Angels Den Blog

Despite Alistair Darling’s attempts to appease the entrepreneurial section of our population, a recent survey has suggested that up to 10% of all entrepreneurs are considering the benefits of quitting the UK in favour of more appreciative shores for their ventures.

The current issues that seem to be focusing the minds of British entrepreneurs on far-off lands are the business investors needed to replace a practically non-existent bank lending system for SMEs, and Darling’s failure to convince the country of his commitment to helping SMEs despite the policy announcements he made back in December last year.

The truism that there are always more business investors needed than ventures needing their help is just a fact of financial life, but we’ll cover that later in this article.

Back in the long distant past of December 2009, Alistair Darling’s Pre-Budget Report set out a number of initiatives to support entrepreneurs in their activities. He promised £500m to a capital growth fund to support small businesses and proposed an extension to the Enterprise Finance Guarantee scheme (EFG) to 31st March 2011. His tax incentives were to delay the increase of some SMEs’ corporation tax, to extend the property rate relief on some properties, and to prolong the life of the “time to pay” scheme, all to encourage SMEs to develop their ventures here in the UK.

Unfortunately the proposed increase in National Insurance and the bounce back of VAT to 17.5% counter any good that could have come from these initiatives.

The Government also seems to be doing little – as we may have mentioned once or twice before in this blog – to encourage bank lending to businesses. SMEs have been hung out to dry, and it is only the efforts of those who respond to the call “business investors needed” that have kept many a small business alive and kicking throughout this banking drought.

The Government seem to be throwing their hands up in surrender; a Treasury paper has just been sent out asking businesses to give their suggestions on ways that small firms could raise the funds they need to launch, develop and grow. Maybe they should have thought about asking that question before they spent countless billions in taxpayer’s money on a banking system that seems unwilling to help!

Angel investing has helped, but the number of business investors needed to support the demand for funds by SMEs is massive and although growing in numbers, Angels are just not a force strong enough alone to fill the vacuum left by an inactive banking system.

To keep our home-grown entrepreneurial talent at home we must encourage the Government to make the UK a more appealing place to launch and pursue a venture adventure. And we must also encourage those wealthy individuals already successful in their own enterprises to bolster the ranks of the business investors needed to support the recovery of our economy.

© Emilio Labrador