Business angels

Business angels are conventionally defined as high net worth individuals who invest their own money, along with their time and expertise, directly in unquoted companies in which they have no family connection, in the hope of financial gain. The term angel was coined by Broadway insiders in the early 1900s to describe wealthy theatre-goers who made high risk investments in theatrical productions. Angels invested in these shows primarily for the privilege of rubbing shoulders with the theatre personalities that they admired. The term business angel was given to those individuals who perform essentially the same function in a business context (Benjamin and Margulis, 2000: 5). There is a long tradition of angel investing in businesses (Sohl, 2003). Moreover, angel investing is now an international phenomenon, found in all developed economies and now diffusing to emerging economies such as China (Lui Tingchi, and Chen Po Chang,, 2007). However, it has only attracted the attention of researchers since the 1980s

Business angel investing

Business angels are conventionally defined as high net worth individuals who invest their own money, along with their time and expertise, directly in unquoted companies in which they have no family connection, in the hope of financial gain. The term angel was coined by Broadway insiders in the early 1900s to describe wealthy theatre-goers who made high risk investments in theatrical productions. Angels invested in these shows primarily for the privilege of rubbing shoulders with the theatre personalities that they admired. The term business angel was given to those individuals who perform essentially the same function in a business context (Benjamin and Margulis, 2000: 5). There is a long tradition of angel investing in businesses (Sohl, 2003). Moreover, angel investing is now an international phenomenon, found in all developed economies and now diffusing to emerging economies such as China (Lui Tingchi, and Chen Po Chang,, 2007). However, it has only attracted the attention of researchers since the 1980s

Shifting sands: the changing nature of the early stage venture capital market in the UK

The UK early-stage venture capital market is currently experiencing major changes. With private funds - once the bedrock of start-up investment for entrepreneurs - moving away from the early stage, it is not just entrepreneurs but the economy as a whole that will be affected. The shift comes at a time when there is real pressure for the UK to build great global companies to match those of the US, India and China as well as a harsher environment in which to start a new business. But as long as investors continue drifting away from the smaller deals that new firms depend upon, many businesses will struggle to get a foothold

The anatomy of high growth firms in Scotland

There is a growing volume of scholarly evidence from various countries which points to high growth firms (HGFs) as a key force fuelling economic growth. These businesses are typically highly dynamic enterprises which undertake very rapid growth, generating substantial levels of turnover and employment growth over relatively short periods of time (BERR, 2009; Anyadike-Danes et al, 2009; Mason et al, 2009; Henrekson and Johnannson, 2010)

High Growth Firms in Scotland

High growth firms (HGFs) are widely thought to be a key force driving economic growth in modern advanced economies (Acs et al, 2008; BERR, 2008; Henrekson and Johansson, 2010). One of the central aims of the current economic strategy of the Scottish Government is to provide responsive and focused enterprise support to increase the number of highly successful, competitive businesses (Scottish Government, 2007). Hence, for the past decade there have been a number of policy initiatives designed to stimulate high growth entrepreneurship in Scotland. Many of these policies have had a strong technology focus. Given the importance these firms have for a region’s economic growth potential and the policy attention they are beginning to receive, it was felt to be important that Scottish Enterprise develops a deeper understanding of these important generators of wealth creation in the Scottish economy. This report examines HGFs in Scotland from both quantitative and qualitative perspectives

Business begins at home

One of the most significant trends in the post-industrial era has been for the home to become an important focus for work. The boundaries between work and home are now increasingly blurred, reversing the forces of the industrial era in which places deemed suitable for each were clearly demarcated and physically separate. The most recent published figures available from the Labour Force Survey (2005)1 indicate that 3.1m people now work mainly from home, 11% of the workforce. This represents a rise from 2.3m in 1997 (9% of the workforce), a 35% increase. The majority of homeworkers (2.4m or 77% of the total) are 'teleworkers' – people who use computers and telecommunications to work at home. The number of teleworkers has increased by 1.5m between 1997 and 2005, a 166% increase. Clearly, it is the growth in the number of teleworkers which is driving the increase in homeworking

Backing the horse or the jockey? Due diligence, agency costs, information and the evaluation of risk by business angel investors

This paper explores the argument that business angel investors are more concerned with managing and minimising agency risk than market risk. Based on data on the due diligence process from a survey of business angels in the UK, the paper concludes that business angels do view entrepreneur characteristics and experience as having the greatest impact on the perceived riskiness of an investment opportunity. Further, they emphasise personal and informal over formal sources of information in the due diligence process, and seek information on both the entrepreneur and the venture in determining valuation. Indeed, the reliance of business angels on short-term and subjective information to value investment opportunities leads to the conclusion that their approach to valuation is not a function of the conventional protocols of financial analysis, but of personal relations and assessment

The City's role in providing for the public equity financing needs of UK SMEs

The City of London recognises the important contribution made by small and medium sized enterprises (SMEs) to the UK economy and the critical role played by UK financial services in providing equity finance to facilitate their growth. As a result the City of London has commissioned research to assess the role and contribution made by UK financial services in terms of supporting the provision of and access to equity finance for UK SMEs. This commission is timely given the Government’s concerns over gaps in the SME funding escalator and the recent economic downturn, which has led to a withdrawal of venture capital funds and a loss of investor confidence