Scottish angel investment heads for record year after first-half rebound

Angel investment into fledgling Scottish businesses is on track for a record year despite the continued fallout from the pandemic.

New figures from Linc Scotland indicate that investment levels from Scotland’s business angel community are set for a bumper 12 months after a strong first half.

According to the national business angel association, angel investors led £70.24 million of investments – including co-funding from public sector bodies – in the first six months of 2021. This compares to £74.42m during the whole of 2020, when the Covid crisis had a significant impact on investor sentiment.

The level of investment so far in 2021 puts volumes on track to surpass the record annual total of £85.79m set in 2019.

Linc Scotland has 21 syndicates as members – with an estimated 2,000 investors – enabling the association to make larger investments than individual angels acting alone and to support companies with sizeable follow-on rounds. Picture: Jon Savage

With 48 deals between January and June 2021, the average investment value from Linc members is also at its highest level since investment volumes have been tracked, reaching £418,000 compared to the previous peak of £359,000 in 2018.

Companies supported by angel investors tend to be high-growth potential enterprises in the technology and life sciences sectors.

Business angels provide funding at higher risk stages of their development, typically when these businesses are pre-revenue and need financial support to develop a prototype, carry out trials, or secure pilot contracts.

David Grahame, executive director at Linc Scotland, said: “These figures already show a return to better than pre-pandemic levels and indicate the resilience of the Scottish business angel community.

“We see a strong willingness to invest in the future, with most of the funding going into high-potential technology focused businesses.”

Linc has 21 syndicates as members – with an estimated 2,000 investors – enabling the association to make larger investments than individual angels acting alone and to support companies with sizeable follow-on rounds.

The British Business Bank’s UK Business Angels Market 2020 report found that just 5.5 per cent of business angels are based in Scotland.

Ian Mitchelmore, senior manager, Scotland at the British Business Bank, said: “While investment levels by angels have historically been concentrated in London and the south east of England, angel funding has been very beneficial in supporting sectors important to Scotland.”

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