Why negative interest rate environment may prove a boon for High Net Worth angel investors

Bank of England is about to witness a negative interest rate environment – a first in its 326 year history. Central bank officials have announced an additional £150 Billion stimulus package with an interest rate of 0.1% in order to boost consumer spending. While the negative interest rates now has become the reality, banks can now add more incentives to lend more through means of making loans cheaper but it may require account holders pay for holding money in their accounts.

What is angel investing attractive?

Angel investors are the financial aid who support a start up from its early stage by providing them the necessary funding and knowledge for a business. The investment could range anywhere between £5,000 and £50,000 per investment. This could prove to be highly risky as the success rates of such ventures are low. Angel investors may need years before they recover their initial investment if a business goes bust. In order to keep start-ups alive during the times of crisis, the UK government has come up with various tax reforms and relief programmes which also include the Enterprise Investment Scheme (EIS). This has encouraged £22bn to be invested in 31,365 companies.

But since the pandemic has struck, the interest rates seem to go on an all-time low and hit the investors the most. While they hope to see a positive return, it still is very uncertain. Investors can look at sectors such as digital health, healthcare, MedTech, BioTech, Life Sciences and Pharmaceuticals which are the current leaders in terms of opportunity and investor engagement. More than ever, this period will be the best time to get started with Angel Investing which is easier in the present days. HNWI should start looking at the most active networks to start investing. One could look at indicators such as variety of regions, sectors and investment sizes, previous investments to get a hold of the previous investments. While the negative interest rates may need to be given a good thought, a good strategy will definitely open up investors to new and exciting offers much more than just financial gains.