The angel investment landscape, everything you need to know

by Startacus Admin

The angel investment landscape, everything you need to know. Angel Investment Network, founded in London in 2004, is the largest global platform to connect startups looking for funding with investors. Oliver Jones, their Head of Marketing, looks at the data from more than 100,000 businesses and 30,000 angel investors on its UK network. 

Despite an uncertain economic climate, the start-up ecosystem in the UK continues to perform thanks, in part, to the ever increasing popularity of angel investment. On the Angel Investment Network platform, we have observed some fascinating trends over the past year that entrepreneurs and investors will want to take note of.

Tech remains top

Technology and software remain the top sectors for both investor interest and number of pitches looking for funding. A growing number of startup businesses on our platform have some form of digital technology at the core of their value proposition.

The success of Fintech unicorns like Monzo and Revolut has inspired a surge of exciting innovation. Other promising startups coming onto the scene including: Coconut – a current account with inbuilt accounting; and Novastone – a version of ‘WhatsApp’ for the finance sector. Both of whom completed funding rounds through Angel Investment Network in the past 12 months.

While traditionally a lot of the innovation has centred on London, one very encouraging trend has been the spread of entrepreneurial activity with faster growth coming from outside London and the South East. Edinburgh is becoming well established as a power base for fintech expertise North of the Border. Indeed in the last year Scotland’s number of pitches grew by 56.8% to come seventh in the list of the UK’s nations and regions.

Out of fashion

But while the interest in tech seems set to surge, the picture remains more challenging for businesses with a physical presence. The challenges on the High Street are well reported in what has been a tough time in the past year. Fashion has been particularly hard hit. ‘Fashion’ as a sector has declined from the 6th to the 14th most popular sector for investors, the biggest fall of any category. Concern for sustainability is a huge issue, with the ‘fast fashion’ model feeling increasingly dated.

However some High Street based businesses are still attractive. We recently raised for high street Bakery ‘L’Oree’, one of the largest raises for a food business in AIN’s history.

It was of strong interest to our investors with its offering of a premium, authentic French Patisserie to a market. The locations are all London based and highlight London’s undisputed world leadership in food. Overall Food and beverage climbed from the 4th to the 2nd most backed category by investors. Meanwhile it is the third most popular category for pitch ideas.

Impact investment

Another area starting to show promise is ’impact investment’. Investor activity on the website has mirrored growing societal interest in ‘impact’ or ‘profit-with-purpose’. Investor searches for impact-related terms were up an average of 24.9% from 2017. The fastest growing sector was ’renewables’ saw a 25.4% increase in number of searches, ‘greentech’ climbed by 25.7%, meanwhile ‘environmental’ had a 23.5% increase.

Some of the companies who have benefited from this rising interest we have raised for include: Advanced Sustainable Developments, the first complete circular economy solution for food grade plastic recycling in the UK and the MENA region and Teysha technologies, a renewable and earth friendly plastic substitute, that can be turned into hundreds of short and long-term applications.

On the back of this interest from investors, we launched a spin-off platform, Seedtribe, with the mission of building a community of impact entrepreneurs and investors.

Whatever the political climate, the UK entrepreneurial environment is deep, profound and embedded in technology across a variety of industries in 2019. It is up to these investors to continue supporting the industry with capital, expertise and contacts as the lifeblood of the UK economy.

 

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Published on: 6th July 2019