Beating the Business Angel Investment Odds?
We are living in risk-averse times and “Cash combined with courage in a crisis is priceless” according to Warren Buffet. But when does courage cross the line into gambling territory? Or to put it another way what if you had say, £50,000 to invest, and someone said you have a 20% chance of a return on it, would those odds appeal?
With a failure rate in the region of 80% if you look deeper into the stats, the odds are pretty well stacked against any kind of successful outcome. But there are ways to lessen those odds and increase your chances of success by following the advice of experienced business angels.
The latest instalment of the BBAA angel investor evenings held in Manchester provided an opportunity
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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.
The BBAA (British Business Angels Association) trade body is today organising its annual awards ceremony and conference at the Belfry.
The event is sponsored by Advantage West Midlands, the redevelopment agency for the West Midlands.
It will include both an opportunity to recognise key contributions made to this growth sector during the year at the annual awards dinner as well as create a platform for discussion about how this new sector should grow during the conference session on Thursday.
Many business angel networks and agencies have seen an increase in activity in 2009 as a result of high net worths looking for greater influence over how their money is invested as well as more business start-ups turning to business angels to provide initial funding.
However, converting interest into actual funds invested; and, funds invested into business success is where the industry still needs to prove its mettle.
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