Recent data published suggests that the Scottish angel investment scene is poised for its biggest year ever. According to figures from LINC Scotland, the Scottish Angel Capital Association and as published in Business Insider, Scottish angel investors are set to exceed the record annual level of investment during 2021.
According to LINC's research, during the first six months of 2021, Scottish angels (in conjunction with public sector funding, including Scottish Enterprise's Scottish Co-Investment Fund) have led investments totalling £70.2m. The previous annual record of £87.5m was set in 2019 but 2021 looks set to surpass this once the figures for the second half of the year are included. The amount invested in each deal has also increased with the average deal size of £418,000 between January and June 2021 exceeding the prior record average of £359,000 per deal set in 2018.
One observation made regarding the Scottish angel investment market is that a considerable proportion of deals are carried out through angel syndicates. This contrasts with more common practice in other parts of the UK where angel investments are more frequently carried by individual angels who are not necessarily part of an established syndicate.
While the figures in Scotland are encouraging, the number of active angels remains relatively modest when compared to London and the South East. According to the British Business Bank's Angels Market 2020 report, 56.6% of business angels are based in London and South East while only 5.5% are located in Scotland. That said, there remains a very healthy angel investment ecosystem in Scotland offering crucial support to emerging technologies.
At a time of uncertainty when many businesses and sectors are struggling, it is encouraging to see the renewed appetite of angels in Scotland to identify opportunities and then back the most innovative and promising companies with the necessary capital to fund their growth. 2021 is set to be a bumper year in this space and hopefully this trend continues into next year and beyond.
Morton Fraser has an experienced team of corporate lawyers in Edinburgh and Glasgow who advise both investors and companies on a wide range of equity investments and corporate transactions. Please do get in touch should you wish to discuss any of these matters.
Stephen Clark, Senior Associate - stephen.clark@morton-fraser.com or call 0131 247 1344
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