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Why angels dare to tread

The British Business Angels Association (BBAA) http://www.bbaa.org.uk/ is the national trade association dedicated to promoting angel investing and supporting early stage investment in the UK. BBAA works to create an ecosystem to help support the industry through bringing together angel networks, private investors, early stage funds and professional advisors and represents almost 100 organisations including the vast majority of business angel networks across the UK, over 20 early stage venture capital funds, professional service providers and advisers and business angel investors.

Data from the BBAA survey of its member networks show that those networks that were active in 2009/10 had 4,555 member angels at the end of the year. This compares with 5,548 member angels reported by networks in 2008/09.

The networks received 9,640 business plans in 2009/10. This was an increase of 955 (+11%) on the 2008/09 figure. The networks put forward just 764 businesses to their investors, just 8% of the business plans received. This is 60 fewer businesses than were presented to investors in 2008/09 when 9.5% of received plans were put forward. There were 238 businesses which raised finance from these networks, a marginal increase on the 2008/09 number (+2%). These companies raised £42.3m through from angel investors in 2009/10 compared with £44.9m in 2008/09, a decline of £2.6m (-6%).

The British Private Equity and Venture Capital Association (BVCA) http://www.bvca.co.uk/home is the industry body for the UK private equity and venture capital industry. The BVCA has over 450 member firms, representing the overwhelming number of UK-based private equity and venture capital firms and their advisers.

Colin Ellis, Head of Research at BVCA, said: “Business angels are a vital source of finance for many new and exciting businesses. Today’s research provides some of the hard facts that are needed to understand the impact and influence that angels have, and the vital contribution that they can make to the broader economy as the public spending cuts really start to bite.”

The June 2010 budget announced a set of changes to existing tax-based Venture Capital Schemes (including EIS) and Enterprise Management Incentives ensuring State Aid compliance. These have made the venture capital schemes, including EIS and VCTs, more flexible by relaxing limitations on where target companies can carry out their activities and where VCTs can be listed. A full impact assessment of these changes, which the Government expects could eventually provide an additional £40m of tax relief to investors per annum, can be found on the HMRC website: http://www.hmrc.gov.uk/budget2010/vent-cap-ent-man-ia-2540.pdf


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