Jenny Tooth

Expert commentary by Jenny Tooth, UK Business Angels Association

An effective and connected entrepreneurial finance ecosystem is vital for the successful growth and scaling of small businesses across the UK – and a thriving angel community is an essential component of this supply chain of scaleup finance. Many of the inspiring businesses featured in this report have successfully accessed angel finance to build their early-stage growth and scale.

Last year showed a continuing rise in the level of angel investment in innovating businesses, with an increase in the value of initial and follow-on investments made by angel investors and with more experienced angels committing over 20% of their disposable assets in backing growth-focused entrepreneurs. However, 2020 has been a challenging time for the angel investment market. Angel investors have focused on supporting the growth of the businesses in their existing portfolios during the COVID-19 crisis, providing strategic support, mentoring and hands-on help, while many have been providing extensive additional funding, bringing forward investment rounds to their investee businesses to enable them to continue to survive and grow.

As we look to reset the economy and boost entrepreneurial growth across the UK, it will be vital to ensure that we can rebuild an effective supply of angel investment across the UK to ensure that we can meet the needs of the many businesses seeking to scale. Notably, as we rebuild angel investment capital, we need to ensure that we can address the existing imbalances in access to angel investing which have been highlighted during this period, including businesses in the regions, women-led teams and businesses from underrepresented communities.

The UK Business Angels Association will continue its work in building capacity of angel investment in the regions outside the Golden Triangle, supported by the rollout of the £100m British Business Investments Regional Angel Programme. We are also a founding signatory of the new Investing in Women Code and will work to actively support increased investment in women founders. However, we have also recognised the need to establish a new framework of good practice to increase access to angel investment for all underrepresented growth-focused founders, including increasing the diversity of the angel investment base.

As we look to boost the growth prospects of our scaling businesses across the UK, I hope that we can work together to build strong investment ecosystems to enable many more great businesses to access the risk capital they need to successfully grow and scale in the year ahead.