Angels are increasingly clubbing together to form syndications which can then lead larger investment rounds, new research shows.
A survey of angel investors in the UK reveals that 73 per cent usually invest in syndicate, while 35 per cent are investing in syndicate more than they did in 2011/12.
Findings from Deloitte and UK Business Angels Association (UKBAA), as part a report titled Taking The Pulse of the Angel Market, looked at 262 deals worth £137 million between 1 April 2012 and 31 March 2013.
The report also identifies a growing trend of angels putting their cash into digital and internet businesses.
Unsurprisingly, 58 per cent admitted that they would invest less if schemes such as the Enterprise investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) didn’t exist.
Jenny Tooth, CEO of UKBAA, says that with syndication a growing trend, it remains the best model to share knowledge and build investment levels.
‘However,’ she adds, ‘we remain concerned about liquidity and we intend to work with all players in the market to improve the opportunities for access to further growth capital and exit opportunities for angel investors.’
More on angel investments:
- Betfair founder Ed Wray backs Footfall123
- Sherry Coutu joins angel investors at Duedil
- Made in Chelsea star Amber Atherton nets angel funding
When looking at a regional breakdown of the UK, the Deloitte and UKBAA survey identifies London and the South-East as the most dominant area with 54 per cent of angel investment – 50 per cent of which went to digital and internet ventures.
Those in the South-West accounted for 6 per cent, the Midlands 11 per cent and Northern Ireland 6 per cent.
However, despite 76 per cent of angels questioned highlighting more deals being available, the same number believe the number of quality deals is either the same or worse.
Mark Doleman, head of private companies and entrepreneurs at Deloitte, comments, ‘Overall, there seems to be a need for education; not only for new angel investors, but entrepreneurs who are about to accept angel investment.
‘From the start, they need to have a clear picture of the end goal and consider an exit strategy; angels can keep investing only if they can sell on their business.’
In recent years, the government has introduced a number of initiatives to boost angel investments. Alongside the introduction of SEIS and the extending of the EIS framework, the coalition has also created the Angel CoFund, which invests alongside high net worths to bolster deal amounts.
See also:
