Cross-Border Business Blog

Posted by Grainne Lennon on August 17, 2016

There is no such thing as an ‘average’ Business Angel – or is there?

InterTradeIreland has just published a unique all island report into the Business Angel investor market- “Funding for growth: The Business Angels Market on the Island of Ireland”.

InterTradeIreland has just published a unique all island report into the Business Angel investor market- “Funding for growth: The Business Angels Market on the Island of Ireland”. Drawing on the views of over 100 individuals involved in Business Angel investing, the report suggested that the typical Business Angel is largely male (over 90%), and generally middle-aged, with over two-thirds of survey respondents aged 45-64.

Grainne Lennon, Operations Manager, InterTradeIreland said:

 “The high proportion in this age group is not unexpected. Business Angels need money that they can afford to risk, they also need business experience and know-how and the time to provide support to businesses in which they invest, which would realistically reflect those in mid/late-careers.

However, there is a growing trend in the UK towards more female Business Angels and an increasing number of younger Business Angels, observable in the USA, reflecting technology entrepreneurs ‘cashing-out’ at an early age. So far, these trends appear to be less pronounced on the island of Ireland. We’d like to see this trend towards diversifying the Business Angel talent pool replicated as future all-island syndicates develop”.  It is also worth noting that HBAN, the all-island business angel network, has facilitated the introduction of a number of Irish female business angels to the newly formed EBAN Rising Tide investment syndicate, a group of over 90 women from 25 countries which plans to invest €1m+ in early stage European companies.

Tax incentives

The report also shows that tax incentives are an important factor for many Business Angels when considering investing in this asset class. Almost half of the Business Angels surveyed reported that they would stop making Business Angel investing if all tax incentives were removed, and a third reported that they would scale back their investing. However, if the tax regime was more attractive the majority of Business Angels interviewed indicated that they would make investments of higher value.

Recommendations

The report sets out five strategic recommendations that should be made to improve the market for Business Angels investing on the island of Ireland. The recommendations are listed below:

  1. Increase the profile and policy-leverage of Business Angel investing amongst key decision makers across the island of Ireland, placing it at the core of enterprise and economic development thinking.
  2. Enhance the scale, and improve the functioning, of the cross border Business Angel market on the island of Ireland, with a view to raising the number of Business Angels that consider actively investing in the neighbouring jurisdiction.
  3. Broaden and deepen the pool of ‘active’ Business Angels on the island of Ireland, leading to more individuals becoming Business Angels, and a more diverse cohort of Business Angels.
  4. Enhance the capacity and support to those groups both providing and seeking Business Angel investment, leading to a more mature, sophisticated, and efficient market.
  5. Develop the underpinning infrastructure for Business Angel investing, including the evidence base on market activity, the technology platform, and the ‘event diary’.

 

Worth noting is that unlike bank lending and venture capital, Business Angel investing levels held firm in the immediate aftermath of the global financial crisis. With Business Angel investment on the island currently estimated to be worth between €70 million and €120 million annually, they are an important source of financing for SMEs and should be at the core of enterprise and economic development thinking.

Download a full copy of the report.


Gráinne is an Operations Manager in InterTradeIreland with responsibility for the Succeed in Raising Finance programme.  The programme provides supports to early stage companies seeking to raise venture capital and business angel investment and supports for more established SMEs seeking new funding from traditional and alternative funding sources.

Gráinne is a chartered accountant with a background in public and private sector finance.  She has a wide range of experience gained from working in an executive capacity with a number of SME’s across the island.  Her skills stretch from business planning to raising finance and financial control.  She has worked with early stage/start up businesses and more established ventures.


Coming next: Marketing on a shoestring budget by Dwayne Stewart