New £8m fund to attract investment by business angels
ANEW fund that aims to significantly boost the amount invested by business angels into growth firms in Wales has been launched.
The Welsh Government’s £8m Wales Angel Co-investment Fund, managed by the Development Bank of Wales, will seek match-funded investment from angel investors – providing financial firepower of at least £16m over the next five years.
The fund will be looking to invest £25,000-£250,000 per deal – matchfunded by angels.
It comes as a new network for angel investors has also been established. Angels Invest Wales, a wholly-owned subsidiary of the Development Bank, will bring together syndicates and facilitate – not just with the support of the new fund – increased investment across Wales by angel investors, who are often successful entrepreneurs.
It is hoped the Wales Angel CoInvestment Fund will support up to 80 businesses and create and safeguard 375 jobs over the next five years.
The focus of Welsh angel activity has previously been managed through Xenos, the Wales Business Angel Network.
As a highly mobile source of capital, angel investment is often driven by environment and return as opposed to specific business sectors or locations. The Development Bank estimates business angels coinvested more than £4m alongside them during 2017-18.
Economy Secretary Ken Skates said: “I am pleased to launch the Development Bank’s new business angel network, along with the new £8m Wales Angel Co-investment Fund, which will be an important and valuable addition to our business and wider entrepreneurial support system in Wales.
“The network will work to match Welsh entrepreneurs seeking finance and expertise, with business angels and syndicates who are actively seeking to invest in the brightest and best opportunities Wales has to offer. It is an approach that is endorsed by the BeTheSpark initiative and one that is internationally recognised as supporting economic growth in a way we know can make a huge difference to the survival chances of businesses.
“I am committed to ensuring that our SMEs have the access to finance they need to enable them to start up, strengthen and grow – and as set out in our Economic Action Plan, the Development Bank of Wales, working in parallel with Business Wales, is right at the centre of our work to deliver this.”
It is estimated that £1.5bn is invested annually in the UK by angels, with around 18,000 active angel investors.
Development Bank of Wales chief executive Giles Thorley said: “Business angels are increasingly being recognised around the world for their role in supporting economic development. Indeed, Scotland has a particularly active angel community led by LINC Scotland and there are a number of networks around the country.
“The new fund will give Wales a competitive edge, enabling us to encourage angel investment and provide essential equity funding for ambitious start-up and growth companies in Wales. We’ll be investing between £25,000 and £250,000 on a match-funding basis at a minimum of 1:1 alongside a support programme that ensures business needs are being met.
“Business angels typically come with a wealth of experience, having successfully operated their own businesses or have been part of a successful management team. These skills are then shared with the businesses themselves through management advice, mentoring and networking. This is the key differentiator which increases the chances of angel investments being successful, as many early-stage businesses will have inexperienced management teams.”
Professor Dylan Jones-Evans, whose review for the Welsh Government highlighted a lack of angel investor activity in Wales compared to other parts of the UK, said: “With 58 new investors signed up, this promises to address the poor record of its predecessor Xenos in supporting funding within early-stage firms in Wales. Certainly, this initiative is long overdue and we can only hope that it will close the business angel funding gap with the rest of the UK and help the entrepreneurial talent we know exists across Wales to grow their businesses.”
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