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The key trends shaping the angel investing landscape

Angel investment is one of the best ways early stage startups can raise investment. Therefore the behavioural trends of investors will be closely followed by savvy businesses looking to ensure they have what it takes to raise finance.

It is now the second year we have carried out our ‘State of the Angel Investment Nation’ report. It is based on a wide dataset of more than 125,000 UK registered businesses looking for funding and the live keyword searches of more than 35,000 investors.

Technology leads the way

‘Technology’ was the top search term used in 2019 by investors seeking out businesses to back. Applications connected with technology also made up the bulk of the top ten searches. ‘Mobile’ was the third most popular. ‘Robotics’ shot six places year on year to now be the fourth most requested search term. Meanwhile ‘electronics’ is up by nine places on the list to number six.

Tech valuations have been huge in recent years and so angel investors are keen to get in at the early stage with companies who could turn into future tech unicorns. Indeed a recent report from Tech Nation highlighted the extent to which the UK dominates in this arena. The UK  created eight unicorns in 2019 – defined as companies worth more than one billion US dollars. The speed of growth was faster than both the US and China, and beat fundraisers in France and Germany.

Our report also looks at the top areas for pitch ideas. Property has become the most popular sector for pitch ideas with entertainment number two. Property is also the second most popular keyword search for investors, showing a good fit with idea and investment. However the same can’t be said for fashion which has fallen out of fashion for investors. It is just 17th on the list although it remains the fourth most popular category for pitch ideas.

Northern powerhouse of ideas

An encouraging trend picked up from our data was the extent to which new entrepreneurial hotspots are developing throughout the country. The report found that the North West is closing the gap on London and the South East as the top place to launch a startup.  The North West was up 10% year on year in startup ideas. There is now a real ’Northern Powerhouse’ of ideas with a network of agile SMEs springing up. Tech Nation recently reported that Manchester was one of six UK cities ranking amongst the top 26 in the world for raising venture capital in 2019.  In the fast growing Internet Of Things (IOT) sector Manchester is now considered number one in the country.

There has also been impressive growth in other parts of the country. There was 25% growth in pitch ideas in the West Midlands, with East Anglia up 26%. The North East shot up by 29% to post the fastest rise in the country.  There have been several accelerator programmes set up in the region to bolster this growth.

Investment climate has changed62

With climate change centre stage in Davos recently one of the most dramatic trends is the remarkable rise in interest for sustainable businesses among investors. For example ‘Renewables’ is up by 34 places to be the 14th most searched for term. Similarly ‘greentech’, is now the 19th most popular keyword, up from 47th last year.  This really does mark a seachange in investor attitudes, with climate change now at the top of the news and business agenda.