7,500 BA in Germany 4,300 BA in France
Concentrated or decentralized geographical distribution
In France, the few richest regions concentrate most Business Angels with a strong concentration on Paris and the Parisian region. While in Germany, there is a very good regional distribution of Business Angels in all the Länder of the West, moreover many more than in France (7,500 in Germany against 4,300 in France)(3).
A small country like the Netherlands totals 3200 BA and finances more than 200 million € per year.
BAs are mainly located in the richest regions. 76% of BAs are in Northern Italy, for example.
What are their selection criteria?
The main BA selection criteria is the high capacity to increase the value of the start-up’s shares in a short time (2 years).
The BAs finance already existing young companies that prove their ability to significantly increase their turnover and generate a high profitability by relying on a new service, a new product or patents and thus having the necessary attractiveness to interest a large company or the ability to make a good IPO in a short time (ideally 2 years).
Only innovations applicable to a market can appeal to BAs. Thus, the most invested sectors are ICT (Information and Communication Technologies) (43% in Austria, 48% in France), but all industrial sectors can be covered.
The BAs receive a lot of projects, they do not present much to their investors who themselves are not all financed. The Austrian network ABAN receives about 50 projects every year, selects 60 and only about 20 get BA funding. In Belgium, the 400 Bas receive 750 projects per year and so 40-50 deals annually for a total amount of around €10 million. A small country like the Netherlands totals 3200 BA and finances more than 200 million € per year.
Among Business Angels, if they receive 1000 projects per year, they will select 400 and they will audition alone for 10 minutes to select only 160 and present to investors 40 to 50 projects for 30 minutes which themselves will only find funding for 20 to 30 startups.
How governments support BA?
Public sector can set up a BA network as it did in Austria (ABAN)(4), in Germany (BAND) (5), in the Netherlands (BAN)(6). It can also favor BA investments by tax deductions as in France (2007 TEPA law on wealth tax –ISF), in Italy or in United Kingdom (“70% of the overall investment is covered by the government through tax breaks”)(7). The public authorities can also set up grants and co-investment funds (in Germany HTGF, ERP Startfonds, EAF, in the Netherlands Seed, in France recently Angel Source ..).
Crowdfunding, new BA tendancy ?
Many BA are involved in crowdfunded platforms. In the United Kingdom, 23% of angels invested by the crowdfunding platforms.
Those investors are younger profile of BA (in the UK, 74% are between 25 and 54 years old, half less 45years old).
What future for BAs?
In the context of the depletion of resources, the reduction of the labor factor in relation to capital and therefore of work-related wages, the aging of the population, there is a risk of lasting impoverishment of part of the population of the Triad countries (Western Europe, North America, Japan) and elsewhere in the short and medium term.
Thus, BAs do not favor sustainable development entrepreneurs because these projects are less profitable, require long-term investments and the consideration of societal and not just financial objectives.
At the same time, the public overindebtedness of these same countries of the Triad and the high risk taking of entrepreneurial projects make BAs an indispensable tool for the development of the 4th industrial revolution.
It would require a new generation of BAs that would integrate societal projects if investors or Public policy make them a conditional goal. It would be beneficial social criteria for consumers (health, energy saving ...) or employees (number of jobs created, quality of jobs, working conditions and wages ...), environmental criteria (sustainable development, preservation of resources, low level of pollution, ...) or research (space, ...) or culture (multicultural dimension, peaceful philosophy..).