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British Business Angels Association Announces Fund

The British Business Angels Association announced Wednesday the launch of a new 50 million pound ($78.6M) angel co-investment fund. The Angel CoFund will invest alongside Business Angel syndicates across England. The fund is administered with the support of Capital for Enterprise Limited and set up with a grant from the Regional Growth Fund, the association said in a written statement.

BBAA is delighted that Business Angel Investing received a strong boost from Government this week, through both a new major 50% tax relief for seed stage investing and the launch of a new £50m angel co-investment fund.

Notably in his Autumn statement today, Chancellor George Osborne has announced that investors wishing to back very early stage seed stage businesses can gain up to 50% tax relief. Under this new Seed Enterprise Investment Scheme (SEIS), commencing from April 2012, which will be similar in design to the current Enterprise Investment Scheme (EIS), the focus will be on supporting new early stage companies with 25 or fewer employees and assets of up to £200,000 which are carrying on or preparing to carry on a new business. For investors the maximum an annual investment limit for will be £100,000 and the maximum that any early stage business can receive cumulatively under this scheme will be £150,000.

Today also marks the launch of the new £50M Business Angel Co Investment Fund, to be named the Angel CoFund and will be investing alongside Business Angel syndicates from across England. The fund shortly opening for business is administered with the support of Capital for Enterprise Limited (CfEL) and set up with a grant from the Regional Growth Fund.

The fund is able to make initial equity investments of between £100K and £1M in to SMEs alongside syndicates of business angels, subject to certain geographical restrictions and an upper limit of 49% of any investment round. Investment decisions will be made by the independent Investment Committee of the fund based on the detailed proposals put forward by business angel syndicates.

Anthony Clarke, Chair of BBAA stated: “As the trade body for angel and early stage investment in the UK, we are extremely pleased that the Government has recognised the importance of backing angel investors to bring their financial capacity and business experience to support small business growth and jobs. This enhanced 50% tax break will stimulate high net worth individuals to see the benefits of using their cash for investments in very early seed stage businesses where, even with the current EIS scheme, these deals may have seemed too risky.

BBAA has been working with Capital for Enterprise for some time to support this new co-investment fund and we are delighted that this has now been launched to bring angels together in syndicates to pool their resources and expertise. This will significantly strengthen the angel market, offering the opportunity to leverage up to £1m additional finance in each deal to support high growth potential businesses”.