Angels shore up venture market

FEWER firms seeking venture capital in the North were successful in raising capital than in the south of England, and those that were received smaller amounts, according to a survey.

UK Funders found that just 28 early-stage (sub-£10m) investments were made during 2011, compared with 31 in Scotland and 80 in London. The North West was one of the more active regions, however – significantly ahead of Yorkshire (10 deals), Wales (10) and the West Midlands (4).

The average value of each investment stood at just £1.4m, however – significantly lower than the average of £4.1m in the East of England and £2.7m in London.

The survey also found that fewer sub-£500,000 deals were carried out as institutional investors shied away from earlier-stage (and more risky ventures).

“Alternatively, it may be that this lower end of the market is being increasingly occupied by individual angel investors as opposed to early-stage institutional investors.

“Certainly, anecdotal evidence suggests that, thanks to low returns from other asset classes, high-risk high-reward (and tax efficient) early-stage investment looks increasingly attractive to many high net worth individuals.”