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Jenny Tooth reflects on 2020 and the impact its had on the investment community

Jenny Tooth

As we are now in the run up to what will no doubt be a somewhat limited festive period for many and with the final throw of the dice on Brexit negotiations underway, this seems a good opportunity to reflect on the past year for our investment community.

2020 has brought many unexpected challenges for the investment market and the small businesses that we back, but one thing is clear: angel and early stage investors have been a lifeline to very many entrepreneurs across the UK throughout this time, not only bringing much needed additional risk capital, but also hands on help , strategic advice and experience of past crises to support their investee businesses. We know from our recent research carried out in partnership with British Business Bank, that many of our investors have been impacted by the pandemic and deep economic and political uncertainty over Brexit, with over 50% of business angels citing a negative impact on their level of investments and with the value of initial and follow on investment considerably lower than previous years, having fallen by 41% during 2020 and follow-on investments by 34%. At the same time, we know that many of our investors have found that their portfolio businesses have shown huge resilience and capacity to not only survive but grasp new and exciting growth opportunities during this time.

Our investment community and notably our Angel groups and syndicates across the country have also shown amazing capacity to adapt to the restrictions of Covid and have successfully digitalised their services and interactions with investors and entrepreneurs, operating online pitching, education and networking events, attracting new participants and often new investor recruits – and notably getting deals done and even some exits in this virtual environment.

At UKBAA we have also transformed our services to an online offering for our members and indeed, we have hosted 64 webinars since the start of the crisis attended by nearly 4,300 participants. Whilst we also held our three-day Future Forward investment summit at the end of November, which many of you attended with over 41 industry thought-leaders speaking and over 700 participants from across the UK and internationally. We have also launched our new branding and website during this period providing more effective access to information advice and support for our members and wider community. We have been especially concerned to keep our community informed and have provided regular updates on developments at Government level, including both the Covid support schemes and wider developments set out through our dedicated Covid 19 information hub. I have been especially keen to ensure that I was able to reflect the views and concerns of our community in my interactions with Government and would like to thank all those who have responded to our surveys and opinion polls, providing vital insights and evidence for me to pass on to key Government departments.

An important outcome of the crisis has been the opportunity for the key trade bodies and industry players to come together to share insights on the impact on our market and most importantly to collaborate on actions in relation to Government measures such as the Future Fund. We also had the opportunity to work together to look at the impact of Covid on the future of our finance market and I was pleased to be able to feed into the Recapitalisation Report and the Future of Growth Capital report on behalf of our community when we identified the £15bn equity gap and notably the £2bn angel and early stage equity gap.

The pandemic has also shone a light on some important structural issues within the investment market and notably the impact of the crisis on the availability of finance for businesses in the regions and those from underrepresented groups. This was especially underlined through the Black Lives Matter campaign when we at UKBAA turned to the important topic of Investing in Black and ethnic minority founders and understanding their challenges in accessing early stage equity, bringing together key players from the black investment and entrepreneurial communities to review what actions we could take to achieve change and to help us formulate and benchmark meaningful actions going forward. These issues have been further highlighted by three important reports including the “Alone Together” report from BBB, “Beyond Gender” report from Extend Ventures on VC investment and black founders and the “Black Report” from Andy Davis 1×10 on access to seed stage investing. Alongside this, we have continued to work on actions for women founders and maintained our campaign to bring more women into angel investment. Our work with Investing in Women Code has resulted in 16 of our members signing up to the Code this year and we have been collecting gender related investment data from the Angel group signatories to be published in the HMT report due to be launched early next year.

The existing disparity of access to finance for entrepreneurs across the regions was also compounded during the crisis and this was underlined by our latest BBB-UKBBA market research that identified the very thin pools of angel capital that exist across many of our regions outside the Golden triangle. We have identified the need to build much stronger angel investment capacity and many of the angel groups in the regions have been working hard over the past year to further build their networks. Whilst the Regional Angels Programme has rolled out 4 pots of co-investment so far to be deployed in the regions, there remains much more to be done to build a critical mass of regional angel investment in these underserved regions.

As we look to the year ahead and working toward resetting our economy and with the potential of the vaccine offering us some normality, I hope that we can continue our work together to ensure that we can build an even stronger and more connected ecosystem for angel and early stage investment across the UK. There is much more for us to do, but I want to thank you all, together with our many partners and supporters for the work that you have done in the past year to support investment in innovation and entrepreneurship and very much looking forward to continuing our collaboration in the year ahead.

Meanwhile, I wish you all on behalf of UKBAA, a peaceful and enjoyable festive season and keep well and safe.

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By UKBAA10 Dec 2020