Research from the British Business Angel Association (BBAA) shows that investment in the first half of the year fell by nearly £5m when compared to the previous six months.
Gary Robins, founder of private investor network Hotbed, says that investments are too small to make any real difference to the UK as a whole.
He said: “Business Angels who invest below £70,000 per company are not making any significant difference in the enterprise economy.
“In my view, entrepreneurs need a minimum of £1m to launch an initiative which will develop into a business of substance capable of delivering a healthy return to its investors.”
The fall in investment comes despite the fact that there are an increasing number of high-net worth individuals in the UK.
“The Business Angel model demands a high level of hands-on activity from investors and this will not appeal to the enormous number of passive investors in the UK,” says Robins.
“In Hotbed's experience less than 10% of private investors will be active. Many are still in active employment and do not have the time to sit on boards and make decisions.”
Investments fell in the first half of this year to £12.8m from £17.5m for the six months previously
Research by the British Business Angel Association (BBAA) also found that in the first half of 2006:
The average investment was just £70,000 per company, compared with £180,000 in the previous six months.
The number of Angels making investments dropped by 18%, despite the number of registered Business Angels in the UK increasing by 76% to 5,112.
There are now at least 376,000 millionaires in the UK.
© Crimson Business Ltd. 2006
