Response to the Chancellor’s Spring Statement from the UK Business Angels Association
Following the Chancellor’s Spring Statement the UK Business Angels Association is pleased to see rising confidence in the UK’s overall economic climate. This sentiment is reflected in the actions of the UK angel community, with 41% of angel investors investing more last year than in 2016.
Further to the conclusion of the Patient Capital Review in Autumn 2017, it is heartening to see extensive new funds provided via the British Business Bank to enable regional businesses, many already backed by angel investors, to access the extra finance they need. While there is still a market gap for a connected supply of patient capital available to entrepreneurs across all of the UK’s regions, the UKBAA is seeking to address this by building capacity in the angel market through Angel Investor Hubs and comprehensive e-learning programme.
The UKBAA welcomes the fact that, following Royal Assent on Thursday, angel investors will have a significant new opportunity to bring a further £1m investment per year to support knowledge-intensive businesses. The doubling of the EIS cap represents an estimated £7bn of additional investment, all targeted towards innovative and IP-creating UK scale-ups. This, combined with the additional opportunity to establish new Knowledge-Intensive Funds under the enhanced EIS and VCT legislation, enables investors to more flexibly deploy capital raised over a longer period.
Alongside the updated EIS and VCT legislation will be a new “risk to capital” condition requiring that companies backed by investors under the schemes can be shown to be genuine entrepreneurial deals. The UKBAA welcomes this opportunity to reduce tax-avoidance motivated investing and instead focus on the opportunities offered by these schemes for private investors to reduce risks in backing innovating, growth-focused businesses. UKBAA’s recent research, in partnership with the British Business Bank, showed that 87% of Angel investors used the EIS/SEIS scheme last year and 80% % of the Angel Investors using the scheme said that EIS/SEIS enabled them to back riskier, much earlier-stage businesses than they otherwise would have done.