A business angel is a private individual, often of high net worth, and usually with business experience, who directly invests part of his or her personal assets in new and growing private businesses. Business angels can invest individually or as part of a syndicate where one angel typically takes the lead role.
Besides capital, angel investors provide business management experience, skills, and contacts for the entrepreneur. Experienced angels also know that they may have to wait for a return on their investment. They can therefore be a good source of ‘smart and patient’ capital.
Business angels play an important role in the economy. In many countries, they constitute the second largest source of external funding in newly established ventures, after family and friends. They are increasingly important in providing risk capital, as well as contributing to economic growth and technological advances.
Tools to promote business angel investment are the responsibility of EU countries. They should create incentives for private individuals who are willing to invest in enterprises. This should include the use of public funds to target co-investment with business angels.
The European Commission aims to encourage EU countries to learn from good practices by supporting business angel investments, in particular across borders and through cooperation with venture capital funds. The Commission is also spreading good practice in investment readiness training.
This Expert Group was convened to identify trends and best practices in the area of matching innovative firms with investors on a cross-border basis. The Group was also asked to formulate policy recommendations.
The group consisted of 12 representatives of organisations with expertise in financing innovation. It was chaired by Anthony Clarke, then chairman of the UK Business Angels Association. The Group met three times between November 2011 and March 2012.
The group concluded that, 'Innovative firms in Europe face significant problems in accessing the funding they need to start, grow and compete in global markets. The cross-border matching of innovative firms and investors in particular poses significant challenges, even though research has identified cross-border funding as key to supporting a company’s international growth.'
In 2012, the Commission financed a study on the Business Angel market in eight EU countries (Germany, France, Netherlands, Sweden, Italy, Spain, Poland, and the United Kingdom). The objective of the evaluation was to help improve policy-making regarding SMEs’ access to seed and early stage capital, and to share existing best practice in policies and programmes across EU countries.
Executive summary (327 KB)
Final report (2 MB)
This guidebook describes how investments and co-investments of business angels can be supported in sectors, regions or EU countries where their presence is still limited.