“ Measures to Accelerate the UK Angel Market” Managing Director – GLE Growth Capital/Seraphim Capital Chairman – British B...
<ul><li>GLE Growth Capital </li></ul><ul><li>“ Angels and Angel Co investment Funds” </li></ul><ul><ul><li>London Business...
<ul><li>* EIF identifies not just an equity gap but a “management gap” in early stage tech cos. Business angels can play a...
<ul><li>Big gains for risks involved  (8 – 10 x in 5-7 yrs) </li></ul><ul><li>SMEs with a clear/concise Business Plan </li...
<ul><li>Business Angels/ UK Market </li></ul><ul><li>Est. 18,000 + angel investors? </li></ul><ul><li>Circa 90% male </li>...
<ul><li>UK   VC’s investment in 2006 </li></ul><ul><li>VC Investment in start ups £531m – 245 SMEs </li></ul><ul><li>VC In...
<ul><li>E quity For Early Growth SMEs   </li></ul><ul><li>Various sources of equity finance : </li></ul><ul><li>< £100k:  ...
<ul><li>Finance Ladder </li></ul>CAPITAL NEEDS TIME SEED START-UP EARLY GROWTH SUSTAINED GROWTH HIGH RISK LOW RISK Friends...
<ul><li>UK – Angel Tax Breaks/EIS Scheme </li></ul><ul><li>Income tax set off (20%) for each £1of angel investment up to £...
<ul><li>BBAA -  Trade Association for UK Business Angel groups and networks. Established 2004 now has 75 members </li></ul...
<ul><li>UK Angel Regulation “Light Touch” </li></ul><ul><li>Investors can self certify themselves as -  HIGH NET WORTH IND...
High Net Worth <ul><li>Earnings of at least £100,000 p.a. </li></ul><ul><li>or </li></ul><ul><li>Net Assets of at least £2...
Sophisticated <ul><li>Member of a BAN/Syndicate of Business Angels  for at least 6 months </li></ul><ul><li>Made more than...
<ul><li>Angels and University Spin Outs </li></ul><ul><li>Angels now showing an interest in rich IP and assisting as busin...
UK Experience of University Spin Outs* <ul><li>435 Spin-Outs – 36 universities </li></ul><ul><li>46% life science/ 38% IT ...
Business Angels and Spin outs <ul><li>Business angels provide pre VC Funding </li></ul><ul><li>Invest after validation of ...
<ul><li>Investment Readiness /  Fit for Finance </li></ul><ul><li>“  Demand side support to entrepreneur delivered by inve...
<ul><li>Summary of key interventions to accelerate UK angel market </li></ul><ul><li>Raise awareness / National Federation...
<ul><li>Angel Tips </li></ul><ul><li>“ Early stage investing is like drilling for oil…You can’t do just one”  John Hime </...
THANK YOU FOR YOUR INTEREST Anthony Clarke  Tel:  0044 207 089 2306 www.gle.co.uk www.bbaa.org.uk www.eban.org [email_addr...
