Heaven-sent investors bring expertise, commitment and money to the table
For business owners seeking to access angel finance, the first step is to ensure your company qualifies for the scheme.
One source of funding for start-up and growth-phase companies that has been growing in importance in recent years is angel investment.
Business angels are typically entrepreneurs who invest capital in early-stage businesses in return for a minority stake. But they bring a lot more than money, they also bring their time, skills, contacts and business knowledge to bear to support the companies on their growth paths.
“The introduction of the new Angel Investor Capital Gains Tax (CGT) Relief is a welcome development for Ireland’s innovation ecosystem,” says Anne-Marie Turley, head of fintech, financial services and cybersecurity at Enterprise Ireland.
“By offering a reduced capital gains tax rate of 16 per cent for individual investors and 18 per cent for qualifying partnerships, this initiative is designed to stimulate investment in early-stage, innovative SMEs — precisely the kind of businesses Enterprise Ireland supports every day.”
For business owners seeking to access angel finance, the first step is to ensure your company qualifies for the scheme, she advises. “Enterprise Ireland can support you through this process by helping refine your business plan and connect you with potential angel investors through our extensive network and events. Enterprise Ireland encourages founders to consider all funding options carefully and to seek advice before committing.”
BDO head of entrepreneurial services Mark Waldron agrees that the new tax relief is very appealing to angel investors. He also points out that many Irish companies have successfully leveraged this type of investment but notes the compliance complexity involved.
“For founders, the main routes for securing angel investment include personal contacts, structured angel groups such as HBAN [Halo Business Angel Network] Ireland, university spin out funds and referrals through advisers,” he says. “To qualify for the new Angel Investor Relief, companies must be innovative SMEs, secure Revenue certificates and issue ordinary shares before the December 2026 deadline.”
The Halo Business Angel Network is an all-island organisation funded by Enterprise Ireland and InterTradeIreland, which connects individual angels and syndicates to start-ups across the island of Ireland. In July it was named Europe’s Best Performing Business Angel Network by the European Business Angel Network (EBAN), the pan-European representative body for the early-stage investor community.”
The pitfalls can be the time and cost involved in preparing for investment, including Revenue certification, legal structuring and investor-ready financials, along with restrictions on share terms and the risk that not every angel will be the right strategic fit, Waldron adds.
“For early-stage businesses, however, the right investor can be transformative. HBAN Ireland often notes that angel investment is about more than money. It brings mentorship, expertise and access to networks. I would encourage business owners to seek advice and leverage the supports in the ecosystem that can provide valuable direction and assistance.”
Focus Capital Partners head of tax Andrew Kenny emphasises the importance of the new tax incentive.
“From a commercial perspective, sourcing investment from angel investors who qualify for the angel investor CGT relief can be an efficient source of capital given that at least a portion of the return the investor is seeking is derived from the tax relief,” he says. “This typically reduces the amount of commercial return expected from the company by the investor and can make it attractive compared to other sources of equity.”
From a tax perspective there are a few big considerations, he says. “Does the company meet the conditions required to allow investors to claim the relief and, in particular, will it be in a position to obtain a Certificate of Commercial Innovation from Revenue? Can it satisfy the necessary conditions for the full term of the relief – being three years – to avoid a claw back of the relief for investors. If a company can satisfy those conditions, it makes angel investment an efficient source of capital as the investment proposition and return for the investor is comprised at least partly of the tax relief on disposal and provides flexibility on the nature of the investment return offered to investors.”
Finding a suitable angel investor can be relatively straightforward.
“For most companies, angel investors can be sourced through a variety of advisers but specifically accountants and tax advisers whose clients are interested in angel investments,” says Kenny.
