“We should be loving (Business) Angels instead”: more support for equity finance and business angels are needed
September 14, 2009
- Tax incentives, such as France’s solidarity tax exemption as an example of providing tax incentives without falling foul of EU State Aid rules.
- Support for networks, which can help business angels identify investment-ready businesses and leverage the experience and capital of their peers. Subsidising the gate-keeping function of angels is one easy way for governments to make a real difference without spending much.
- Developing investment-readiness – Angel investors are constrained by a lack of opportunities rather than by a lack of funds –accountants need to build demand for equity finance by helping SMEs understand the benefits of equity and signal their value to potential investors.
- Developing exit routes. – Equity investors don’t make any money from their investment unless a business is sold or goes public. Exits could become more attractive and more numerous if businesses were able to achieve fairer valuations (for instance, by better valuing intangible assets) and investors could be lured with lower levels of capital gains tax.
However, interventions into the angel investment market are no simple matter and there are great concerns that the EU institutions and governments do not have enough information on Business Angels to inform policy in this area. ACCA’s SME Committee is hence actively working to correct that.