On the 8th October, the British Business Bank (BBB) published its UK Business Angels Market report for 2020 (UKBAM).
According to the BBB, the report provides a 'unique lens' on the trends in private investment in the UK and reiterates the essential role that angel investors play in the UK economy by providing capital, with added business experience and advice.
Catherine Lewis La Torre, CEO of the BBB, mentions four areas of particular interest in her introduction to the report - the changing market, investors' reaction to COVID-19, diversity and access to finance. Regarding the changing market, the report concludes that continuous growth seen in seed stage investment between 2011 and 2018 has ended with the annual amount reducing by 1% in 2019.
Encouragingly, the BBB details that angels have responded positively to the pandemic. 57% made an investment between April and July 2020, 46% expected to make new investments in the coming year and 72% are confident in the future growth of their portfolio. With this being said, the angels surveyed did list economic uncertainty and the impact of COVID-19 as the two biggest challenges to investing. Jenny Tooth OBE, Chief Executive of the UK Business Angels Association (UKBAA) commented that the angels could provide additional support to businesses during this time by 'drawing on their own experience of dealing with previous economic crises'.
The report also focuses on the diversity of angel investors and, although the report notes some signs of improvement in this regard, La Torre acknowledges that 'many challenges remain in achieving greater representation of diverse groups of both funders and founders of smaller businesses'. The report details that 13% of funders are female and the UKBAA specifically mention its focus on increasing both 'access for female founders to angel investment' and the amount of female investors available.
Finally, La Torre also highlights the disparity in access to investment throughout the UK - the UKBAM report details that 57% of investors are based in London or the South East, with only 6% in Scotland and 1% in Wales. Tooth concludes that 'regions outside the Golden Triangle lack sufficient investment' and increasing investment in 'underserved regions' is essential to help rebuild local economies and support small businesses.
Co-authored by Andrew Walker and Jack Townsend