Launch of UK Angel Investor Accreditation
The UK Business Angels Association is to launch UK Angel Investing Accreditation – the new official qualification to promote effective investments in Britain’s small businesses.
Angel Investment fulfils a vital role in the economy in supporting entrepreneurs and remains the most significant source of equity for early stage businesses. In 2015 over 1 million investors backed small businesses across the UK, attracted by the opportunities offered by crowdfunding platforms and the government EIS & SEIS tax incentives.
For many first-time investors expected returns can fall far short of reality, in part fuelled by social media and the widely publicised rapid success stories of today’s technology giants. In reality, only a small number of investments will generate the potential for huge multiple returns witnessed in companies such as SnapChat, Whatsapp, TransferWise and Uber. Research shows that over 50% of businesses receiving early stage investment will fail. The aim of the Angel Investing Accreditation is to educate potential investors about that reality, and improve their chances of success.
The UK does not have a compulsory accreditation requirement, unlike the US where Angel Investors are now required to be accredited and must prove that they have sufficient income or assets in order to make investments in small businesses. Up to now there has been no formal means to verify that an individual has the ability and competence to make investment decisions. Under the FCA, individual private investors in the UK must prove that they are high net worth or sophisticated, but this is a self-certification process. At the same time we have a light touch process for crowdfunding which requires self-certification and a short test of understanding of the risks.
The UKBAA Accredited Qualification, the first quality controlled angel training, was developed in collaboration with Intelligent Partnership, the UK’s leading independent authority on alternative investments. It will be recognised by two leading institutions, the Chartered Institute of Securities and Investment (CISI), and SFEDI, the standards-setting body for Enterprise and Entrepreneurship.
Jenny Tooth OBE, CEO of UKBAA, said: “As the trade body we are uniquely placed to establish these new quality standards for angel investing, bringing new confidence into the market at a time when so many individuals are attracted to back small businesses. Accessible online this will enable new and less experienced investors across the UK, to gain recognised skills, leveraging the experience and insights of seasoned investors for a more informed approach to backing growth stage businesses. We will also be able to accredit quality training being delivered by our investor members around the regions.”
Michael Blakey, serial tech investor and UK Angel Investor of the year 2015-16,said: “Having been investing for many years, I know that it takes some time to acquire the knowledge and skills to choose which businesses to back and achieve a successful portfolio of investments. The new UKBAA Angel Investing Accreditation offers the opportunity for new investors to access this experience and get more quickly up to speed, whilst recognising those investors in the market who have the skills and competence to make good decisions”.
Simon Calver, ex CEO of LoveFilm, Partner at BGF Ventures and Chair of UKBAAsaid: “It is vital that we have a strong and effective Ecosystem to support angel and early stage investment across the UK. The new UK Angel Investor Accreditation will underpin this by building the capability and capacity of the investment community across the UK to fulfil their key role in supporting the growth and scale up of UK businesses”.
Julia Groves, Chair of UK Crowdfunding Associationsaid “Early stage investment is becoming more diverse than ever as Angel-led crowdfunding opens up access for entrepreneurs to a wider range of funders. And we all know there is much more to backing than money: these investors can also bring the skills, experience and networks to UK entrepreneurs to help them succeed.”
“Having opened up the market to this next generation of investors, we now need to provide them with the tools and education to assess both the opportunities and the risks. This is another excellent initiative from the UKBAA and I expect several of the equity crowdfunders to be amongst the first to sign up.”
Guy Tolhurst, MD of Intelligent Partnershipsaid: “We’re delighted to be partnering with the UKBAA on this initiative. We know from our work training financial advisers in this area that once people acquire the skills and experience they need, they invest with much more confidence. The Angel Investing Accreditation gives everybody the chance to get themselves to that level, safe in the knowledge that they are learning from independent experts.”