Jenny Tooth OBE

Expert commentary by Jenny Tooth OBE, Chief Executive, UK Business Angels Association

Angel investment is a vital source of finance for small businesses to launch them on their journey from start-up to successful scaleup business. At this time of economic uncertainty here in the UK, it is heartening to see that angels are continuing to back small businesses. Indeed, our latest survey among our community showed that 2% had invested more last year than the previous year. Many angels have been through multiple economic cycles and know how to address key challenges for small businesses, also recognising that exciting new opportunities for innovation and disruption can emerge during these periods.

Angel investors often have themselves been entrepreneurs, or built and grown businesses, enabling them to bring strong added value alongside the risk capital, including access to strategic support and direct introductions to customers and markets. Angels generally invest in syndicates also frequently co-investing with VCs and VCTs to help build the investment deal, while providing access to important follow-on capital as the company grows.

Yet for entrepreneurs outside the Golden Triangle of London, Oxford and Cambridge, there remain significant challenges in accessing the angel investment they need. At UK Business Angels Association we are therefore working with partners across the UK to build a much greater pool of angel investors in the wider regions, helping to grow capacity in existing angel groups and to identify and build new angel communities. We are also supporting the new Regional Angels Programme launched this year by British Business Bank bringing £100m co-investment funds to stimulate more angel investment across the regions.

A further key challenge that we all share and that has been reinforced by important research this year, is how to address the low level of women entrepreneurs who are accessing risk capital across the UK. We know that a diverse base of capital is needed if we are going to successfully tackle this issue. An important factor is the low proportion of women angel investors in our community and our recent research into the barriers and opportunities for women in angel investing revealed that 30-50% of the portfolio of most women investors consists of women-led businesses. Thus, we are proactively working to increase the number of women investors to enable many more women entrepreneurs to access the start-up finance they need.

We know that these inspiring businesses need access to an effective supply of risk capital to achieve their growth potential and we will continue to work with all key players in the year ahead to build a more effective and connected finance ecosystem.