Angels go where banks fear to tread

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More and more South West businesses are turning to ‘business angels’ for investment as banks continue to take a hard line on debt finance and investors look for better returns on their cash.

Corporate finance advisers say the squeeze on traditional lending means that the funding jigsaw has become more complex – but there are deals to be done for businesses that are investment-ready – and it’s private investors that are going where the banks fear to tread.

Richard Wadman, from the corporate finance team at Winter Rule, said: “This could be a win-win. On the one hand you have sound businesses with good growth prospects but they can’t get all the cash they need because of the credit crunch. On the other you have investors and high net worth individuals who are prepared to take a punt because they’ve seen their other investment returns hit by the financial crisis.

“These business angels often bring specialist expertise and strategic advice as well, so it really is the potential for a match made in heaven and we’re seeing more and more deals involving angels as part of the financial jigsaw.”

Five local businesses will be pitching for angel investment next week [June 22] at an event organised by the South West Angel Investor Network (SWAIN), which connects private investors with companies looking for investment.

Richard said: “We’ve been working with a couple of these businesses in preparation for the SWAIN event and I’ve no doubt that the business angels will be impressed by the quality and range of opportunities available.”

SWAIN investment director Bruce Colley said: “We have found the format we use works well, giving business angels the opportunity in a single evening to see a number of different propositions and ask questions.

“We have a good group of investors attending but we are always keen to hear from more, especially in Cornwall. We find individuals are increasingly looking for different ways of potentially improving the return on capital beyond the historically low rates of interest achievable on deposits with banks.  There is also potential for tax efficient investment in the SME sector through the Enterprise Investment Scheme.”

If you are a company interested in finding out more about business angels and the process and issues involved, please contact Richard Wadman at Winter Rule, rwadman@winterrule.co.uk

If you are interested in the becoming a business angel and specifically would be interested in attending the event at the Arundell Arms in Lifton, Devon, on June 22 please contact Bruce Colley bruce.colley@swain.org.uk