Investment: No flight of business angels: A recent survey dispels some of the common myths about venture capitalists in Britain

'VIRGIN', 'latent' and 'entrepreneur' angels are among six distinct types of wealthy individual investor identified in a report to be published this week that claims to be the most comprehensive survey of the market to date.

Besides the virgins (rich individuals looking to make their first investments), latents (those who have not invested in the past three years) and entrepreneurs (those who back many businesses both for fun and in preference to the stock market), there are 'wealth-maximising' angels (rich people who invest in several businesses for financial gain), and 'income-seeking' angels (less affluent people who invest to generate income or a job for themselves). The sixth type, the corporate angel, is not a true angel, but - as the name suggests - a company that makes angel-type investments, often for a majority stake.

This classification helps explain and predict angels' different investment preferences and strategies, according to Hamish Stevenson and Patrick Coveney, authors of the report. 'It should also enable them to be separately targeted and encouraged to invest more,' they say.

This is particularly important since, the authors say, the survey's preliminary findings suggest that although angels attract attention, because of their potential economic importance in backing small companies, they remain a largely untapped source of finance.

The survey - undertaken at Oxford University and sponsored by Venture Capital Report, a leading business- introduction agency - targeted angels associated with established business-introduction agencies, yet 37 per cent of the 500 respondents were virgins.

However, the findings suggest the total amount of funds invested by active angels in Britain is significantly greater than the previously oft-quoted 'guesstimate' of pounds 2bn. Indeed, preliminary findings in the latest report suggest that more than pounds 60m was invested over the past three years by the angels surveyed. Moreover, 70 per cent of those surveyed said they would have liked to make more investments if they had come across suitable opportunities; 76 per cent expected to increase their investments during the next five years.

Another misconception the authors claim to correct is the relative wealth of British angels compared with those in the US.

Although there are far fewer of them, they are more like their American counterparts in terms of income and investment activity - as well as wealth - than previous surveys had suggested. A third of those surveyed were millionaires, and many had founded their own successful businesses.

'That there are angels in Britain who are much richer and make more regular investments on a much larger scale than portrayed by previous researchers should help redress the prevalent image imposed by the previous smaller surveys. These new findings suggest that the image of angels as typically making small, local investments is a fallacy,' they say.

The survey is based on a detailed mail survey carried out earlier this year of angels who had either used or were considering using the services of business introduction agencies. Mr Stevenson, a director of Venture Capital Report, and Mr Coveney, who is completing research at Templeton College, Oxford, where Mr Stevenson was previously a research associate, plan to carry out further analysis and publish a final report early next year.

Free copies of 'Survey of Business Angels, Fallacies Corrected and Six Distinct Types of Angel Identified', are available from Venture Capital Report, Boston Road, Henley-on-Thames, Oxfordshire (0491 579999).