‘Super Angels’ in UK having growing influence in investment market
Study reveals new breed of investor filling gap left by traditional venture capital
A new breed of ‘Super Angel’ investors in the UK are playing an increasingly vital role in growing early stage ventures and plugging the gap left by lack of access to traditional venture capital for small firms, a study has claimed.
A poll conducted by professional service firm Deloitte with the UK Business Angels Association (UKBAA) found that tax breaks were particularly crucial in attracting business angels to UK start-ups, with 86% of respondents saying they had used tax breaks such as the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS).
Over half admitted they would invest less if such schemes were not available.
The study also revealed that syndicate investments are becoming more common amongst angels; 73% regularly invested in tandem with others and more than a third invested in syndicate more than they did in 2011/12.
The lack of quality deals was revealed as a concern, however; 76% of angels said that while the number of available deals has increased, the quality of the deals was either the same or worse than before.
‘Super Angels’ can be defined as investors who started as entrepreneurs themselves and have a significant amount of capital to invest in new ventures, typically in the sector they started in.
They often make multiple, small investments and look to exit at an earlier stage than larger VCs would expect.
The phenomenon was first seen among former Silicon Valley tech entrepreneurs including PayPal’s Dave McClure, Sean Parker of Napster and Linkedin’s Reid Hoffman.
It has since spread to the UK and Europe, with notable ‘Super Angel’ funds including Adriane Capital founder Julie Meyer’s Adriane Capital Entrepreneurs fund and The Accelerator Group, founded by serial entrepreneur Robin Klein.
Deloitte urged the government to remove barriers to angel investment in the UK as a result of the study, including raising the current £150,000 cap on SEIS investments and encouraging more City investors to become angels.
Jenny Tooth, chief executive of UKBAA, said: “It is clear that while SEIS attracts more individuals to come forward to invest in seed stage businesses, UKBAA has an important role to promote awareness and understanding of the asset class, notably among wealth advisers. We need to bring more smart money into angel investing through increasing skills and transferring experience from existing angels.
“It is also clear that syndication is a growing trend and the best model to share knowledge and build investment levels, with the Angel Cofund able to offer further valuable support. However, 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.”