During the first few months of 2022 there has been a significant shift as a large number of people in the UK resigned from their jobs. They are doing this at the highest rate for more than a decade. At the same time more people are considering becoming angels and investing in startups.
Let’s look at why these are connected.
After the pandemic, more of us want to feel empowered by our work. By deciding to become an angel investor, you’ll spend your money and time helping to grow businesses that you find inspiring.
Research we conducted over 2021/22 analysed the portfolios of nearly 50 experienced angel investors. They were required to have invested a minimum of £250k in at least 5 companies over a ten-year period. The study found a weighted average Internal Rate of Return (IRR) of 14.7%.
Other findings were that 89% of respondents showed a net gain; 11% of respondents showed a net loss and 173 of the businesses had exited while 368 had failed and 1,119 were still in play.
As an active angel myself I find the results of the report enlightening. Angel investing is known for being high risk, but what the study clearly shows is that it can be very lucrative.
Furthermore, under the HMRC’s Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), angel investors receive income tax relief of 30-50% on funds invested in startups and early-stage businesses.
Having an Impact
As an angel investor you can make a real difference to your chosen startups, and not just with cash. Typically, angels are evangelists for the businesses they support, and can provide advice and strategic direction by sitting as a non-executive director, advisor, or acting as a champion.
Joining a Community
Leaving a job may mean that you’re making fewer connections with new people. However, many investors join angel networks to find their next opportunity, and also meet like-minded people, both other investors and enthusiastic entrepreneurs. As well as this, investors joining a network benefit from deal flow, support with due diligence and opportunities to participate in larger deals through syndication.
To minimise risk, working with an angel network listed on the Financial Conduct Authority (FCA) register is recommended.
Benefiting from Flexibility
After the pandemic, many people are looking at flexible working options. Especially using digital platforms, you can be a nomadic angel and work from anywhere.
Ultimately, if you’re one of the 500,000 people in the UK who qualify as a ‘High Net Worth Individual’, and are looking for more empowerment, impact, community and flexibility, it is a good time to look into becoming an angel investor.