What are some Advantages of Angel Investing
Posted by hrtechpartnership on May 1st, 2019
Angel investing in the United Kingdom (as in most parts of the globe) is on a sharp growth trajectory. Most angels seem satisfied with the return on investment and financial performance that they are experiencing. This explains why more than 40% of UK based Angel Investors are increasing their levels of investment. Industry reports also point to the fact that more than 70% of UK based Angel Investors are investing in between one and five companies.*
Increased confidence in Angel rounds
This robust confidence of Angel Investors is caused by some inherent advantages of angel investment. Unlike the listed share or equity market which is subject to market volatility, an angel venture enhances in value as the company scales upwards. Good companies see their valuation increase through multiple rounds of capital infusion by VCs and PEs. When such increases happen, Angel Investors can broadly choose from two options both of which are lucrative. Either the angel investor can stay invested and see the valuation of his/her investment climb along with the start-up or he/she may offload the investment and cash out with increased returns.
Angel investment also offers investors a healthy avenue to achieve diversity in their investment portfolio. Particularly in the UK, investors get added tax incentives such as EIS and SEIS with a potential tax reduction of up to 50 %. Additionally, there are angel investors who offer expertise along with the capital. Such expertise can be very valuable to the investee company and offers the investor an opportunity to play a part in creating something valuable. Many angel investors are lawyers, accountants, professionals or other entrepreneurs who have had bumper exits themselves.
Crowdfunding as an exciting option for first time investors
People who may be first time investors can experiment in a safe manner through the crowdfunding route. Crowdfunding gives them an opportunity to ride on the expertise of others and limit their risk.
Most investors investing through The HR TECH Partnership (HRTP) bring a rich background in the human capital space. They find this route interesting for several reasons:
– They understand the challenges of the human resource function in large corporates and are able to astutely identify if a particular product solves a real ‘pain point’.
– They are also able to gauge adoption rates and the likely chance of success of AI-based solutions using leading edge technology from a ‘practitioners’ perspective.
– Having respected peers as co-investors gives them an opportunity to make well-informed decisions and reduce their risk.
– Many do it for the ability to keep abreast and understand the rapid Digital Disruption that is happening to the future of work.
– Finally, leveraging their experience and network to help early stage start-ups enables them to give back to society and the profession.
The London based HR Tech Partnership is an investment venture in the People Tech space with most of its stakeholders being senior corporate directors. The company is an early stage investor and focuses on solutions that leverage data and analytics to help organizations around Talent and Workplace productivity. To know more visit http://www.hrtechpartnership.com/
* Some statistics mentioned in the blog are sourced from the recent survey by UKBAA and British Business Bank.
