Angel investors are making more investments than ever before and their numbers are swelling, with more women and younger individuals choosing to invest in Britain’s engines of growth: entrepreneurs. These are some of the findings from major research launched today by the UK Business Angels Association (UKBAA) trade body and the Centre for Entrepreneurs (CFE) think tank.
Women now represent one in seven angel investors, double the rate observed in 2008. Angels are also getting younger – three quarters of angels are aged under 55, with 44% under 45 and 16% under 35 years. In London and the South East the shift is more pronounced, with 46% of angels aged under 45 compared with 37% across the rest of the UK.
Alongside this changing profile, angels are making more investments than ever before. The median number of investments is now five – double that reported in 2009. Angels are increasingly investing outside their home region (58.4%) and outside the UK (22.3%) , showing geographic distance is becoming less important in investment decisions.
Both the Seed Enterprise Investment Scheme and the Enterprise Investment Scheme play a big role in encouraging investment activity. Nine out of ten angels have used one of the schemes and 80% of investments in angels’ portfolios were made under EIS (55%) or SEIS (24%). The research also found that one in four angels have invested in ventures that have a social impact. Social impact investments accounted for 24% of deals by angels in the study.
‘Nation of Angels: The unsung heroes of Britain’s economy’ is the largest ever study of the investment behaviour and impact of UK business angels. Commissioned by UKBAA and CFE and carried out by the Enterprise Research Centre, the study was sponsored by Barclays, Deloitte and BVCA. 403 angel investors shared portfolio information through an online survey, 28 syndicate and network leads representing 8,000 angels completed an online survey and 43 angels discussed their investment behaviour through telephone interviews.
The research also finds that angels are far more confident in the growth status of their portfolios, with some 45% of angels reporting that their investee businesses are showing high growth and with higher expected rates of return than found in earlier studies.
Commenting on the findings, Centre for Entrepreneurs chairman and serial angel investor Luke Johnson said: “The results of this study demonstrate the important role that angel investing is playing in the economy, not only bringing risk capital, business experience and skills to support the growth of small businesses, but also through investing to create social impact. ”
UK Business Angels Association chief executive Jenny Tooth said:
“We hope that these findings which show the impact of angel investment will reinforce the need for government to give ongoing support to this growing nation of angels to enable them to continue to fulfil their important contribution to the UK economy.”