Growing angel investment activity in Wales as the Development Bank of Wales details high expectations for 2021

Investments in Welsh businesses by syndicates of angel investors in Wales has grown despite business uncertainty in 2020 according to the Development Bank of Wales.

With six new lead investors and 57 new angel investors registered with Angels Invest Wales in 2020, almost £2million was invested in nine deals. Six of these were completed post lockdown in the last quarter of 2020 prompting expected continued growth in 2021.

During 2020, lead investor syndicates invested £1.045m which leveraged £931,800 of match funding by the Wales Angel Co-investment Fund, managed by the Development Bank of Wales.  Over 230 angels have now registered their interest in investing in Welsh businesses with bio-tech, fin-tech, health-tech and SaaS proving particularly attractive industries.

In the last three months of 2020 Angel Invest Wales facilitated deals included:

• Cardiff-based Rescape Innovation Limited is pioneering the use of virtual reality to solve challenges in healthcare. Lead investor Andrew Diplock led a syndicate that raised over £482,500 with £42,500 of match funding from the Wales Angel Co-investment Fund. This is in addition to the first fundraising round giving an overall total of £250,000.
• Atherton Bikes Limited is a manufacturing business based in Llanrhaedr. Lead investor Rhys Owen led a syndicate of eight angel investors from North Wales raising over £76,000 with a further £76,000 from the Wales Angel Co-investment Fund..
• SaaS business Mercury Labs Limited specialises in the prioritisation of high volume email control. It has the backing of David Hulston as lead investor with a syndicate of eight angel investors. A total investment of £250,000 included £125,000 from the Wales Angel Co-investment Fund.
• £300,000 for Cardiff based Elen Financial Software Ltd. A syndicate of angels invested £150,000 with a further £150,000 from the Wales Angel Co-investment Fund.

David Hulston is the lead investor in Mercury Labs Limited. He said: “The early stages of a business can be challenging and many of the successful companies that we know today wouldn’t have got off the ground without angel investment, especially in the current economic climate. By backing entrepreneurs, investors like myself can help drive innovation and share risk by co-investing alongside others. That’s where the Development Bank plays such an important role with their Wales Angel Co-investment Fund. By working together we can make sure that our patient capital is having real impact. It’s also really exciting and rewarding to be part of a start-up’s growth journey.”

Steve Holt, Director of Angels Invest Wales said: “Obviously 2020 has brought a period of real uncertainty for business and investors alike but we finished the year on a positive note, with six supported deals completing in the last quarter.  This increase in activity in the Wales Angel Co-investment Fund reflects the appeal of ‘syndicate’ investing for angel investors more generally.

“The benefits of sharing risk and knowledge with like-minded co-investors is an attractive strategy for many angels in Wales and has definitely influenced angel investment decision making recently.

With six new ‘lead’ investors now appointed, some of the key sectors being supported are fintech, biotech, healthtec and ICT, all of which align with the Welsh Government’s economic growth strategy.

“As business and investors in Wales plan to recover from the impact of the pandemic we expect to see a continuation of these positive angel investment trends. There is still plenty of work to be done in growing the angel eco system in Wales, but with the significant expansion of our Angels Invest Wales investor cohort in the last year, we are optimistic that many successful deals will follow in 2021.”

The £8 million Wales Angel Co-investment Fund provides Welsh business with a key source of alternative finance through the encouragement of more active angel investment. The five year fund supports the creation of angel syndicates and networks across Wales by providing loans and equity up to £250,000 to investors looking for co-investment.

Tom Preene is the Operations Manager of Angels Invest Wales. He said: “Our Wales Angel Co-investment Fund is available to syndicates of investors seeking to co-invest in Wales based SMEs. Syndicates are managed by lead investors who have been pre-approved by the Development Bank and we are actively seeking new lead investors in key sectors to expand the reach of the fund.

“All of our investors have access to our bespoke online investment platform which provides a really useful tool for matching investors with businesses. It also allows businesses to upload deal information to the platform, showcasing directly to registered high-net-worth individuals while providing investors with an easy and accessible source of business opportunities to review at any time. We’re certain that it will continue to play a key role in 2021.”

Image credit: Photo by Matt Horton