HBAN (Halo Business Angel Network) today announces its five-year business angel outlook that predicts business angels will invest €85 million in 250 high potential start-ups in the period running 2017 to year-end 2021.
It will mark a 79% increase in investment over the previous five years, which saw €47.4 million invested in 244 companies.
When matching funding from other sources are included, HBAN expects total investment pool will come to more than €230M
Record year for Irish angel investment in 2016: €13.6M invested in 50 start-ups
Business angel research reveals:
80% of business angels have started a business and 32% have started at least three businesses
Serial business angels account for 10% of Irish angel investors
More than 90% of business angels are male and they tend to be middle-aged
HBAN, a joint initiative of InterTradeIreland and Enterprise Ireland, expects businesses operating in a number of key industries stand to gain from the predicted cash injection over the next five years. They will include companies working in the fields of technology, knowledge, food and beverages, software development, medtech, fintech and agritech.
Last year was a record-breaking year for business angel investment in Ireland, with €13.6 million invested in 50 early-phase businesses. Those investments leveraged a further €20.5 million from other public and private funds, bringing the total invested to €34.1 million.
John Phelan, national director of HBAN said: “These forecasts are based on the growth we have seen in angel investment over the past five years. They clearly demonstrate a very strong and growing appetite for investing in start-up companies. In an international environment where low-risk investment receives miniscule or even negative returns, there is an increasing interest in balancing investment portfolios with higher risk seed investments.
“What we have seen recently is that the number of businesses receiving investment isn’t changing dramatically, but the amount of capital that angels are injecting into those businesses is increasing considerably. This reflects the quality of company that angels are presented with through HBAN. We only introduce angels to companies that we are confident are investor-ready and have the potential to scale.
“We expect the €85 million to leverage an additional €145 million in matching funds from public, private and international funders – such as Enterprise Ireland, venture capital firms, founders and European investment funds – so this is very exciting for the future of angel investing in Ireland.”
HBAN has also revealed insights contained in an InterTradeIreland business angels’ market report*:
Serial business angels account for 10% of Irish angel investors and more than a quarter of investments. They account for two-thirds of the value of investments;
Business angels on the island of Ireland are predominantly male – over 90% – and generally middle-aged, with more than 69% of survey respondents aged 45 to 64;
Business angels are very entrepreneurial – 80% have started a business, while 32% have started at least three businesses;
Angels typically invest in related industries, but rarely in one single industry;
ICT and related digital industries are the most common sectors that survey respondents invest in;
Three-quarters of angels are members of investment networks or syndicates.
John Phelan commented: “It is interesting to see that two-thirds of the value of investments comes from just 10% of investors. In HBAN, we are actively seeking to increase the number of business angels who take a broader portfolio approach to investing. This is proven to increase the chances of positive overall returns and thus increases the appetite for return investing.
“HBAN helps business angels find the right type of company to invest in and therefore maximise their chances of successful investments. We offer a lot of supports, such as hosting business angel forums where pre-qualified start-ups pitch to angels. We also offer advice and encourage angel syndicates, which allow angels to invest as a group and build broader portfolios.
“Business angels are increasingly important to the start-up economy. Institutional investors, such as venture capitalists, can create a funding gap because they are reluctant to commit funds to very early-stage businesses. Business angels bridge that gap while also bringing their own expertise and knowledge to the table; providing start-ups with the best supports possible to make their business a success.
“Angels will often focus their investments on innovative technology companies with international scalability, which is a key source of growth for Ireland. They often invest locally because they want frequent interaction with the companies in which they invest. This is very good for overcoming the lack of risk capital outside core economic regions such as London and Silicon Valley.
“Our business angels also provide smart money, as they themselves are typically successful entrepreneurs, or have held senior positions in large successful companies. This allows them to be hands-on investors, who can contribute their skills, knowledge, experience and networks.”