According to data from the London-based analytics house Beauhurst, angel investors injected more than double the amount of capital into private UK companies in 2021 than in 2020.
Beauhurst, who discover and track high-growth UK companies, reported skyrocketing start-up valuations in later funding deals, with the largest increase happening at the growth stage, increasing from £48.0m to £73.9m. While venture capitalist and private equity was the most active investor type, angel investors surpassed the number of deals facilitated in 2021.
The Angel Market: A Growing and Vibrant Sector
Different from a stock market investor, angel investors invest in the early stages of a business and mentor entrepreneurs throughout their journey, applying their specific knowledge and utilising their networks, connections and contacts. Playing a vital role in powering the UK economy, they provide business experience and skills to support the growth of start-ups.
The angel market has seen a steady flow of new investors entering in recent years which represents a growing and vibrant sector, bringing investors and entrepreneurs together to help develop and grow businesses.
Angel Investing Platforms
If you’re an angel investor looking for a new initiative, product or service, identifying which start-ups have potential can take time, connections and a willingness to think long-term. Angel investing platforms present a solution to this by forming a collaborative collective of like-minded people designed to help these start-ups grow.
Connecting angel investors with founders, TrendScout is one such platform specialising in creating purposeful, considered partnerships to drive profit and growth. Their expert team researches hundreds of start-ups each year, analysing the potential, mission and ethical practices of every business they work with and identify up-and-coming opportunities before they reach the masses.
A Picture of Health
Now the second biggest source of investment for UK start-up deals, the data paints a picture of health for the UK start-up scene. Emerging as an important source of funding for early-stage start-ups, the UK has the biggest angel investor market in Europe.
Keith Morgan, CEO of The Uk’s Economic Development Bank, British Business Bank Says:
“Encouragingly, the business angel market has been maturing, with the experience of the investors and the volume and value of investments made increasing in recent years.”
A survey of business angels commissioned by the British Business Bank with support from the UK Business Angels Association and run by IFF, reports that the UK business angel market is maturing, in terms of the experience of investors and the volume and value of investments those investors make.
Reviewing a demographic profile of the typical angel investor, the survey found that the typical UK angel investor:
- Is male, white and most likely to live in London.
- 75% of angels are aged between 45 and 64 years.
- 25% are aged between 18 and 44 years—showing an emerging cohort of younger angel investors.
- Has achieved a successful business-oriented career and/or has inherited capital.
- Holds their investment (on average) for six years.
- Makes effective use of the EIS and SEIS schemes.
Chief Executive of the UK Business Angels Association, Jenny Tooth OBE Says:
“There are hugely positive signs of continuing growth in the angel market, with 41 per cent of angel investors having increased their level of investing. With 69 per cent identifying strong growth and scale-up of their investee businesses, exceeding their expectations. In addition, this research shows the continuing importance to the angel community of the EIS/SEIS scheme to support their investments and we welcome the new enhanced EIS scheme made available by the government to support investment in Knowledge Intensive Businesses.”
Generally, this sector has investors who apportion not all, but a segment of their wealth to risky assets. Interestingly, this is also a good way to diversify risks and not rely solely on any one investment. Ultimately, as an investor, you need to have what it takes to do your own due diligence.
Westbrooke Associates identify a wide range of investment opportunities, backing the businesses you believe in, including BaaS. Register your interest today and explore how we can help you target and capture attractive returns.