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47. Measures to Accelerate the UK Angel Market"

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47. Measures to Accelerate the UK Angel Market"

  1. 1. “ Measures to Accelerate the UK Angel Market” Managing Director – GLE Growth Capital/Seraphim Capital Chairman – British Business Angels Association - BBAA President – European Business Angel Network - EBAN Anthony Clarke
  2. 2. <ul><li>GLE Growth Capital </li></ul><ul><li>“ Angels and Angel Co investment Funds” </li></ul><ul><ul><li>London Business Angels – A 25 year old angel network bringing SMEs and investors (known as business angels) together </li></ul></ul><ul><ul><li>London Seed Capital – A ‘seed capital fund’ – a £5million fund that invests in small businesses alongside business angels </li></ul></ul><ul><ul><li>Seraphim Capital – £30m Enterprise Capital Fund comprising £10m private and £20m public funds </li></ul></ul>
  3. 3. <ul><li>* EIF identifies not just an equity gap but a “management gap” in early stage tech cos. Business angels can play a key role but there are not enough business angels in the UK or Europe compared to USA with also a much higher deal size in USA </li></ul><ul><li>* Francis Carpenter Chief Exec European Investment Fund: BVCA Technology Spin Out Conference London 26 th September 2006 </li></ul>European Investment Fund ( EIF)
  4. 4. <ul><li>Big gains for risks involved (8 – 10 x in 5-7 yrs) </li></ul><ul><li>SMEs with a clear/concise Business Plan </li></ul><ul><li>Minority shareholder legal protection </li></ul><ul><li>Potential for explosive growth </li></ul><ul><li>Involvement post investment </li></ul><ul><li>Exit in medium term ( 5-7 Years) </li></ul>Business Angel = private investors who invest their own patient money Angel Network = organisation that links suitable businesses to its membership of Angel investors UK Business Angels
  5. 5. <ul><li>Business Angels/ UK Market </li></ul><ul><li>Est. 18,000 + angel investors? </li></ul><ul><li>Circa 90% male </li></ul><ul><li>Typically Aged 40+ entrepreneurial background </li></ul><ul><li>Investing between £500m / £1billion p.a. </li></ul><ul><li>£3 billion invested in SMEs 2001/2006 </li></ul><ul><li>25 UK BANs </li></ul><ul><li>6 Angel Co investment Funds </li></ul><ul><li>6 Enterprise Capital Funds. 4 more to follow in 08 </li></ul>
  6. 6. <ul><li>UK VC’s investment in 2006 </li></ul><ul><li>VC Investment in start ups £531m – 245 SMEs </li></ul><ul><li>VC Investment in early stage £415m – 255 SMEs </li></ul><ul><li>VC Investment in Expansion £1,836m – 490 SMEs </li></ul><ul><li>European VC’s investing in start up/early stage returns -1.8% IRR over 5 years/ 1.3% IRR over 10 years to 2004 compares to 20%+ IRR in USA </li></ul><ul><li>UK VCT’s currently have over £1,000m available to invest. Typically investing circa £2m+ </li></ul>
  7. 7. <ul><li>E quity For Early Growth SMEs </li></ul><ul><li>Various sources of equity finance : </li></ul><ul><li>< £100k: Friends and Family </li></ul><ul><ul><li>£100k -£750k: Business Angels’ (private investors) / publicly funded VC’s ( Capital Fund) </li></ul></ul><ul><ul><li>£750k - £2m: Enterprise Capital Fund </li></ul></ul><ul><ul><li>£2m+ - VCs </li></ul></ul><ul><ul><li>How do these link together? </li></ul></ul>
  8. 8. <ul><li>Finance Ladder </li></ul>CAPITAL NEEDS TIME SEED START-UP EARLY GROWTH SUSTAINED GROWTH HIGH RISK LOW RISK Friends, Family, Fools Business Angels/ Co-investment Funds Formal Venture Capital Exit IPO/Trade Sale etc Proof of Concept, Grants, Loans PRE-SEED
  9. 9. <ul><li>UK – Angel Tax Breaks/EIS Scheme </li></ul><ul><li>Income tax set off (20%) for each £1of angel investment up to £400k p.a. </li></ul><ul><li>Individual angels cannot own more than 30% of an SME </li></ul><ul><li>Previous gains rolled over for each £1 invested </li></ul><ul><li>No capital gains tax on angel exits after 3 years </li></ul><ul><li>Income tax/capital gains tax loss relief for failed angel investments </li></ul><ul><li>No inheritance tax on angel investments </li></ul><ul><li>Failed investments only cost 48p for each £1 invested </li></ul>
