BUSINESS angel investment in Scotland has defied the credit crunch, racking up £12 million worth of deals in the first seven months of the year – compared to £14m in the whole of 2007.
And Linc Scotland, which represents the majority of business angel networks north of the Border, has predicted that the value of angel investment deals will exceed last year's figure as investors look to put their cash into smaller companies amid tur
moil on the listed markets.
A total of 34 deals have been struck so far this year – one more than at the same time in 2007 – although the average value of the deals has been much higher.
Figures for the first six months of the year were already at record levels at £9m, Linc revealed last month, but an extra £3m of deals were done in July, putting 2008 even further ahead.
David Grahame, chief executive of Linc Scotland, last week met James Geshwiler, managing director of Massachusetts angel investment syndicate CommonAngels, and founding chairman of the umbrella body the Angel Capital Association in the US, to discuss the health of the sector on both sides of the Atlantic.
Geshwiler, who also held meetings with major angel syndicates such as Braveheart and Archangel during his visit to Scotland last week, said Scotland was more like the US in its structure of angel syndicates than most other countries in Europe.
Grahame said: "The numbers of deals are holding up but the money is slightly ahead. That suggests that investors are committing heavily to follow-on funding. They are still doing new investment, but are also supporting the existing companies as they expand. We usually have a very quiet July and August, but this year we're steaming along."
Linc, which currently represents 15 business angel networks in Scotland, has a target of three new groups being formed every year – and has already attracted two new ones this year.
Geshwiler said: "The technology markets and other small businesses are not particularly closely tied to the financial markets. The technology sector in the US is actually very healthy and I believe it is comparable in Scotland.
"What investors are looking at now is where small companies will be in three to five years, not what Wall Street or the City is doing at the moment."
He added: "The myth is that the business angel network in the US grew up around the dot-com boom – in reality, it grew up around the dot-com bust."
Grahame added: "There are a lot more similarities than differences in business angels between Scotland and America. We have been sharing information and the connection is invaluable."
The full article contains 446 words and appears in The Scotsman newspaper.
