PROFESSOR DYLAN JONES-EVANS

One of the major concerns from the tech sector when the Covid-19 pandemic hit was that the availability of funding into those businesses that can grow quickly in knowledge-based sectors would be dramatically curtailed as individual and institutional investors withdrew from the market. This was the main reason why the Chancellor of the Exchequer introduced the £500m Future Fund to provide government loans of £125,000 to £5 million to equity-funded UK-based companies which would then be matched by investors. Whilst this intervention would have been largely targeted at formal venture capital companies, very few informal individual investors would have directly benefited given the lower levels of funding they provide.  However, these business angels are critical to any economy as they often are the ones who will put up the money for high risk investments into new exciting companies that the banks tend to ignore. More importantly, the better angels not only invest money but often, as fo...

Research has shown that by far the most significant source of equity capital for high growth potential businesses are individual informal investors (or business angels). These are individuals who provide support for the formal venture capital sector by seeking out new entrepreneurs and nurturing them up to be investment-ready, thereby raising the number of start-ups and increasing the deal flow for venture capital companies. In this respect, business angels are widely recognized to play a key role in the first round of equity capital of ‘the funding escalator’ prior to entry by venture capital for a small proportion of companies. Indeed, contrary to popular myths about entrepreneurial finance, the vast majority of successful high growth potential businesses taking equity finance do not receive venture capital funding even in the most developed capital markets such as the USA. During the last few years, the UK has benefited from a number of policies that have provided incentiv...

I have been very fortunate in my career to work with some brilliant young academics who have gone to make a real impact in their field. One of these is Dr Niall Mackenzie , who joined the University of Wales from Cambridge University five years ago before leaving to go back home to a lectureship at the Hunter Centre for Entrepreneurship at Strathclyde University. Niall has been undertaking a number of research studies since he arrived back in Glasgow and possibly one of the most influential has been his analysis of the performance of Archangels, Scotland’s oldest business angel group . Business angels – those private individuals investing in unquoted companies - have received growing attention and recognition for their activities in the UK in the last 25 years. Their investments typically involve receiving equity that is reduced with further rounds of financing for investee companies. As would be expected with such transactions, angel investment involves a risk of failure but...

The entrepreneurial activity of a nation usually reflects its economic vitality. Certainly, a growing economy presents many opportunities for those wishing to make the plunge into being their own boss and the creation of a whole cadre of new entrepreneurial ventures can be the catalyst to driving forward economic growth. That is why the figures released earlier this week on the number of new businesses will have brought some measure of satisfaction to those running the UK economy. According to the latest data put together by Start-Up Britain, a record 581,173 new UK firms were registered with Companies House in 2014. This represents a growth of 8% in just 12 months and beats the previous high mark of 526,446 businesses recorded the previous year. Given the high levels of economic activity in the more prosperous parts of the economy, it is not surprising that the most enterprising regions of the UK are London and the South East of England, accounting for nearly 43% of all new firm...

An important part of the access to finance review was an examination of how other types of lending to SMEs in Wales can help close the finance gap that currently exists for some businesses.  There were several recommendations from the stage 1 review on non-bank sources of finance and a number of these issues are currently being examined by the Welsh Government - most notably that of trade credit. However, as this blog posting will show, there have been some further developments in the field of alternative sources of lending which is a significant factor given that banks continue to struggle to lend to SMEs in Wales and the rest of the UK. Trends in non-bank lending The first part of the report examined, in detail, the different types of alternative finance that is available to businesses in Wales. Six months later, the evidence suggests that whilst traditional bank lending continues to decline, there has been an increase in the level of non-bank lending to businesses across ...

For many small growing firms, individual informal investors play a vital role in supporting their development. These so-called ‘business angels” are defined as individuals, acting alone or in a formal or informal syndicate, who invest their own money directly in unquoted businesses in which there is no family connection in the hope of financial gain. They also, after making the investment, take an active involvement in the business either as a mentor, adviser or member of the board. They are therefore important additions to the funding market for early stage businesses and potentially, given the reluctance of banks to lend to such firms, have a critical role to play in ensuring a strong private sector-led recovery within the UK economy. Unfortunately, there is very little data available on business angels and their investments on a regional level. The best proxy for this, at least in terms of informal investment by individuals into SMEs, is the Enterprise Investment Scheme (EIS...