Angel Investing set to come into its own in 2011

Some of the leading business angel and early stage investment community within the UK gathered in London this week to review the implications of the current financial climate for investing in innovation following the severe challenges to the economy and new government measures to address finance for business growth.

The Workshop was organised by the British Business Angels Association, the UK trade body for angel and early stage investing, with over 120 investors all getting together at the event held at the law firm Travers Smith.

Anthony Clarke, Chair of BBAA and MD of Angel Capital Group, opened by saying that the “BBAA welcomes the proposed new measures to support a new Angel co-investment Fund as a key means to leverage new investor groups and significantly increase the level of equity finance into the market place for early stage and start-ups”

“With such measures in place and a greater awareness of the opportunities offered for investors, we have the capability to achieve comparable levels of angel finance as in the US market, where over 22bn dollars are raised annually to invest in this space”. Clarke added.

Ian Stewart, Chief Economist at Deloitte Research, reviewed the latest economic data and the likely prospects for 2011 for investors and businesses against the backdrop of a further dip in GDP announced this week.

Stewart concluded that the overall picture is not so gloomy, with evidence that the private sector is seeking to expand and invest in new products and with a greater appetite for risk. However, he concluded that whilst there is a continuing recovery, it will be erratic and choppy and there will be a wide variation between SMEs sectors with those focused on consumer products most at risk, whilst technology and manufacturing are showing strong resilience.

Ken Cooper, from Capital for Enterprise Ltd, presented the details of the new proposed Business Angel Co-investment Fund of £100m. He said  “The proposed co-Investment fund recognises that Business Angels are the most significant source of early stage capital in the sub £1m market source of early stage venture and aims to leverage this potential.

“The Fund would aim to act as a ‘big business angel’ sharing the risk with private investors, investing as partner alongside angel networks and syndicates and with a view to leveraging at least £2 angel investment alongside each £1 put in by the Fund”. CfEl will manage the Co-investment Fund if the bid to RGF is successful and will set up an Investment committee to review all deals that meet requirements.

With the government due shortly to announce the results of its negotiations with the Banks, including a new annual target for increased lending to small businesses, Stephen Pegge of Lloyds TSB Commercial and representing the British Banking Association Business Finance Taskforce, announced the new measures being launched for 2011.

“These initiatives are designed to address the challenges faced by the banks as legacy of the financial crisis over the past two years. We intend to significantly increase access to bank finance, improve overall knowledge and understanding between banks and SMEs and address the lack of confidence among SMEs in relation to bank lending” said Pegge.

Mentoring was identified as a key measure to address the need for improved advice and guidance with a new network of mentors being set up across the UK of experienced individuals with banking and financial experience to deliver free coaching and advice to SMEs on how to plan their finances and maximise their opportunities from bank lending.

Anthony Clarke concluded from the conference that BBAA as the UK trade body has a vital role to play to bring together all these different models from angel networks to new super angel groups to leverage the power of angel investing for early stage businesses and to maximise the opportunity to grow the market for angel investing in the UK.