The FT has a report on angel investment in Scotland. It is of note because Scotland has a high level of angel activity compared to the rest of the UK. The country accounted for almost a third of visible angel investment in the UK in 2010, says the report. The Scottish angel investment market is dominated by quite formal syndicates of investors, which act “like mini venture capital funds”.
The professionalization of angel investment and syndication has resulted in greater public sector support for the industry than elsewhere in the UK, through bodies such as the Scottish Co-investment Fund, which enters into contractual partnerships with select angel groups, matching their investments pound for pound. “However, it is not involved in picking winners. Once a syndicate has been approved, the fund backs the syndicate’s investment choices,” says the report.
In 2009, Archangels stepped in to provide bridging finance for Touch Bionics, a high tech prosthetic limb manufacturer, in which it had already invested during the height of the credit crunch. The loan was fully subscribed in 36 hours. Although these loans can carry interest rates of up to 12 per cent, some angel investors are wary of providing funds in anything other than exceptional circumstances. Unlike angel investment, offering loans to small companies does not come with a substantial tax break.