Business Angels need training!

Business Angels need training – that was the overwhelming message coming from the British Business Angels Association annual conference held at the Belfry in early July.

Quoting new research from Nesta, Mogwenna Rees-Mogg stated that a ‘56% failure rate for Business Angel investing is not good enough’.

This means that for every £1 invested by UK Business Angels, 56p will be lost out right and the remaining 44p will have to grow considerably to make up for the loss and return the business angel with a sufficient return to justify both the money and the time invested.

Discussing the Nesta research in more detail, the panel members expressed the view that it is likely that perhaps 10 or 20% of Business Angels do considerably better than the remaining 80 to 90% and therefore, in order for angel investing sector to grow, more investors need more support, training and help to make better investments.

John Huston, Chairman of the US equivalent to BBAA, Angel Capital Association, confirmed that the results of the Nesta survey into UK business angel success rates mirrors the experience in the USA.

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  • One area where Business Angels need training is in the term sheet stage of the transaction. One area that is often overlooked is a requirement for regular investor reporting and consequences for non-compliance. Lack of transparency is one of the primary reasons that companies fail to get follow-on funded even when warranted. As a Business Angel, I saw all this first-hand and was inspired to create Informia and our product, InvestorUpdate.
  • Neil
    Thanks Lisa – yes, I agree – investors become agitated when they don’t see what is happening.

    This is a critical area of ‘mini-corporate’ communication that most entreprenuers miss.

    Do you think that the advent of Crowd Funding will require better and more systematic reporting to a larger group of investors? Or will it make no difference?

    Regards
    Neil

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