More than half of UK business angels have continued to invest post Covid-19

Angel

Published today, the British Business Bank’s UK Business Angels Market report 2020 reveals that angel investors across the UK are continuing to invest in early stage businesses and are optimistic about the future despite current economic uncertainty.

  • 57 per cent of business angels made an investment between April and July 2020
  • 46 per cent of business angels plan to build their portfolio in the current financial year
  • 72 per cent of angel investors are confident about the future growth in value of their portfolio
  • Healthcare; biotech, life sciences and pharmaceuticals; and software as a service remain the most favoured sectors

Despite almost half of angels reporting a negative impact on their investment activity from Covid-19, overall the business angel population remains supportive of UK businesses and have a positive outlook for future investment.

More than half (57 per cent) of the angel investors surveyed had made an investment between April and July 2020, with 46 per cent expecting to make new investments to add to their portfolio during the remainder of the financial year.

Since the onset of Covid-19, more than half (54 per cent) of business angels have increased their engagement with their investee businesses. Of these, 56 per cent have prioritised support of their investee businesses to help achieve their growth milestones. 77 per cent of angels reporting greater involvement with portfolio businesses did so via strategic advice while 69 per cent provided a sounding board and 43 per cent operational advice.

But the angels are exercising caution. Values of initial and follow-on investments are lower than last year, sitting at an average of £69k (down 31 per cent from £100k) and £46k (down 34 per cent from £70k) respectively. This greater caution related to current economic uncertainty which was ranked as the number one barrier to investment by 45 per cent of angels. Despite this, the data revealed that 72 per cent of angel investors are confident about future growth in the value of their portfolio over the next 12 months.

The top three sectors that continue to be most favoured by business angels are healthcare (31 per cent), biotech, life sciences and pharmaceuticals (26 per cent) and software as a service (24 per cent). Distribution of angel investment across the UK remains broadly in line with earlier Bank surveys, with the ‘Golden Triangle’ (London, Oxford and Cambridge) remaining the most popular area for investment.

Data from the survey reveals that 41 per cent of business angels have not been negatively impacted by Covid-19 while nine per cent are seeing a positive outcome, with the most popular reason given that sectors they have invested in have performed strongly despite the impact of Covid-19.

Catherine Lewis La Torre, CEO, British Business Bank, said: “Angel investors play a vital role in the economy, particularly in the scale up journey of smaller businesses. They provide ‘smart capital’; funding combined with business experience, strategic advice and networking opportunities, to support the growth of the businesses they back. Their investment, mentoring and expertise can be the key to unlocking rapid growth for companies wanting to expand, diversify, or enter new markets. It is therefore encouraging that they remain optimistic and continue to invest in and support companies in their portfolios.”