Fintech is the most lucrative sector for angel investment

By Nicole Miskelly | 30 January 2015

According to the Nation of Angels study by the UK Business Angels Association Fund and Centre for Entrepreneurs, financial technology is delivering the highest growth out of any industry and is the most lucrative sector for angel investment.

The study, which is also supported by the BVCA, Deliotte, Barclays and ESRC, features survey responses from 403 individual business angels and data from angel syndicates and networks of 8,000 individual investors.

The report, which helps to better understand the impact of angel investment both in the marketplace and the economy, shows that 28 per cent of fintech investments are exceeding expectations and are beating food, property, drink and transport companies two-fold.

The study results show that 24 per cent of financial services ventures are delivering high growth and there has been a rise in the median number of investments per angel which is up from 2.5 in 2009 to five.

70 per cent of angel investors are investing in technology-intensive businesses which include those in the financial technology, biotech and mobile and telecoms sectors. The consumer electronics sector is listed as the most reliable investment sector overall, with only 5 per cent of these investments reported as having lost value.

The study also found that early-stage investors are getting younger, 44 per cent are under-45 years old compared to the median age of 53 reported in 2008. Almost three quarters of investors are now under-54 and 16 per cent are under-35 years old.

The research shows that the number of women angels in the UK is also rising and is up from 7 per cent in earlier to research to 14 per cent in recent years, but still lags behind the US where 20 per cent of angels are female. Women were also found to be less likely to report ‘no growth’ in their investments.

The study also highlights the recent success of crowdfunding and investment opportunities in small businesses. Results show that almost 45 per cent of angels investing in crowdfunding platforms and a huge 75 per cent are re-investing their gains in small businesses.

Nine out of ten angels have used the Government Enterprise Investment Scheme or Seed Enterprise Investment Scheme (SEIS), to invest in young companies and according to the Telegraph a separate study by private equity firm Radius Equity shows that business start-ups raised £83.7m of seed funding through SEIS in 2012-2013.

Nation of Angels is the biggest survey of business angels in the UK and shows that as a result of the development in technology and increased support, UK angels are making more investments than ever before.

 

By Nicole Miskelly, bobsguide Lead Journalist

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