Asking a business team to consider an “exit strategy” before they’ve proven that their business idea works can lead to wishful thinking, with less foundation than the high growth sales forecast that precedes it. Here are six reasons why many companies and investors are wary of “exit expectations”; high growth start-ups take note – forewarned is forearmed.
The latest report on Angel Activity in the UK is a massive 102 pages in length. It’s a good read and it’s “crunchy”. That is, comments are backed up by real deal data, a survey of angels and scaling up from known investments to estimate the market size in the UK. This week I present a quick synopsis of the report. Lots of facts, question is, what to make of them? This is your chance to make a comment before I write another blog.
Colin Mason (University of Strathclyde) and Richard Harrison (Queen’s University Belfast) have just completed their 102 page annual report on the Business Angel Market in the UK 2008/09. Here is a quick summary of facts for 20 of the 24 networks who are members of the British Business Angels Association:
|Number businesses receiving funding||233|
|Average number investors||2.5|
|Mean per investor per deal||£77,053|
|UK Investment 2008/09||£63.8M|
|Total business plans received||8,685|
|Companies presented to investors||824|
|Sole investors (England)||58% of deals|
|Investments with >3 investors (England)||30% of deals|
|Deals greater than £500K||8%|
|First round deals||32% of total|
|Change in angel activity since previous year||30%-40% lower|
|EIS activity (from HMRC)||25%-30% lower|
|Investments using EIS||76%|
Mason & Harrison have also put together some figures estimating the overall Angel Market in the UK and contrasted them with a decade ago:
|Number of networks||48||24|
I’ve picked a few “one liners” from the report as well:
- Significant contribution: “business angels are making a significant contribution to the development of entrepreneurial ventures in the UK.”
- Implications for Regional Networks: “Although the large national networks represent a minority of all networks they dominate in terms of numbers of registered investors, number of business plans received, investments and amount invested.”
- Early stage: “Investments by business angels … largely concentrated at the start-up and early stage/early growth stages (69%)”.
- Investee Business Size: “Justover half of the investee businesses of BBAA investors have fewer than five employees and 87% have 10 or fewer employees.”
- Technology Businesses: “angel investing has a strong focus on technology businesses.”