New UK Business Angel Market report published by the British Business Bank reveals clear regional disparity with 57% of Business Angels based in London and the South East
- 43% of Business Angel investments made in London and the South East
- 75% of business Angels aged over 45 and 21% aged over 65
- Healthcare, Life Sciences, Fintech and Software as a Service most popular sectors for investment
Published today, the British Business Bank’s UK Business Angels Market report, produced with the UK Business Angels Association, reveals a clear regional disparity in terms of where Angel investors are based and where they invest.
The survey found that 57% of business Angels are based in London and the South East, with 35% in London and 22% in the South East. Furthermore, nearly a third of business Angels’ investments are made in London (31%), followed by the South East (12%).
In England, the South West has the largest number of business Angels outside of London and the South East (6%), followed by the North West (5%) and the East of England (5%). In the devolved nations, 8% of UK Business Angels are based in Scotland, 4% in Wales and just 1% in Northern Ireland.
The Business Angel market is maturing
Data from the survey indicates that the Business Angel market is maturing, both in terms of Business Angels’ experience and the volume and value of investments made. More than half (56%) of those surveyed have more than five years’ experience as an Angel investor; 40% hold their investments for more than six years; and the majority said they held an investment portfolio of more than five companies.
An older cohort of Business Angels also emerges from the survey, with 21% aged over 65 years old and 75% aged over 45 years old.
How Business Angels Invest
The UK Business Angel Market report revealed that the median initial investment by a Business Angel is £25k with a median follow on investment of £7.5k. 79% of Business Angel investments are made as part of a syndicate with other Angels.
The four sectors most-favoured by Business Angels are Healthcare (27%), Life Sciences (26%), Fintech (25%) and Software as a Service (24%).
Angels invest in entrepreneurs, not just the business plan
The findings reveal that Business Angels’ investment decisions are based on a range of factors, including their assessment of the individuals running the business. 93% surveyed thought it was essential that entrepreneurs had relevant skills and experience, while 89% emphasised the potential of the business to achieve growth and scale as a key factor.
Keith Morgan, British Business Bank CEO, said: “Angel investors play a vital role in the economy, bringing patient capital, business experience, and skills to support the growth of smaller businesses. Their funding and expertise can be the key to unlocking rapid growth for companies wanting to expand, diversify, or enter new markets.
“That’s why we’re launching a new commercial investment programme this Summer to support developing clusters of business angels across the country.”
Small Business Minister Andrew Griffiths said: “The findings from today’s report provide encouraging news to small businesses who are looking to grow, in a market where there is often a shortage of funding.
“Though it is clear that there is a regional disbalance in angel investment in the UK, the British Business Bank’s new initiative to support clusters of business angels outside of London I am sure will provide improvements to diversity the market.”
Jenny Tooth OBE, Chief Executive, UK Business Angels Association said: “The findings of this report show extremely positive signs of continuing growth in the angel market, but many regions continue to show an underserved level of angel investment. We therefore welcome the British Business Bank’s implementation of this major new commercial investment programme to stimulate new regional business angel clusters.
At UKBAA, we are complementing this important initiative with capacity building actions, including new regional Angel Hubs, combined with our new national e-learning programme on angel investing”.
Reversing the regional disparity
To address the regional disparities revealed in the survey, the British Business Bank is establishing a new commercial programme to support developing clusters of business angels outside London. Alongside its existing programmes, the bank will increase its physical presence across the UK by leveraging regional angel groups and establishing a network of regional relationship managers. It is expected that these new initiatives will help deliver further improvements in the UK’s Business Angel finance ecosystem, making it more dynamic and diverse.
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About the British Business Bank
The British Business Bank is the UK’s national economic development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper, grow and build UK economic activity. Our remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.
The British Business Bank is currently supporting almost £4.6bn of finance to more than 70,000 smaller businesses and participating in a further £7bn of finance to mid-cap businesses (as at March 2018).
As well as increasing both supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of the finance options available to smaller businesses. It has published the Business Finance Guide (in partnership with the ICAEW, and a further 21 business and finance organisations). This guide impartially sets out the range finance options available to businesses – from start-ups to SMEs and growing mid-sized companies. Take the interactive journey at www.thebusinessfinanceguide.co.uk/bbb or download/print a copy.
More information, including a legal structure chart for British Business Bank plc and its subsidiaries, can be found on the British Business Bank website.
As the holding company of the group operating under the trading name of British Business Bank, it is a development bank wholly owned by HM Government which is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). The British Business Bank operates under its own brand name through a number of subsidiaries, one of which is authorised and regulated by the FCA.
British Business Bank plc and its principal operating subsidiaries are not banking institutions and do not operate as such. A complete legal structure chart for British Business Bank plc and its subsidiaries can be found on the British Business Bank plc website.