More than half of UK business angels have continued to invest post Covid-19 reveals new UK Business Angels 2020 report by the British Business Bank
- 57% of business angels made an investment between April and July 2020
- 46% of business angels plan to build their portfolio in the current financial year
- 72% of angel investors are confident about the future growth in value of their portfolio
- Healthcare; biotech, life sciences and pharmaceuticals; and software as a service remain the most favoured sectors
Published today, the British Business Bank’s UK Business Angels Market report 2020 reveals that angel investors across the UK are continuing to invest in early stage businesses and are optimistic about the future despite current economic uncertainty.
Despite almost half of angels reporting a negative impact on their investment activity from Covid-19, overall the business angel population remains supportive of UK businesses and have a positive outlook for future investment.
More than half (57%) angel investors surveyed had made an investment between April and July 2020, with 46% expecting to make new investments to add to their portfolio during the remainder of the financial year.
Since the onset of Covid-19, more than half (54%) of business angels have increased their engagement with their investee businesses. Of these, 56% have prioritised support of their investee businesses to help achieve their growth milestones. 77% of angels reporting greater involvement with portfolio businesses did so via strategic advice while 69% provided a sounding board and 43% operational advice.
Values of initial and follow-on investments are however lower than last year, sitting at an average of £69k (down 31% from £100k) and £46k (down 34% from £70k) respectively. This greater caution related to current economic uncertainty which was ranked as the number one barrier to investment by 45% of angels. Despite this, the data revealed that 72% of angel investors are confident about future growth in the value of their portfolio over the next 12 months.
The top three sectors that continue to be most favoured by business angels are healthcare (31%), biotech, life sciences and pharmaceuticals (26%) and software as a service (24%). Distribution of angel investment across the UK remains broadly in line with earlier Bank surveys, with the ‘Golden Triangle’ (London, Oxford and Cambridge) remaining the most popular area for investment.
Positive investment performance despite the pandemic
Data from the survey reveals that 41% of business angels have not been negatively impacted by Covid-19 while 9% are seeing a positive outcome, with the most popular reason given that sectors they have invested in have performed strongly despite the impact of Covid-19.
Catherine Lewis La Torre, CEO, British Business Bank, said: “Angel investors play a vital role in the economy, particularly in the scale up journey of smaller businesses. They provide ‘smart capital’; funding combined with business experience, strategic advice and networking opportunities, to support the growth of the businesses they back. Their investment, mentoring and expertise can be the key to unlocking rapid growth for companies wanting to expand, diversify, or enter new markets. It is therefore encouraging that they remain optimistic and continue to invest in and support companies in their portfolios.”
About the British Business Bank
The British Business Bank is the UK government’s 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. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.
The British Business Bank programmes were supporting £8bn of finance to over 98,000 smaller businesses at end of March 2020. Since March 2020, the British Business Bank has launched four new Coronavirus business loan schemes, delivering tens of billions of pounds of finance to over a million businesses.
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:
- The British Business Bank Finance Hub provides independent and impartial information to high-growth businesses about their finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success. The site also features case studies and lessons from real businesses to guide businesses through the process of applying for growth finance.
- The Business Finance Guide (published in partnership with the ICAEW and a further 21 business and finance organisations) impartially sets out the range of finance options available to businesses at all stages – from start-ups to SMEs and growing mid-sized companies. Businesses can take the interactive journey at https://thebusinessfinanceguide.co.uk/
As the holding company of the group operating under the trading name of British Business Bank, British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). The British Business Bank operates through a number of subsidiaries, none of which are authorised or regulated by the FCA or the PRA.
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