Business angel investing during the COVID-19 economic crisis: evidence from Scotland

Mason, C. and Botelho, T. (2021) Business angel investing during the COVID-19 economic crisis: evidence from Scotland. Venture Capital, 23(4), pp. 321-343. (doi: 10.1080/13691066.2021.2019564)

Abstract

The onset of the coronavirus pandemic in early 2020 quickly gave rise to a concern that the resulting economic uncertainty would produce a collapse in angel investing. In view of the critical role that business angels play in financing the start of the entrepreneurial pipeline, a decline in their investment activity would have a negative effect on the ability of entrepreneurs to start and commence the scaling process which, in turn, would compromise an entrepreneur-led economic recovery from the coronavirus pandemic. This paper draws on two unique data sources on investments made by business angels in Scotland before and since the onset of the pandemic. It shows that business angels continued to invest since the onset of the crisis although their investment activity declined sharply between Q2 and Q3 2020. Investment activity stabilising in Q4 and has significantly increased during 2021 and is now above pre-Covid levels. Angels have increased their emphasis on follow-on investments and in businesses that have raised one or more previous rounds of funding. This highlights a potential problem for entrepreneurs seeking to raise their first round of angel funding that policy-makers need to address.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Mason, Professor Colin
• Authors: Mason, C., and Botelho, T.
• College/School: College of Social Sciences > Adam Smith Business School > Management
• Journal Name: Venture Capital
• Publisher: Taylor and Francis
• ISSN: 1369-1066
• ISSN (Online): 1464-5343
• Published Online: 28 December 2021
• Copyright Holders: Copyright © 2021 Taylor & Francis
• First Published: First published in Venture Capital 23(4):321-343
• Publisher Policy: Reproduced under a Creative Commons License