A Strathclyde academic, together with a colleague from Queen's University, carried out research which showed that business angels are playing an increasingly important role in the funding of growing businesses.A Strathclyde academic, together with a colleague from Queen's University, carried out research which showed that business angels are playing an increasingly important role in the funding of growing businesses.
The research, carried out by Professor Colin Mason of the Hunter Centre for Entrepreneurship and Professor Richard Harrison of Queens University, Belfast, formed a report published by the Department for Business, Innovation and Skills (BIS) and provides significant new information and insights into the investment activity of business angels.
The study shows that business angels are increasingly investing in organised groups and alongside other investors, rather than as individuals. This means that whilst Professor Masonangels typically invest less than £200,000 per project, deals can rise to upwards of £500,000 when investing as a syndicate.
In addition, angels are more likely to make follow-on investments in their portfolio companies than they were 10 years ago. Their investments tend to be concentrated in start-up and early growth businesses with fewer than 10 employees, and in technology sectors including ITC, health, biotech and pharmaceuticals.
The research is based on data provided by the British Business Angels Association (BBAA) and LINC Scotland.
Professors Mason and Harrison are widely regarded as the leading academic experts on the angel market in the UK.
Professor Mason said, "Because private venture capital funds have largely disappeared from the early stage market, business angels are having to cover more steps in the so-called funding escalator. Co-investment schemes are now critical."
Business and enterprise minister, Mark Prisk, said, "The Government wants to make this decade the most entrepreneurial and dynamic in our history and this means ensuring individuals and businesses have the skills, tools and networks they need to understand and access finance.
"This report shows that business angels play an important role in funding new and growing businesses, which are vital to the economic recovery. The support of angels is hugely significant and I welcome their contribution."
Copies of the report are available from http://www.bis.gov.uk/publications