Business Angel Investing During the COVID-19 Pandemic

The onset of the coronavirus pandemic quickly raised concerns that the associated economic disruption would result in a collapse in angel investing which—given their critical role in the entrepreneurial ecosystem—would have an adverse impact on entrepreneurial activity. Given the discretionary nature of investing in new and early-stage entrepreneurial businesses, the uncertainty about the impact of COVID-19 on their financial assets (e.g. shares, property) was expected to prompt angels to pause their investment activity. Meanwhile, those angels who continued to invest were expected to focus on their existing portfolios rather than making new investments. A further source of disruption was the shift in the investment process from face-to-face to online meetings. The evidence that emerged in the early months of the pandemic indicated that there had been a significant decline in angel investing. But by the autumn of 2020, there were clear signs of a recovery in angel investing. Moreover, contrary to expectations there has not been a sustained shift by angels to making follow-on investments in their portfolio companies and away from new investments. The resilience of angel investing reflects several factors. The confidence of angels increased as the COVID vaccine roll-out programme started, driving economic recovery and as they became more familiar with the new business environment. Moreover, entrepreneurs who had deferred seeking funding in the early months of the pandemic had return to the market. Angels also had the opportunity to see more deals as investment pitching moved online. Both angels and angel groups had also become more accustomed to the digital environment for connecting with people and more comfortable in investing in people that they had never met. And attractive investment opportunities had emerged as entrepreneurs developed creative and innovate solutions to the problems arising from the disruptions created by COVID.