Angels inject £24m in early stage firms as banks back off

Investors pumped 23.9 million into 104 early-stage companies last year, compared with the 19.4m given to 75 firms in 2009.

Figures from Linc Scotland, the national association of business angels, showed that the average size of business angel investments fell from 258,000 to 229,000.

The total amount invested by public sector bodies, such as Scottish Enterprise, dropped from 9.7m to 8.8m, Linc Scotland claimed.

David Grahame, chief executive of the business angel network, said: "2010 was another record year for angel investment and we are tremendously encouraged by the number of strong, investable proposals coming from dynamic early-stage Scottish companies.

"The entrepreneurial community has not been deterred by the difficult economic conditions and our members have responded to that by investing more in fledgling businesses than ever before."

Grahame added: "We are providing vital support for early-stage companies that might otherwise struggle to attract funding in the current economic climate.

"Our members are focused on making long-term commitments rather than engaging in short-term deals."

Grahame emphasised that while funding was an important part of the work business angels undertook, they also advised start-up businesses on how to grow their sales and other strategic advice.

Members of Linc Scotland provided 12.5m of last year's funding total, with other business angels providing the other 11.4m.

Earlier this month, Linc Scotland revealed that it had raised a further 1m from the European Regional Development Fund to finance its work in the sector.