There is a consensus that scale-up companies have a positive impact on productivity. The UK is believed to have a deficiency in scale-ups which, in turn, is thought to contribute to its low productivity. The concentration of scale-ups in the South East and East of England and their under-representation in the North is also thought to contribute to regional variations in productivity. Discussion of the barriers to scale-up have focused on access to venture capital and the ability to recruit members of top management teams with scale-up experience. These are particular challenges outside of the South East. However, the debate has been based on an inappropriate definition of scale-ups. Moreover, many companies that have scale-up potential or have started to scale are acquired by larger companies and so drop out of the statistical base, exaggerating the UK’s scale-up deficiency. There is a lack of clear evidence on the effect of acquisition on the acquired companies.
The chapter reviews the definition of business angels, stressing that love money and angel investing are conceptually different. It emphasises the key features of business angels: they are investing their own money, investing in private unquoted companies, investing directly and are motivated by commercial returns. However, the emergence of managed angel groups has challenged the continued validity of some aspects of this definition. The author then reviews the various ways in which researchers have sought to identify business angels, either for sampling purposes or to estimate the size of the market. Each of the sources reviewed has significant deficiencies. The author is therefore of the same view as Wetzel that the population of business angels ‘is unknown and probably unknowable’. However, he does see the emergence of angel groups as an important development, comprising a significant investment category in their own right and which is visible, in contrast to solo angels who operate informally and so remain largely invisible. He therefore advocates that efforts should be made to collect investment information from such groups on a regular basis.