business angel investing: awareness seminar
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Business Angel Investing:Awareness Seminar4th March 2010Brewin Dolphin, Newcastle upon Tyne
Welcome
Dan BrophyChief Executive, Entrust
Introduction
John DunsDivisional Director, Business Development & Marketing, Brewin Dolphin
Did you know?
· One of the largest independent private client investment managers in the UK
• Over £20 billion assets under management
• Significant financial planning expertise
• Investment Banking Division with National coverage
• Corporate adviser to over 100 corporate clients and Institutional clients
Graham ThrowerBoard Member, North East Access to Finance
Anthony ClarkeChairman, British Business Angels Association
Angel InvestingThe Risks and Rewards
Definition of a Business Angel
“An individual, acting alone or in a formal or informal syndicate, who invests his or her own directly in an unquoted business in which there is no family connect and who, after making the investment, takes an active involvement in the business, for example, as an advisor or member of the board of directors”.
Prof Colin Mason and Prof Richard Harrison, UK 2007
CAPITAL NEEDS
TIME
SEED START-UP EARLY GROWTH
SUSTAINED GROWTH
HIGH RISK
LOW RISK
Co-investment
Funds Business Angels
Formal Venture Capital
ExitIPO/Trade Sale etc
Finance Ladder
PRE-SEED
Friends, Family,
Neighbours
The Market• UK Business Angels invest £750m p.a.• BBAA – 24 networks – 6,000 angel members• Approx 18,000 Angels (UK EIS statistics) • 2007 – VCs invested £434m in start-up/early stage• Equals 50% of angel investment
----• EU: £3bn – £3.5bn invested p.a. (EBAN 2008)• EU:50,000-75,000 angels; UK = 30% Europe market
• US: £18bn invested p.a.• US: 225,000 angels; 10,000 invest in angel groups
Trends in Angel investingSyndication• Angels increasingly investing in groups to leverage level of finance required by Entrepreneurs and skills of angels
• (£500k deal; 5-10 angels; each angel 30k average) - Lead Angel
appointed)• US Angels investing in groups have average 27% return (ACA and Kauffman)
Angels Investing alongside VCs• 41% of early stage VC deals in UK were public and private sector syndications• 72% of US Angels have done deals alongside VCs
Co-investment funds• Increasing number of funds set up on side of networks to close equity gap and attract new angels to the market across Europe
Recent Research on Angel Investing
NESTA-BBAA “Siding with the Angels”- May 2009• Angel Investing = Most significant source of investmentin early stage companies - more than half of investments made were pre-revenue.•Business angel investment does carry risks - 56% of all deals not returning their stake money.
• But ….. 22% IRR return overall
•Shows importance of promoting Business Angel finance as an important Asset Class to wealthy and sophisticated individuals
Recent Research:Angel Returns
% of Exits
Multiple Category
Industry ExperienceAffects Outcomes
% of Exits
Multiple Category
Due DiligenceAffects Outcomes
% of Exits
Multiple Category
Board InvolvementAffects Outcomes
% of Exits
Multiple Category
BBAA Campaign 2009-10• Build on Research results to promote awareness of angel investing across the UK regions – Promote recognition of this Asset Class
• Recruit individuals with Business skills, expertise and Smart Money
• Government (BIS) and RDAs backing the campaign
• Regional Awareness events – identify new Angel investors to join local networks
• Build the capacity of new angels to be effective investors
• Opportunities for wide range of agencies to get involved
Angel Investors Checklist• High net worth or self certificated as sophisticated?• How much can I afford to lose?• My age and other commitments?• Active/Passive investor?• Single/syndicate investor preference?• My own skill sets/entrepreneurial background?• Sector preference/my experience?• Stage: Start up/ early stage/development?• Tax Planning: EIS Scheme Tax Breaks?• Marketability/location of investments?• 10x return on start up/early stage investing
Investor Panel
Anthony ClarkeAlistair ArkleyChris ThompsonJohn Josephs
North East Angel FundJonathan GoldOperations Director, Rivers Capital Ltd & Chief Executive, Finance Tree Ltd
RCP is a joint venture between E-Synergy Ltd and Finance Tree Ltd
• London based VC firm
• Manager of several UK funds
• Run AngelNet
• John White - CEO
• North East based Corporate Finance and Investment Readiness training firm specialising in early stage companies with high growth potential
• Jonathan Gold - CEO
E-Synergy Ltd is authorised and regulated by the Financial Services AuthorityAs a parent of Rivers Capital Partners Ltd, E-Synergy Ltd will carry out all regulated business on behalf of RCP until it becomes independently authorised
• Fund Size: £7.5m capital• Deal Size: £50-£150k initial deal size, capacity to follow-on
• Can do stand-alone transactions• Mostly equity deals with potential for gearing• Focus is generalist, likely to be relatively early stage
• Looking for management ability, market size and innovative products• Process around 8-12 weeks – includes introduction to Angels
• Responsible for stimulating Business Angel activity in the Region
For more information contact:
Steve Garbutt Fund Manager
[email protected] 0191 230 6370
16-18 Hood StreetNewcastle-upon-Tyne NE1 6JQ
0191 230 6370
www.riverscap.com
To join AngelNet contact:
Natalia Blagburn Investment Executive
[email protected] 0191 230 6370
North East Business Angel NetworkJane RidleyHead of Operations, Entrust
Investor Forum • Showcasing high-growth knowledge based companies
• A network which includes private equity and venture capital investors, business angels, successful entrepreneurs, business advisors and corporate financiers
• 282 network members of which 123 are business angels
• Presentation events take place 5-6 times per year involving 4 or 5 pre- vetted investment opportunities
• Since July 2007 we have showcased over 50 investment propositions, helping businesses to raise in excess of £1m
• Legal, Tax and Regulatory Guide
• Upcoming Events;
Business Angel Master Class – 25th March 2010Business Angel Master Class – 22nd April 2010Presentation Evening – 29th April 2010Presentation Evening – 24th June 2010Presentation Evening – 23rd September 2010
Thank you to our host and sponsors:-