Jenny Tooth discusses the Chancellor’s latest announcement and the impact on the angel community

Author

UK Business Angels Association

26 March 2020

As we all get used to a life mainly spent indoors, I am sure that for all of us working in the angel and early stage market this has been a very difficult week. We have seen some very important measures put in place by the Government to support small businesses during the crisis announced last week, including the new British Business Bank Coronavirus Business Interruption Loan Scheme (CBILS) launched on Monday.

Indeed we have today heard the Chancellor’s further announcement about the measures to be put in place, for the over 5m self-employed across the UK, offering 80% of average monthly profits up to £2.5k. Nevertheless, there remain many challenges for survival for the very early stage, high-risk, high-growth businesses that we are all supporting. We also know that speed is of the essence to ensure that the great businesses that angels and early stage investors are backing can continue to survive and build further growth, so we are working with Government departments, British Business Bank and key players to find the right solutions.

We are grateful to all of those of you have provided insights and feedback about what you are seeing out there. It is clear that many of our community are finding it difficult to make any fresh investments and struggling to find further funding for those portfolio businesses that they have already backed and currently raising. We are aware that so many of our investors are doing a fantastic job in continuing to help their businesses with valuable hands-on and strategic support as well as direct funding during these difficult times. However, we realise that they and their fellow investors may not have sufficient investment capacity to meet the current and ongoing growth needs of their portfolio businesses over an extended period of time.

Angel investors and HNWs are being impacted by the decline in the global markets on their own personal wealth and investments, reducing their spare financial capacity to invest in small businesses, or to make further funding rounds in existing portfolio. Other co-investment sources such as seed funds or VC funds are also not available.

We also know that if angel-backed, high-growth potential businesses are no longer supported with the finance they need at this time, there is a strong danger of a major breakdown in the pipeline of scale-up businesses available for Venture Capital investment across the UK for some time to come with serious impact on the whole finance ecosystem from start-up to scale-up.

Angels and early stage investors are backing businesses in a wide range of sectors and we we are keen to understand which sectors are especially affected. We are also conscious that businesses are creating valuable solutions to address these global challenges, through such areas as life sciences, healthcare, fintech, cleantech, logistics and connectivity and will be bringing innovative and disruptive new products and services to market.

That is why angel and early stage investors are so important at this time and, at UKBAA, we will be doing our best to ensure that measures are rolled out as soon possible to support, leverage and stimulate investment across the UK in these coming months. We want to ensure that innovating, high growth potential businesses in all regions across the UK can access the funding they need at this time. We continue to welcome your comments, views and ideas and do keep in touch.

Meanwhile keep well and safe.

Best regards

Jenny

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