Dragons Fired Up Over Start-Up Investment Prospects

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Business dragons have seen turnover and jobs grow in their investment portfolios, according to a new report.

Turnover was up for 75% of businesses, while more jobs were created by 80% of their investments.

Nine out of 10 of the dragons invested through the Enterprise Investment Scheme or Seed Enterprise Investment Scheme.

But the survey by the British Business Bank and the UK Business Angels Association (UKBAA) expressed some disappointment that investment was concentrated on London and the South East, with the capital attracting 47% of all deals in 2016.

Keith Morgan, chief executive of British Business Bank, said: “British Business Bank research shows that angel investment is up, but the UK’s small businesses still suffer from an equity gap outside of the capital.

£2.5 billion boost for businesses

“We are working on plans to support business angels across the UK and ensure smaller businesses can access the finance they need to grow and succeed, wherever they are in the country.”

Chancellor Phillip Hammond boosted funding for small businesses in his Autumn Statement – giving the British Business Bank an extra £2.5 billion to add to £13 billion already loaned out.

“The Budget also called on us to support developing clusters of business angels outside London,” said Morgan.

“In the regions, we are already responsible for funds supporting £650m of finance for the Northern Powerhouse and Midlands Engine areas, and will shortly be launching a similar fund for Cornwall and Isles of Scilly.”

The UKBAA also confirmed that more funding was available for deals in the regions rather than London.

Breaking out of the golden triangle

CEO Jenny Tooth said: “Angel Investment is a vital source of finance for early stage businesses and it is very encouraging that this latest research shows that Angels have invested even more in small businesses in 2016 than the previous year.

“Yet the research shows that there remains a considerable challenge for entrepreneurs to access this source of investment outside the golden triangle – and so we are pleased that the British Business Bank has been given this new mandate to leverage further angel investment in the regions”.

The golden triangle lies between London, Cambridge and Oxford, where many technology-based start-up businesses are based.

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