Background on Angel Investment

Angel Investors use their own spare financial capacity to make investment in small businesses, generally at the start-up or early stage of development. They usually take shares in return for providing equity finance and  seek to use their own experience and contacts to support the growth of the business. Angel investors can invest on their own, but frequently choose to invest in syndicates, enabling them to pool their finance and knowledge, where they can take the lead or a more passive role. Angel investing is the most significant source of investment in start up and early stage businesses seeking equity to grow their business. 

Whilst the market is relatively difficult to calculate since many Business Angels are investing privately, an estimated £850m per annum is invested by angels annually in the UK. This is more than 2.5x the amount of Venture Capital invested in early stage small businesses annually. Whilst it is also estimated that there about 18,000 angel investors around the country, many indivdiuals are still not  aware of this asset class and there is a need for more individuals to become Business Angels to use their finance and experience to support the growth of small businesses.Click here for more information on the Angel Market. 

Angel investing in the UK is taking place in different ways. Whilst many investors still prefer to invest on their own, there is a growing trend towards investing in groups and forming structured or unstructured syndicates, enabling investors to pool their finance and their knowledge when making investments. There are also a number of Angel networks operating around the country, some operating nationally and some operating regionally, many of these are members of UK Business Angels Association, and bring together between 50 and 500 investors.  Angels are also working alongside Accelerators, Incubators and investing with VCs and Co-Investment Funds. Click here to access our searchable member directory.

As an individual angel under the FSA Financial Promotions Order you are entitled to receive business plans and make investments through your own decision, provided that you are able to certify yourself as either a High Net Worth Individual or a Sophisticated Investor.

A Certified high net worth individual:

You confirm that you either

• have a net income in excess of £100K or
• have net assets in excess of £250K beyond your pension fund assets and your private residence

or:

A Certified sophisticated investor:

You confirm that have been one of the following

• A Director of a company turning over at least £1 million within the last two years
• Have made more than one investment in an unlisted company in the last two years
• A member of a network or syndicate of business angels for at least six months
• Have worked in the past two years in a professional capacity in the private equity sector or in the provision of finance for small and medium enterprises

Click here to access our Handbook on Technical and Regulatory Issues related to Angel Investing.

Click here to download the investor Self Certification forms.