Angel investment occupies a large percentage of the global early stage investment market and has become a primary choice for most entrepreneurs. The UK is no exception. Besides the usual gains, investors in the UK enjoy advantages like the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) which can offer qualifying investors tax relief of 30-50 %. It is estimated that £ 1.5 bn is invested per annum by angels. This is more than 3 times the venture capital (VC) invested in early stage UK businesses annually.
A recent study conducted by the British Business Bank and the UK Business Angels Association reveals some interesting insights. The typical business angel in the UK is male, white and most likely to be based in London. They normally have prior experience in investment of about 8 years with some part of it being professional. Their median initial investment is about £25,000. They are generally serial investors making follow up investments typically to the tune of £75,000. An angel investor in the UK also remains quite involved in the chosen business. The typical angel spends 1.6 days in a week in the chosen business and has shown to stay invested for an average period of 6 years.
Males dominate this investment sector and comprise 91% of the angel investor population. The WA4E female investor survey found that female angels are more likely to invest in female founders so there is no doubt that increasing the number of female investors will have a direct correlation on the number of female founded businesses.
Like gender diversity, ethnic diversity of UK business angels is quite weak and they only form 7 % of the investor population. This is surprising as a sizeable proportion of the ethnic minority population run their own businesses and tend to have an entrepreneurial streak.
Evidence from the United States suggests that individuals tend to invest in “people like them”. Our own experience of both investing as well as earlier managing Diversity initiatives in complex businesses shows that change is marginal unless there are ‘systemic ‘ programs addressing root cause issues. So there is no doubt that improving the number of female and ethnic minority investors is essential to a wider range of entrepreneurs benefiting from funding.
The London based HR Tech Partnership is an investment venture in the People Tech space with most of its stakeholders being senior corporate directors. The company is an early stage investor and focuses on startups which leverage data and analytics to help organizations around Talent and Workplace productivity. To know more about Crowdfunding and how the HR TECH Partnership works visit http://www.hrtechpartnership.com/