Tuesday, 27 September 2011

Are Angels alive and well in the UK?

The answer is a resounding yes and they have become even more important with the Banks dragging their feet when it comes to lending to SMEs. I thought it might be interesting to share the following general statistics with you, concerning Angel Investment in the UK.
Last year Colin Mason (University of Strathclyde) and Richard Harrison (Queens University Belfast) completed their 102 page report on the state of the UK Angel Market. The report was compiled from 20 of the 24 Angel Networks that belong to the British Business Angels Association.
These are just a few of the findings:
·         The average mean investment was £192,634
·         233 business received Angel funding
·         The average number of investors in each business was 2.5
·         The mean investment per investor was £77,053
·         Total UK investment was £63.8m
·         There are 5,500 registered Angels
·         Only 10% of all business plans ever get shown to investors
·         58% of deals were funded by a single investor
·         30% of deals had less than 3 investors
·         8% of deals were for more than £500k

In another survey carried out by YFM companies that had successfully raised Angel funding gave their top tips on raising equity finance:

·         Bring in expert advice, not using advisors was a false economy
·         Consider equity as your first port of call, this will make it easier to attract Bank finance
·         Do not put all your financial eggs in one basket. The more channels of finance you have in your business the better
·         Talk to a number of funders to ensure you get the best fit for your company and always chose a proactive investor with an adventurous spirit
·         Raise more than you need. Think of raising finance as a way of building your company for tomorrow, not as a way of fixing today’s problems. Always mention upfront if you will need follow up funding.
·         Think about investors as not only providing money, chose the ones that can help you with strategy, contacts and new markets. Banks are only interested past performance and projections
·         Ensure that potential exit opportunities are flagged up and looked at as they arise and not in three years time
·         Always remember that raising finance takes longer than you think and will also be more costly than you planned
Angels are alive and well in the UK and come in many shapes and sizes. Remember Angels are interested in investing in companies at any stage of their growth and there is even one network that specialises in turnaround situations. An Angel investment does not always have to be an equity investment, many also like to provide debt funding as well or even a mixture of equity and debt.
When the Banks turn you down think about looking for an Angel.
For more information go to: http://www.pegasusfunding.co.uk/

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