Background information

In 2013, Law No. 14/2013 to support entrepreneurship and its internationalisation established a wide range of fiscal incentives for investors and 'Business Angels' (a person - private investor- who invests time, money and expertise in a company, usually SMEs).

Thus, Business Angels offer their support to small and medium enterprises (SMEs).

Content of measure

Following Law No 14/2013, the main incentive for investors and 'Business Angels' settles that 'Business Angels' are entitled to a deduction of 30% (with a maximum of €6,000 in 2020) in the quota of the personal income tax (Impuesto sobre la Renta de las Personas Físicas, IRPF) in order to encourage the uptake by companies of new or recent creation. In Spain, there are associations such as the Spanish Association of Business Angels that bring together SMEs with private investors who have a high level of experience and strong business skills. The investors bring capital and expertise, gained from running their own company.

Examples of Business Angels are: ESBAN, ACC1Ó, ASBAN, GOBAN, AEBAN.

Use of measure

The 2022 AEBAN Report (Spanish Association of Business Angel Networks) shows that 2021 was an intense year in terms of angel activity. Business angels continued to fund the startups in their portfolios, with 79% of them having made follow-ons. A significant proportion of business angels invest through venture capital funds (36%) and crowdequity platforms (29%), in addition to direct investment in start-ups. Technology and software (39%), health and medical equipment (33%) and biotechnology (29%) were the most appealing sectors for investors in 2021. (AEBAN 2022 ).

Also, 2019 was a year of intense activity, 89% of investors increased their portfolios, with an average of 2.6 new transactions each, 49% of business angels continued to finance start-ups within their portfolios. Angel investment still has unresolved matters concerning the integration of women, who remain at 10% of the total. Banking, finance and technology (ICT) remain the most frequent background sectors for investors. The average investment ticket per start-up is mainly below €25,000. (AEBAN 2020 ).

In addition to this, more than 8% of investors report that they have more than €500,000 at their disposal in 2016, compared with only 3.2% in 2015. The percentage of investors placing less than €100,000 per year is only slightly lower than in 2015, indicating the need for co-investment as a means of diversification (less than 2% invest alone). With more diversified and larger portfolios, exit expectations increase. Angel investors cover a broad range of investment, from 4.6% who report an investment capacity of up to €5,000 per year to those who can invest a maximum of €5 million. In 2016, the bulk of investors gained experience primarily in two sectors: technologies (internet software, cloud services, etc.), which increased to 33%, and financial, which increased by 10 percentage points to reach 33% (including retail and investment banking and related services). The third most common sector was consultancy, with 8% of investors. In 2018, the average amount that each investor puts in a start-up has been reduced to €37,600. This represents a decrease of around 20% compared to the same values of the previous year. 16% of investors were not active in 2018. 73% made between 1 and 5 investments during that year. The software sector (56.7% of active investors) was the most popular sector, followed by biotechnology and pharmaceutical sectors (29.6%) and banking and finance (31%) (AEBAN 2016 , 2017 , 2018 and 2019 ).

Strengths: This scheme involves people with investment capacity and expertise in order to encourage innovation and competitiveness and to promote economic activities during the early stages of a company's development ( Soto-Moya 2016 , De los Ríos and Sáenz-Díez 2017 ).

Weaknesses: The Business Angels networks are neither recorded nor verified by any public or private institution. The lack of regulation can generate distrust towards Business Angels ( Del Pozo and Alemany 2017 ).

Target groups

Workers	Businesses	Citizens
Does not apply to workers	SMEs Start-ups	Does not apply to citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement as case not in social partner domain	No involvement as case not in social partner domain
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Unknown

Involvement

No involvement

Views and reactions

Unknown

Sources

• 29 March 2010: Orden ITC/860/2010 of 29 March (www.boe.es)
• 27 September 2013: Law No. 14/2013 of 27 September (boe.es)
• 01 January 2016: Soto- MoyaM. del M. (2016). Incentivos a la financiación empresarial: el caso particular de los business angels en España. Cooperativismo & Desarrollo, 24(108) (doi.org)
• 01 January 2017: Roure, J. and De San José , A. (2017), Business Angels Report, AEDAN, Spain (media.timtul.com)
• 01 January 2019: Roure, J. and De San José, A. (2019), Business Angels Report. La inversión in startups: actividad y tendencias, AEDAN, Spain (www.europeanesil.eu)
• 28 October 2022: European Commission (undated), Business angels, Internal Market, Industry, Entrepreneurship and SMEs, web page (ec.europa.eu)
• 28 October 2022: Business Angels (undated), Directorate of Business Angels Networks, web page (www.business-angel.es)