  10. 10. <ul><li>BBAA - Trade Association for UK Business Angel groups and networks. Established 2004 now has 75 members </li></ul><ul><li>Specifically does not promote investment opportunities to investors or to advisers </li></ul><ul><li>A member’s led organisation. </li></ul><ul><li>Lobby’s Government. Raises awareness </li></ul><ul><li>Member of EBAN </li></ul><ul><li>www.bbaa.org.uk </li></ul>British Business Angels Association
  11. 11. <ul><li>UK Angel Regulation “Light Touch” </li></ul><ul><li>Investors can self certify themselves as - HIGH NET WORTH INDIVIDUALS or SOPHISTICATED INVESTORS </li></ul><ul><li>Businesses can promote to individuals that they reasonably believe are self certified as high net worth or sophisticated </li></ul>
  12. 12. High Net Worth <ul><li>Earnings of at least £100,000 p.a. </li></ul><ul><li>or </li></ul><ul><li>Net Assets of at least £250,000 </li></ul><ul><li>Excluding their primary residence, rights under certain contracts of insurance, and certain benefits from pensions </li></ul>
  13. 13. Sophisticated <ul><li>Member of a BAN/Syndicate of Business Angels for at least 6 months </li></ul><ul><li>Made more than one investment in unlisted companies in the previous 2 years </li></ul><ul><li>Working ( or have worked in previous 2 years) in a prof. capacity in private equity sector or provision of finance for SMEs </li></ul><ul><li>Currently ( or in last 2 years) director with annual turnover of at least £1m </li></ul>
  14. 14. <ul><li>Angels and University Spin Outs </li></ul><ul><li>Angels now showing an interest in rich IP and assisting as business builders </li></ul><ul><li>Syndication model. Pre VC </li></ul><ul><li>Angels can help to create the business model </li></ul><ul><li>Post proof of concept funding </li></ul>
  15. 15. UK Experience of University Spin Outs* <ul><li>435 Spin-Outs – 36 universities </li></ul><ul><li>46% life science/ 38% IT </li></ul><ul><li>65% seed / 15% early stage </li></ul><ul><li>Need to secure equity finance to: </li></ul><ul><li>- proof of market </li></ul><ul><li>- applied research develop IP </li></ul><ul><li>- provide legal entity which IP can be held </li></ul><ul><li>* Spin-out Monitor, Library House,2005 </li></ul>
  16. 16. Business Angels and Spin outs <ul><li>Business angels provide pre VC Funding </li></ul><ul><li>Invest after validation of market and technology opportunity – Grant monies </li></ul><ul><li>External Validation / credibility for spin out </li></ul><ul><li>Access to Network of industry contacts </li></ul><ul><li>Access to market intelligence </li></ul><ul><li>Help in recruiting experienced management </li></ul><ul><li>Mentors to business </li></ul>
  17. 17. <ul><li>Investment Readiness / Fit for Finance </li></ul><ul><li>“ Demand side support to entrepreneur delivered by investment experts” </li></ul><ul><li>Creative Business Accelerator </li></ul><ul><li>High Growth Coaching </li></ul><ul><li>Easy Project </li></ul>
  18. 18. <ul><li>Summary of key interventions to accelerate UK angel market </li></ul><ul><li>Raise awareness / National Federation: BBAA </li></ul><ul><li>Tax Breaks for angel investors </li></ul><ul><li>Angel Co Investment Funds </li></ul><ul><li>Light regulation </li></ul><ul><li>Investment Readiness programmes </li></ul>
  19. 19. <ul><li>Angel Tips </li></ul><ul><li>“ Early stage investing is like drilling for oil…You can’t do just one” John Hime </li></ul><ul><li>“ Invest in what you like” Randy Komisar </li></ul><ul><li>“ Trust your intuition and Judgement” Mitch Kapo </li></ul><ul><li>“ Do multiple deals, with professionals” Bill Sahlma </li></ul><ul><li>“ Find and watch other angels first” Dick Morley </li></ul><ul><li>“ “ Check the cars, expenses, cash and the working hours” Paul Hudson </li></ul><ul><li>“ Try and find the PEG’s… potential for explosive growth” Michael Jackson </li></ul>
  20. 20. THANK YOU FOR YOUR INTEREST Anthony Clarke Tel: 0044 207 089 2306 www.gle.co.uk www.bbaa.org.uk www.eban.org [email_address]

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