Angel Investment is up but the UK’S equity gap persists

Press release 08 December 2017

UK Angel Investors are investing more, with 41% reporting that they invested more in 2016 than in 2015, according to new research from the British Business Bank and the UK Business Angels Association (UKBAA).

The new research shows that, despite this good news, the UK’s regional equity gap is stubbornly persistent. This underlines the findings of the Bank’s Equity Tracker, published in August, which showed London continuing to experience greater levels of equity investment compared to other UK regions, with the capital accounting for 47% of UK deals in 2016.

Other key findings from the research are:

  • Only 26% of Angels invested less in 2016 than 2015
  • Angel investors report strong portfolio growth in terms of both turnover and total employment:
    • On average, angels reported that 75% of their current portfolio has experienced turnover growth
    • And 80% of their portfolio experienced employment growth
  • The survey finds a high concentration of angel investors in London and the South East
  • A high proportion of investors make use of tax schemes – 87% of Angels survey used EIS or SEIS for at least one investment in 2016

These findings were first presented at the UKBAA National Investment Summit on 28th November 2017.

Last month’s Budget announced that the British Business Bank would be given £2.5bn of extra resources to help support £13bn of long term patient capital for smaller businesses. The Budget also called on us to support developing clusters of business angels outside London. In the regions, we are already responsible for funds supporting £650m of finance for the Northern Powerhouse and Midlands Engine areas, and will shortly be launching a similar fund for Cornwall and Isles of Scilly. British Business Bank research shows that angel investment is up but the UK’s small businesses still suffer from an equity gap outside of the capital. We are working on plans to support business angels across the UK and ensure smaller businesses can access the finance they need to grow and succeed, wherever they are in the country. Keith Morgan Chief Executive of British Business Bank
Angel Investment is a vital source of finance for early stage businesses and it is very encouraging that this latest research shows that Angels have invested even more in small businesses in 2016 than the previous year. “Yet the research shows that there remains a considerable challenge for entrepreneurs to access this source of investment outside the Golden triangle – and so we are pleased that the British Business Bank has been given this new mandate to leverage further angel investment in the regions. Jenny Tooth OBE, CEO of UK Business Angels Association
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