In the final three months of 2020, angel syndicate members of Linc Scotland, the business angel association, invested more than double the amount posted in quarter three.
This brought total investment by the syndicates for the year to £25 million, not far off the £26.9m reached in 2019, which was a record year.
In the early months of 2020 angel investment continued at high levels, but as lockdown started to have an impact, investors focused upon helping their portfolio companies to survive, and overall investment levels dipped, Linc noted.
The angel syndicates co-invest with several other types of investor. Although the numbers of deals in which institutional and other private investors participated stayed the same from 2019 to 2020 (66 deals), the amount invested dropped by 23 per cent.
The size of investments by venture capital funds and other institutional investors has varied widely. In 2019 these investors made ten investments of over £1m each, totalling £31m, whereas in 2020 only seven investments in excess of £1m were made, totalling £18m.
Co-investment by funds managed by Scottish Enterprise have also been a major component of deals led by Linc angel syndicates, accounting for about a quarter of total deal sizes (23 per cent in 2019 and 26 per cent in 2020).
David Grahame, director of Linc Scotland, said: “Linc member syndicates started 2020 with the impetus of record investment in the previous quarter, and this high level of activity was initially maintained.
“The coronavirus changed everything, but the syndicates were able to keep investing, supporting portfolio companies to an extent which was beyond initial fears and expectations.
“Investment in new companies suffered a little while the focus was on those needing immediate help, but it is very gratifying to see the syndicates once more engaging with and investing in new companies, and maintaining the pipeline of ventures which are essential to the future of Scotland’s economy.”
Following the decline in investment in new companies in the middle of 2020, in the fourth quarter new companies represented 42 per cent of all deals and 61 per cent of all investment.