BBAA Newsletter March 2011
Dear Reader,
Welcome to the latest edition of the BBAA Newsletter.
Budget 2011
I am able to inform you that BBAA made a strong submission to the Chancellor of The Exchequer, George Osborne, Nick Clegg, Deputy Prime Minister and Vince Cable, Secretary of State for Business earlier this month endorsing the proposed £100m Angel Co-investment Fund presented by Capital for Enterprise Ltd to the Regional Growth Fund, and also recommending that now was the time to put in place a clear package of fiscal measures to increase angel investing, which included an enhanced rate of 50% under the Enterprise Investment Scheme for investments in start up technology based early stage businesses, as well as changes to the Employee Management Investment Scheme (EMI) and Entrepreneurs Relief..
We are delighted that the lobbying that BBAA has made to Government of late on the need to encourage more angel investing has now paid off. BBAA fully supports the extension of EIS tax relief to investors from 20% to 30% from 6 April 2011, removal of many of the previous restrictions as well as the significant extension to Entrepreneurs Relief. We are now hopeful that the bid for a proposed new £100m Angel Co-investment fund presented by Capital for Enterprise Ltd late last year will receive support from The Regional Growth Fund, which is scheduled to be announced next month. The potential launch of the new Fund coupled with the increased fiscal incentives for angel investors would make a real and disruptive impact on the current level of UK angel investing to support growth and innovation in early stage businesses in the UK.
Disguised Remuneration – Consultation on Draft Legislation for Finance Bill 2011
BBAA sent a letter to HMRC in February in support of the response made to by Travers Smith LLP, an associate member of BBAA and member of BBAA’s Technical Committee concerning changes to the Disguised remuneration Scheme as part of the draft legislation for the Finance Bill 2011. BBAAA thanks Russell Warren at Travers Smith and his colleagues for bringing this draft legislation to our attention. an extract from BBAA’s response is given below:
“BBAA draws attention to the role of Angel Investors working with the management teams and frequently using employee incentivisation schemes such as share offers and share options schemes. However, the width of the drafting as proposed would charge these innocent and well meaning transactions to income tax and, for example could recharacterise gains made by employees/founders on a sale to a third party as employment income. Angel investing and employee incentivisation through shares is clearly caught by this drafting. BBAA therefore asks HMRC that consideration be given to withdrawing this draft legislation and reworking it to avoid the likely severe negative impact on the level of angel investment in the UK by limiting the capacity of investors to support and incentivise the growth of their portfolio companies, leading in turn to reduced returns and an overall disincentive to invest in early stage businesses. We also feel that it would be entirely inconsistent with current tax schemes such as the Enterprise Investment Scheme which is aimed at encouraging Business Angels to invest in small firms with growth potential”. A copy of the submission made by Travers Smith can be found on the BBAA web-site together with BBAA’s letter of endorsement.
BBAA National Summit and Awards Dinner
30 June - 1 July 2011, London
With this as a backdrop, I should like to cordially invite you all to participate in the BBAA National Summit in London on1st July 2011. This event which is now in its 7th year is sponsored this year by Lloyds TSB Commercial and hosted by the ICAEW London Region, being held at the Chartered Accountant’s Hall, 1 Moorgate Place, London EC4. This will provide an excellent forum to review developments and gain new insights into early stage investing with a wide range of expert speakers and panellists and offering extensive opportunities for networking. I am also delighted to inform you that the BBAA Annual Awards dinner will take place on the evening preceding the Summit on 30th June 2011, hosted by the City of London and will be held in the prestigious Museum of London. This will offer an exciting setting for the Dinner and Awards ceremony with an opportunity for a tour of the exhibits as part of the champagne reception. We will shortly be launching a call for nominations for the 6 awards. I do hope that you can join us at these events and please see BBAA’s web-site for further details.
BBAA Winter Workshop
I should also like to take this opportunity to formally thank Travers Smith our hosts for the Winter Workshop held on 26th January this year and I hope you all found this a useful event for looking at trends for investing in 2011. Details from this event and power point presentations are on the BBAA web-site.,
New BBAA Membership Category: Individual Investors and Syndicates
I should also like to draw the attention of our readers to the fact that BBAA is especially welcoming individual investors and unstructured small groups of investors to join as members of BBAA at a special rate of £95 including VAT for individuals and package price available for groups of up to 5 investors. We hope that this will attract angel investors to take advantage of this opportunity to participate in BBAA’s events activities and keep in touch with the angel and early stage investment market. All individual members and groups joining BBAA will also have the opportunity to join a BBAA investor network and find out about investment opportunities in their locality. Please contact us at members@bbaa.org.uk if you would like to join as an individual member or small investor group, or please circulate this invitation to your investor colleagues and contacts. We will be fully launching this new membership category from April 2011.
BBAA Angel Investing Awareness Campaign
I am also pleased to report that we now have the results of the BBAA Angel Awareness Campaign that was carried out by BBAA between April 2009 and June 2010 with the support of the Department of Business Innovation and Skills BIS. This was a very active campaign carried out at national and regional level and with 20 awareness events across seven of the English regions with at least 2,600 potential investors or investor sources attended the Campaign events across the UK and 30 Angel Capacity building workshops aimed at identified new investors. Whilst it ended last year there have been ongoing repercussions amongst the networks that participated and which has resulted in 310 new investors identified; 5 new syndicates formed in West Midlands, Kent and East of England and one new network focusing on women investors, set up by FSE. Whilst 09-10 Angel investing was still clearly affected by the impact of the financial crisis, a significant improvement in the levels of investment activity has been identified by several networks which they have attributed to the campaign and which in some cases is up 100% on 09-10 levels of investing. However no final figures on investment levels are yet available for 2010-11 and these will be collected by BBAA during May /June 2011. We should like to take this opportunity to thank all of our network members for all their work in carrying out this campaign and also our wider BBAA membership for their contribution to this campaign as well as to BIS for its support.
As we reach the end of the first quarter of 2011, there seems to be a strong level of deals being done with several of these announced in this newsletter announcements of deals done, including some interesting exits. This is a very heartening sign for the health of the angel and early stage market going forward in 2011.
New Sponsorship Agreement: Unilever New Business
I should like to draw your attention to BBAA’s new Sponsor, Unilever New Business, who have come on board to support BBAA with a specific focus on corporate investing and open innovation in the key target sector of preventive healthcare and med tech. We are looking forward to working closely with Unilever New Business in the coming year and will be organising a dedicated Investment Forum hosted by Unilever at their prestigious facilities in London in the autumn of 2011 . More details of this will be made available shortly. I should like to express my thanks to Unilever for their support of BBAA.
Membership Renewals
As you will know, 1 April 2011 is our membership renewal date. We do hope that you will wish to remain BBAA members over the next year as we bring the organisation up to date and extend our reach to ever more participants in the early stage investment community. The larger our community, the greater weight our discussions with and lobbying to government carry.
Finally I should also like to welcome the Royal Society Enterprise Fund (VC); Innovate Product Design (Associate) and Adamant Partners (Associate) to the BBAA as new Members.
With kind regards,
Anthony Clarke
