British Business Angels Association (BBAA) welcomes support for investment in early stage businesses

The BBAA is the UK trade body representing business angel networks and organizations concerned with early stage investment market. Responding to the UK Chancellor’s latest budget (March 2007), Anthony Clarke, chair of the BBAA made the following statement:

More time welcomed for EIS approved fund
“Clearly at BBAA we welcome the decision of Government to support EIS approved fund schemes. This reflects our submission to HM Treasury and HM Revenue & Customs on behalf of our members and associates which identified the current constraints of the six month investment period. We recognize that this will offer the opportunity for those BBAA members and associates operating EIS approved funds to be less time constrained and able to have a full twelve month period for effective investing of 90 percent of the fund in early stage companies. This should impact on the level and quality of investing in early stage businesses through these EIS approved funds.”

EU limits on EIS, VCTs will challange bio-tech and some angels
“Overall we hope that the application of EU state aid rules limiting the total EIS eligible investment into an individual company to £2M in any one year will not radically affect business angels investing in early stage businesses. However we do recognize that larger syndicated angel deals could experience problems with these new rules. Clearly for those angels and angel syndicates investing in businesses on a fast growth trajectory and requiring high levels of early stage funding (e.g. those in the bio-tech sector), this could prove to be limiting for both the investors and the individual entrepreneurs.

Finally for some of our 22 business angel networks working with VCTs or for our associates directly concerned with operating VCTs, we recognize that the EIS annual investment limit of £2M will present core challenges to raise new funds to support early stage investing and could directly impact on investor appetite.

At BBAA, we will be monitoring these issues and consulting with our business angel networks and associates. This will enable us to constructively report back to Government concerning these taxation issues and to continue to represent the interests of the early stage investment market.”