The UK Business Angels Association discusses the problems facing the UK’s SMEs and how the rise of syndicate investing allows sector alumni to help today’s entrepreneurs.
We live in uncertain times, and uncertainty is one of the most difficult things for businesses to deal with, precisely because it is impossible to know what exactly to prepare for.
The amount invested by SMEs in their own business fell each quarter in 2018 from £103,648 in Q1 2018 to £68,697 in Q4 2018, leaving an investment gap of £34,951.
The number of small businesses with rising sales fell from 39% to 35% in 2018.
Equity investment into start-up and scale-up businesses in 2018 fell by almost 19% on 2017.
The overall number of deals also fell by nearly 10%, from 1,744 to 1,572.
In a period of immense political upheaval, the experience and guidance that angel investors can provide – alongside funding – will be of the utmost importance.
Entrepreneurs often rely on the guidance of people who have experience in running and building a business. This guidance is of just as much importance as investment and funding. The combination of the two – known as angel investors – can be hugely beneficial to the businesses that they are involved with. These investors are sector alumni who can bring with them a wealth of experience in a range of different industries, which is vitally important to young businesses. Entrepreneurs are now increasingly taking advantage of angel syndicates – groups of angel investors formed to provide larger amounts of funding – to maximise the amount, and range, of expertise and contacts.
The average individual angel investment is around £25,000 with syndicates providing – on average – around £190,000.
Angel syndicates encourage a pack mentality in investment; with lead angels championing SME investment and creating an environment where myriad skills combine to provide not only financial support but invaluable sectorial experience for a community of entrepreneurs who need it now more than ever. This is one of the best ways in which to tackle the uncertainty that is currently plaguing British businesses.