Despite current global uncertainty, angel investors remain extremely active in the start-up funding space, overtaking crowdfunding in terms of the numbers of deals both groups have funded this year.
Venture capital and private equity firms remain the biggest investors in the UK, with 730 deals in H1, but business angels were also involved in a record number of rounds during this half, with 353 business angel-led deals secured.
This impressive number overtook crowdfunding and represents a significant part of the early-stage investment landscape.
An angel is a person, who is usually (but not always) a high-net-worth individual, who invests in early-stage, high-growth unlisted companies.
As opposed to private equity or venture capital funds, where financial backing comes from large institutional or corporate investors, angel investing is personally driven by an individual investor or a group of investors who form part of an angel syndicate network.
And in good news for the sector, the UK business angel market is stepping up, to the benefit of the large numbers of high-growth companies that await these primordial fundings for their futures.
Traditionally, business angels have a strong interest in investing in early-stage businesses which possess high-potential IP, based on the development of new technology.
Not surprisingly, between 2011 and 2021, 45% of businesses fundraised by angels were at the seed stage, 46% at the venture stage, whereas only 8% were at the growth stage and 2% established.
Between 2011 and 2021, 2,046 UK company fundraises that involved funds from angels were tracked, worth a total investment value of a staggering £2.31B.
There was a high activity spike in 2019, with 241 deals, and a slight drop to 218 deals in 2020 certainly due to Covid-19.
Yet angel investment activity saw a strong recovery in 2021, with angels involved in 228 deals last year.
Out of 1,276 companies that received investment from angel networks during this time, 9% (115) have exited the private market – roughly meeting the 1 in 10 criteria that angels have traditionally sought.