Angels Den Blog

Does anyone remember the global panic surrounding the “deadly” avian flu pandemic threat of 2005 when the media reported the potential of tens of millions of human deaths? It was all the papers could talk about for a while and people across the globe started wearing those silly surgical masks (which it turns out do little to stop the spread of the flu anyway). The business world reeled, banks, investors, venture capitalists all took stock to see what would happen to their portfolios should the world end that week!

Two years later it was the West Nile Virus that had us all in a panic. The Mail ran the headline, “Deadly mosquito has landed in Britain” because two Asian tiger mosquitoes were found in a back garden in Gloucestershire. But what was the mortality rate of this “deadly” mosquito bite? Unfortunately for the media, West Nile didn’t pan out, either.

Since the 1995 Hollywood thriller Outbreak came to our screens scaring the pants off all of us over the “what if” scenario of an airborne virus the media seem to have be fascinated by the panic they are able to generate and how this translates into lots of viewers, lots of readers, and lots of pounds.

Two years later again and it is swine flu that has captured the headlines and sent us all into a spin. The world’s media has apparently forgotten last month’s story – that is: hello, does anyone remember that we’re in a global economic crisis?

Swine flu has ripped through the lives of families in Mexico causing tragic loss of life, but with those surgical masks appearing on front pages of papers again, schools closing, the NHS going on alert and contingency plans going into effect around the world, anyone reading a newspaper or watching the TV could not have helped but felt the fear of “what if”. The world’s financial woes are forgotten for a little while thanks again to the all powerful media.

So here’s a question: if media hype can lead ordinary people from Mexico to Britain to Hong Kong to wear hot, uncomfortable surgical masks that everyone knows doesn’t work, all over a flu that turns out to be no worse than your average strain, can the same sort of media hype convince the world’s consumers to spend; businesses to start marketing again; and venture capitalists, banks and investors to start investing to lead us out of a global recession?

Maybe so, but what’s in it for them?

But not all is doom and gloom – in fact, just like the swine flu “pandemic”, undoubtedly, part of the global economic pandemic is just more games for ratings by the mainstream media. They discovered a long time ago that death and destruction sells more papers and advertising than smiling school kids and good news.

A good indicator for economic recovery would usually be the lending habits of venture capitalists – organisations whose job it is to wisely invest money that is entrusted with them in dynamic new businesses. Unfortunately venture capitalists, much like banks, have pulled their heads inside their shells and have decided to wait out the economic storm. But whilst venture capitalists have slept a whole new lending machine has risen to the challenge. Small businesses continue to launch and grow even in this economic climate, but lack of funding has made things quite difficult for them, so Angel investing has grown into a funding force to be reckoned with. Unlike venture capitalists that have recession jittery board members, responsibilities to investors, and corporate procedures to follow, Angel investors can make funding decisions based simply on the opportunity that is presented to them. When venture capitalists resurface once they are sure the recession is over they will find that much of their territory has been taken over by this more agile, generous and arguably more successful way for small businesses to gain the funding to give their businesses a much needed boost.

The reason why Angel investors have thrived where venture capitalists have scaled back their operations is that they are natural risk takers. Putting up their own money to back a business opportunity that may be no more than a concept at this stage is what they do whatever the financial climate.

Gordon Brown seems to be getting on the bandwagon a little with his plans to set up a special bank to fund high tech ventures. And Alistair Darling, meanwhile, is lobbying for tax breaks for green technologies. It seems that venture capitalists are being attacked from all sides. Shame they’re hibernating somewhere or they might be starting to get a little worried. Sleep well all venture capitalists.

So even though the global financial crisis seems like a hole that will be impossible to climb out of remember, its depth is just another one of those things that the media just loves to exaggerate, and much like the passing of the swine flu pandemic panic (in a little over 2 weeks), the economic doldrums will also pass soon enough and we’ll be back out into an era of economic sunshine. Wake-up venture capitalists and see how Angel investors have changed the world as you know it!