Why investment can begin at home
For many years, locally based investors have cast the net far and wide looking for exciting opportunities that offer a good return on investment. But in recent years we have started to notice a trend that shows more of these investors are looking much closer to home when choosing who and what they want to back.
According to a UK-wide survey by IW Capital of 2,000 people with £100,000 or more to invest, 42% say they would support a local business or entrepreneur who benefits their community.
While these positive intentions should be seen as very encouraging, we clearly need to do more to convince investors that early stage businesses in Northern Ireland are as worthy of their investment as those anywhere else in the UK and Ireland.
Figures released last month from the Enterprise Research Centre's UK Local Growth Dashboard report showed that last year in Northern Ireland there had been a 15% drop in the number of active start-ups compared with the year before, a steeper decline that the UK average.
This week, Belfast will host the Ready Steady Grow! 2019 series of regional events organised by the Enterprise Investment Scheme Association (EISA) in The Mac, Belfast. The event is an opportunity for entrepreneurs, investors and business advisers to meet and share knowledge of the funding options and growth finance available to start-ups and SMEs.
The story they will be telling - as the Fund Manager of Co-Fund II and facilitators of the HBAN angel investment network in Northern Ireland - is that there are brilliant opportunities here at home to invest in innovative, disruptive early stage companies who have a real chance of scaling up and making it on an international stage.
Like any early stage investment, working with companies at this phase of their development can require a lot of time, money and effort.
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But there has been a steady stream of success stories that show the benefits such as haircare brand We Are Paradoxx, software company Bluesona and sports tech firm Pitchbooking.
Crowdfunding has become the go-to platform for businesses looking to raise capital fast. Popular sites such as Kickstarter, Crowdcube and GoFundMe have opened the doors to investments in tech, board games, fashion and even potato salad.
And while any angel investor worth his or her salt will know that investing in any start-up business carries a risk, there are ways to mitigate that risk.
The Enterprise Investment Scheme (EIS) for example entitles investors to a tax relief if the company they are investing in is not listed on the Stock Exchange.
Investing in these companies carries high risks for investors, such as loss of capital and low market liquidity. EIS is therefore a tax incentive for investors to help outweigh the risks in exchange for investment.
Throughout the year, we have seen a wide variety of businesses pitch for investment at HBAN. One thing all these businesses have in common is ambitious local entrepreneurs at the helm and that is an attractive proposition to business angels.
Of course, that's not unique to Northern Ireland, but why travel if you can find the right level of potential, excitement and community impact from start-ups on your own doorstep?
We have realised that many of the companies we see have simply lacked the opportunities to approach local investors and as such have ended up relying on bootstrapping or using crowdfunding sites.
With access to investors who are open to supporting local business and helping them accelerate their growth, we could see many more of our early stage companies making an even bigger contribution to the economy.