Angels banding together to beat the crunch
A band of global business angels is poised to hoist East of England entrepreneurs onto cloud nine by filling a massive funding void.
Billions of pounds are being raised by angel networks in Europe, North America and Asia to fund cutting edge innovation – and the East of England has a ticket to the inner circle of the party.
Much of the cash will filter through to tech tyros via informal networks. But in a new trend, some angel forums will also forge new funds with a pledge to top up seed capital with significant follow-on investments. Even the UK government and tax authorities have caught the spirit of enterprise. Business Weekly has been told that a number of Cambridge companies could be in line to draw on the biggest ever haul realised from the French wealth tax. The new French wealth tax relief year, allowing French entrepreneurs to invest profits in European tech companies rather than pay tax to the government, starts on May 31 and Sophia Angels have formed a new, bigger vehicle to raise up to €20 million. That compares to €6m last year. Cambridge entrepreneur Alan Barrell has sponsored four UK companies for €500k each – three of whom are based in the Cambridge area. And he says similar funds are being raised throughout France. Bedford based medical device specialist, Probe Scientific benefited last year from French angel funding and is in line for follow-on capital, Business Weekly understands. Professor Barrell and another serial Cambridge entrepreneur, Charles Cotton, are also in discussion with Anthony Clarke and Jenny Tooth of GLE Capital and London Business Angels to see if and how Cambridge Angels may participate in activities to leverage the additional funds being made available through the new East of England ERDF-supported Low Carbon Venture Capital Fund project. Multi-million pound angel-inspired funds are also dripping into global tech clusters via Canada, Asia and Europe. At home, the UK’s three tax-based Venture Capital Schemes (the Enterprise Investment Scheme (EIS); Venture Capital Trusts (VCTs) and the Corporate Venturing Scheme (CVS)), have each received formal state aid approval from the European Commission. This allows the Government to provide certainty to the venture capital industry, investors and small companies over the future of the schemes. These schemes remain a vital component of the Government’s strategy to support investment. The schemes have so far facilitated around £10 billion of investment, which has been invested in over 15,000 companies. Exchequer Secretary, Angela Eagle MP, said: “This is excellent news for the venture capital industry, particularly at this challenging time. “State aid approval of the three venture capital schemes allows the Government to provide certainty over the future of the schemes. “The Government is confident that they will continue to encourage substantial investment into small companies which is vital to our economic recovery.” Professor Barrell said: “There are many other proof of concept and follow-on funds being launched with gusto across the globe into which local companies can tap. Anyone who thinks that early stage business is going down the toilet is being unimaginative. “The really encouraging aspect of the current scene is that we are now seeing cross-border angel activity. Angels in different countries are collaborating to fund the best technology out in the marketplace and that has to boost confidence of start-ups globally. “While we can chart billions of pounds of potential new funding from official angel networks there are lots of lone angels out there prepared to inject significant capital without the publicity.”