The Liverpool City Region Combined Authority has awarded £500,000 funding to the network, which is currently funded by not-for-profit funder Merseyside Special Investment Fund (MSIF), which will match the investment with a further £500,000.

The network will contribute to the city region’s ambition to invest 5% of its economy on Research and Development (R&D) by 2030 – nearly double the government’s UK target – making it easier for high-growth technology and research and innovation businesses to access early stage funding.

The project will ensure that more SMEs in the region can benefit from targeted investment and mentoring from private “angel” investors – individuals who invest their time and expertise (as well as capital) to help young companies grow. It is intended that the network will ultimately become self-funding.

Plans to boost the network were developed in response to research carried out by MSIF into early stage funding in the region and reflect the support that businesses want to see put in place.

Speaking about the funding, Steve Rotheram, Mayor of the Liverpool City Region, said:

“SMEs account for 99% of the Liverpool City Region’s businesses community.  Their success is vital to our region and its long-term road to recovery from the damage inflicted by the pandemic.

“As we rebuild our economy, I want to make sure that we are harnessing our region’s full potential to innovate and bring greater prosperity to the 1.6m people who call it home. The LCR Angel Network is key in helping us to achieve that ambition, helping local SMEs to access new investment and mentoring. This £1m funding injection will help even more local businesses to access new opportunities to grow and succeed.”

John O’Brien, Chair of MSIF, said:

“I am delighted to see the financial support that the Combined Authority is now committing to the LCR Angel Network alongside MSIF. This not only allows the Angel Network to continue but will enable it to develop with dedicated resource and funding to reach more Business Angels and bring forward more exciting business opportunities from the region’s pool of talented entrepreneurs.”

In order to drive diversity among angels and the businesses it supports, this strengthening of the network has been developed following best practice on diversity and inclusion, in collaboration with the UK Business Angel Association (UKBAA).

LCR Angel Network was established in 2018 by MSIF, Brabners and Grant Thornton, to encourage investment by individuals in companies at the early stage of their lifecycle. It is currently run on a pro bono basis by MSIF and Brabners, with approximately 100 investors in the network, but operation has been hampered by a lack of dedicated resources.

The £1 million funding will support the growth and development of the city region’s angel investment community, early-stage funding landscape and the wider Liverpool City Region business and innovation ecosystem over a five-year period.

The network will now have dedicated resource to further develop a platform to share pre-qualified investment opportunities with investors. It will continue to organise angel pitch events and will now recruit additional angels from the city region and beyond and encourage them to work together.

High-growth technology and research and innovation businesses can struggle to access finance as they may not see significant revenue or profitability for several years, making it difficult for them to take on debt.

Investment from Angels often comes in the form of equity risk capital, which can be crucial for early-stage businesses, allowing them to prove their revenue model and product, then secure larger venture capital funding and scale.

The challenges for securing early stage funding are particularly acute in the Liverpool City Region.  By stimulating more activity amongst existing investors and attracting new investors to the city region, the LCR Angel Network will make a huge difference to early-stage businesses who currently have all the ingredients to scale up other than access to financial capital.

The network aims to:

• Increase the number and diversity of angels actively participating.

• Create an approachable network that local entrepreneurs from all backgrounds can easily access.

• Increase investment activity, competence and experience in the LCR.

• Fully integrate the network with the wider LCR ecosystem (for example with the LCR Finance Hub’s investment readiness service).

The project will be delivered by a not-for-profit newco and wholly owned subsidiary of MSIF. Activities enabled by CA-funding will be guided by a project steering group which includes MSIF, LCRCA, UKBAA, local business and angel investor representation.