The rise of the European business angel

The concept of angel investing - in which individuals devote both their time and money to nurturing young companies - has evolved over the past decade from an unknown or poorly understand phenomena in many parts of Europe to an established form of finance.

According to the Europe Business Angel Network (EBAN) the number of angel networks mushroomed since 1999 from 66 networks with 470 members to 228 networks with more than 12,000 members by the middle of 2005.

In Germany and France, the growth of angel networks during the Internet era was meteoric, after which they underwent a rationalisation period. Germany went from having no networks in 1999 to 63 networks in 2000. Today, Germany is Europe’s top country for business angel networks at 43. France also grew from a low base of 4 networks in 1999, then peaked at 48 networks in 2003. That has since fallen to 38 networks, according to the EBAN figures. Sweden got on the bandwagon only as recently as 2003, going from 9 networks in 2003 to 28 today.

The UK was far more advanced than the rest of Europe in embracing the business angel concept. In 1999, when most other European countries had no more than a handful of such networks, the UK already had 49 angel networks; that figure is currently down to around 35 networks.

Cultural attitudes towards wealth also vary greatly between the UK and the Continent, where high net worth individuals are generally much shyer than their UK counterparts. Theories abound as to why, one being that particularly in Catholic-dominated countries “one doesn’t speak about one’s money,” as one investment manager put it. Even in Germany, where networks have become well established, individual angels are reticent about their investments. Scandinavian entrepreneurs also report ambiguous attitudes towards financial success. “In Finland, we say, an entrepreneur must not succeed, but he must also not fail,” says Seppa Märko, director of the Emergent Business Research Coalition, who is working to put together a seed fund for seed companies from the city’s two universities.