An angel investor refers to an individual investor in high-growth businesses, who is usually but not always a high net worth individual. An angel investment network meanwhile is an official collection of angel investors, who share introductions to companies and often syndicate their funds into a single pot and make joint investments. They are a looser, more personal alternative to a venture capital fund, with financial backing coming from a network of individuals as opposed to large institutional or corporate investors.
The top 10 uk angel networks*
*Based on equity finance deals since 2011, where the investors have been publicly announced in the press, or where they’ve privately disclosed their activity to Beauhurst. A significant number of investors do not announce their activity. These figures should be taken as indicators only.
An angel network can be an important source of funding to entrepreneurs and startups, either as an alternative to or in conjunction with traditional VCs. Indeed, a significant number of HNWIs have made their money through exiting on their own startups, meaning they can act as an invaluable source of experience and advice to their investees.
Some basic similarities exist between angel network and venture capital funds. JamJar Investments, for example, is the fund set up in 2013 by the founders of Innocent Drinks, following their sale of the company to Coca Cola in 2010. Prior to this, they had invested in companies together as angels. In this sense, JamJar started out like a very small angel network for three wealthy individuals.
Angel network or crowdfunding platform?
Comparisons can also be drawn between crowdfunding platforms such as Crowdcube and Seedrs, in that both syndicate capital from individual investors into a single investment. Experienced angel investors frequently use these platforms to purchase equity in young startups. However, angel networks are semi-permanent, usually an exclusive collection of investors who regularly invest together. To join an angel network is also more difficult than joining a crowdfunding platform – generally, you will require either significant wealth or significant investment experience.
SyndicateRoom’s crowdfunding model sits somewhere between the two, letting the crowd invest alongside more established business angels.
Angel networks and the local economy
“what’s perhaps the most remarkable feature of Cambridge’s growth is that it’s been achieved without dosh borrowed from or invested by those running the City of London, 57.8 miles due south. Indeed, the reverse may be true: much of Cambridge’s phenomenal success over the last 40 years is due to the fact that the brilliant academics, who have come up with ground-breaking ideas from Concorde’s droop nose to Bluetooth, have banded together with like-minded backers and business angels to find – and fund – their own eco-system.”
This is certainly borne out by our data. One of the UK’s 10 most publicly active angel networks is located in Cambridge – Cambridge Angels. Cambridge Capital Group are also very active in the city’s investment scene, and have participated in 32 publicly announced deals since 2011. Scotland’s Archangels, Equity Gap, and Kelvin Capital have also been very active in Glasgow and Edinburgh.