Foreign Investment Is Thriving, But Creating Structural Imbalance for the UK’s Economy

Foreign Investment Is Thriving, But Creating Structural Imbalance for the UK's Economy
Foreign Investment Is Thriving, But Creating Structural Imbalance for the UK’s Economy

As regional disparities in investment are increased, the UK Business Angels Association fly the flag for regionalised syndicates and hubs. Jenny Tooth OBE, CEO of the UK Business Angels Associations, discusses how angel hubs can galvanise entrepreneurs in British communities.

A new study provided by EY and the Centre For Towns has unveiled that whilst overseas investment in the UK’s 12 largest cities has skyrocketed over recent years, rising from 31% in 1997 to 59% last year, this has elevated the risk of “structural imbalances” occurring across the UK. Already alert to the problem of regional investment disparities, the UK Business Angels Association have been active in their mission to support SMEs in the regions.

According to an independent report by the UK 2070 commission, the UK is one of the most regionally unbalanced countries in the industrialised world and the disparities will widen unless the government adopts a radical programme of investment. For this reason, UKBAA has launched angel hubs in regional cities such as Belfast, Bristol, Cambridge, Leeds and Manchester. Currently, 51% of all equity investments in the UK take place in London. By encouraging regional investment, business angels are more willing to support their regional SMEs, with 69% of business angels investing in their home regions.

Jenny Tooth OBE, CEO of UKBAA, discusses why it is so important for angel hubs to galvanise the spirit of entrepreneurial dynamism in the regions:

“Entrepreneurs often rely on the guidance of people who have experience in running and building a business. This guidance is of just as much importance as investment and funding. The combination of the two – known as angel investors – can be hugely beneficial to the businesses that they are involved with. These investors are sector alumni who can bring with them a wealth of experience in a range of different industries, which is vitally important to young businesses. To bridge the gaps of caused by investment disparities, we need angel investors to use the hubs to connect with local entrepreneurs to ignite growth within local economies.

Entrepreneurs are now increasingly taking advantage of angel syndicates – groups of angel investors formed to provide larger amounts of funding – to maximise the amount, and range, of expertise and contacts. Angel syndicates encourage a pack mentality in investment; with lead angels championing SME investment and creating an environment where myriad skills combine to provide not only financial support but invaluable sectorial experience for a community of entrepreneurs who need it now more than ever. This is one of the best ways in which to tackle the uncertainty that is currently plaguing British businesses.”

The UK Business Angels Association (UKBAA) is the national trade association for angel and early-stage investment, representing over 160 member organisations and around 18,000 investors. Business angels in the UK collectively invest an estimated £1.5 billion per annum and are therefore the UK’s largest source of investment for startups and early-stage businesses seeking to grow.

UKBAA’s members include angel networks, syndicates, individual investors, early-stage VCs, equity crowdfunding platforms, accelerators, professional advisers and intermediaries. UKBAA acts as the voice of the angel investment community and strives to build and connect the angel investment ecosystem so as to ensure a coherent landscape for financing high-potential entrepreneurs.