Angel funding in for a ‘golden time’ – tax incentives combining with a field left open by the banks withdrawal from lending. But expertise and expert support are as valuable to the investees as the funding.
At the recent UK Business Angels Investment Summit, held at the London Stock Exchange, Rohan Silva, senior policy adviser to the Prime Minister, suggested that the incentives of outstanding tax-breaks make this a ‘golden time’ for early stage investors. And presentations by other funders indicate that the withdrawal of the banks from this (and other fields) has left a yawning gap – that Angels can help to fill.
In making the opening presentation, Xavier Rolet, Chairman of the Stock Exchange, indicated the importance he attaches to Angel funding and the contribution of Angels to early-stage ventures and SMEs on the ‘escalator’ of growth – in the ever shortening life-cycle of businesses. And the appointment of Sir Nigel Rudd as the new Chairman of UKBAA under-lines its expanded scope, as it does its potential.
New funding institutions such as the Angel Co-Fund, the Business Growth Fund and the Seed Enterprise Investment Scheme are still themselves early-stage businesses, just beginning to fill the void left by the banks – their contributions as yet quite small but clearly rising fast in what must be a very thirsty market.
Angel funding in the UK has grown rapidly, but in comparison to the US it is still an infant industry as it attracts new Angels. Older hands and professionals have illustrated from time to time the importance of strategy and of liquidity (for follow-on funding). There must be no field in which conditions of uncertainly make it more important to back more horses (or else, as one guru once pointed out, become the book-maker!)
Doyenne of Angels, Sherry Coutu pointed to the importance of due diligence, of staying close to your expertise, of involvement on the Board, and of mentoring that comes with investing. Among the new funding institutions, the speaker from the Business Growth Fund underlined the importance to SMEs of board involvement, of access to [outside] talent, to relevant peer groups, and networks.
Lead Angels are evidently hugely valued and in short supply; and Angel groups will increasingly go beyond being proposal and investment processors and become nurseries for small companies – in providing support, help and expertise for growth and development; (the pool of lead angels, who have ‘done it before,’ is growing but is still small).
Two proponents of the ‘Accelerator’ presented their 13-week programmes of co-working and intensive support (feed-back, advice and contacts from myriads of mentors) for small teams seeking to develop new businesses, one in social enterprises, the other in IT. While a small number of Angels have invested in Accelerators and their progeny, for Angels in general there is as yet no way in: with a single exception, no Angel group, incubator or science park has yet been involved in or run an Accelerator.
Two final presentations underlined the urgent need for simple outcome data and the potential value of research in this field. (For more about UKBAA, see www.ukbusinessangelsassociation.org.uk)