Jenny Tooth looks ahead to 2020 and highlights the environment needed for Angel Investing to thrive in the UK

Author

UK Business Angels Association

16 January 2020

Happy New Year to all of our Readers and hope you all had an excellent break. With Brexit now finally taking place at the end of this month, and with the Chancellor planning his first budget in early March, this is a good time for us all to look ahead and see what kind of environment we want for Angel Investing to thrive here in the UK.

One thing I am sure we all want, is assurance that the EIS scheme which has underpinned angel investing for over 25 years will continue for the foreseeable future and hopefully be strengthened, though some small adjustments could still be made to improve the scheme.

The trade deal and policy on migration are the key areas to be negotiated in the coming year and of prime concern to Angels and their portfolio businesses. For the Angel community, we need to ensure that the companies we are backing can continue to access the talent and skills needed to build great tech businesses. We also need a Trade deal that ensures effective access to the international markets and growth opportunities that will be vital for our investee businesses to achieve global success.

During this coming year, we hope the Government will provide more clarity on the replacement of European funding such as EIF, Horizon 2020 and European Structural Funds which have been vital to support UK small business growth. Whilst we know that British Business Bank will have significant funds to replace cornerstone funding for VCs, we have yet to hear what parameters will be set out for the new Shared Prosperity Fund which will be available to all the regions of the UK to support local economic development and small business growth. Notably we hope that one of the core priorities for the use of these funds will be the development of local Angel Investment communities.

We are all aware that the declared focus of the Government going forward is on shifting investment to the regions outside London and notably through major physical infrastructure. However in parallel, regional policy needs to focus on leveraging private investment to build a long term supply of risk capital to support the growth of small businesses and a key aspect should be the development of a much greater critical mass of Angel Investment as a core source of early stage capital.

The new British Business Investment Regional Angel Programme bringing £100m co-investment is a valuable new addition in leveraging more angel capital in the regions and we look forward to new funding pots being allocated to angel groups during the coming year. But alongside these co-investment funds, there is a need for more direct support from Government to support the identification and mobilisation of more angel investors and syndicates in the regions and notably to recruit more industry savvy lead angels. Meanwhile at UKBAA, we will be continuing our work in the year ahead to build Angel capacity and to support the development of effective and connected angel and early stage funding ecosystems in these underserved regions.

We also hope that the Government will continue to build on the important research reports from last year revealing the disparity in access to risk capital between women and male founders and we look forward to the implementation of the new HMT Investing in Women Code of which UKBAA was a founding signatory. This will enable us to begin to collect data on the level of investing in women founders among Angel groups, alongside VCs and the Banks. We encourage more of our angel groups to become signatories in the year ahead.

A core focus of our work at UKBAA will be on creating a more gender balanced angel investment community and we will continue to support our members in their efforts to recruit more women angel investors. We will also be continuing to develop our National Women Investment Forum to provide awareness, knowledge and peer to peer support for new and existing women investors The opportunity for Government to support more specific co-investment funds focusing on leveraging women led investment could also be revisited.

We will have access to new evidence on the Angel investment market this year, resulting from our recent research carried out by British Business Bank in partnership with UKBAA during 2019 and which will be published in March. This will provide important data on current challenges and needs of the Angel community and to support our case to Government and to the Chancellor on what more should be done at both policy and practical level to build a better environment for angel investing here in the UK.

Meanwhile, we would very much value your comments and ideas on what you feel the Government should do to support the angel and early stage market and what more UKBAA can do in the year ahead.

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