Background
The Regional Angels Programme (RAP), launched in 2018 by British Business Investments (a commercial subsidiary of the British Business Bank (BBB)) was designed to address stark regional disparities in access to early-stage equity finance in the UK. With only 34% of venture capital investment historically reaching regions outside London, the South East and East of England, RAP aimed to
- Increase the supply of early-stage equity capital across the UK
- Promote angel investing in under-represented regions
- Generate a market rate of return on public investment.
Fortia Insight (previously RSM UK Consulting LLP) was commissioned to conduct an independent evaluation of RAP, focusing on the need for intervention, the application process and emerging impacts.
Fortia Insight adopted a mixed-methods approach to evaluate the Regional Angels Programme, combining qualitative insights with quantitative analysis. This included a review of programme documentation, monitoring data and secondary sources, alongside interviews with delivery partners, policy stakeholders and industry experts. These elements provided a comprehensive understanding of the programme’s design, delivery and early outcomes.
To assess impact, Fortia Insight applied a difference-in-differences (DiD) econometric model, comparing RAP-funded firms with a matched counterfactual group to estimate the programme’s effect on business outcomes such as fundraising. Moreover, the evaluation used the Four Es framework – Efficiency, Effectiveness, Equity and Economy – to provide an early assessment of value for money, recognising that many long-term impacts are still emerging.
In terms of broader impact, the study contributed to:
- A streamlined application process: the evaluation contributed to the redesign of the application process, resulting in a more efficient and timely experience for applicants; the delivery team has already implemented a new investment process that significantly reduced the time between application and funding
- Support for unregulated angels: in response to regulatory barriers, the programme has introduced mechanisms allowing FCA-regulated investors to support unregulated angels in the role of investment managers, broadening access to the scheme
- Encouragement of ecosystem development: the evaluation highlighted the importance of long-term support for regional entrepreneurial ecosystems; recommendations included incentivising inter-regional investment and fostering angel syndicates in underserved areas, drawing on lessons from the UK regions
- Foundation for future VfM assessment: the evaluation established a framework and identified data requirements for a fuller assessment of VfM to be conducted as more outcome data becomes available.
Challenges
- Data integration: combining monitoring data, desk research, interviews and econometric modelling required careful synthesis to ensure consistency and reliability and to form a cohesive analysis.
- Stakeholder diversity: engaging a broad spectrum of stakeholders, including delivery partners, policy officials and industry representatives, necessitated a balanced and sensitive approach to capture a wide range of perspectives.
- Early-stage impact assessment: many RAP-funded businesses were still in the research and development phase, and as such, long-term outcomes were yet to fully materialise at the time of the evaluation. Additionally, the regulatory framework – particularly the requirement for Financial Conduct Authority (FCA) authorisation – posed a barrier to participation for some potential partners, which had to be carefully considered in the evaluation.
- Value for money (VfM) analysis: conducting a VfM assessment with limited long-term data required the use of proxy indicators and early-stage metrics, with the understanding that a fuller assessment will be possible in future.
Impacts
- Strong regional reach: a significant majority of RAP funding – 78% of BBB’s capital and 75% of total investment – was directed to businesses outside of London, exceeding the regional distribution achieved by comparable schemes.
- Support for early-stage, high-potential firms: RAP-funded companies were typically small and innovative and were often operating in R&D-intensive sectors, with nearly half in the information and communication industry.
- Improved diversity: the programme supported a higher proportion of female founders than the market average, contributing to greater inclusivity in early-stage investment.
- Catalyst for follow-on investment: RAP funding helped unlock new investment opportunities and signalled growth potential to other investors, particularly in regions with less developed angel ecosystems.