2. Business Angel Co-investment Fund
Rationale
• SMEs contribute strongly to employment growth and
innovation
• Business Angels have taken over from Venture Capital as
the main source of risk finance for early stage businesses
• Business Angels have limited capacity
• There is an opportunity to increase both the quantity of
business angel investing and the number of good active
syndicates
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3. Business Angel Co-Investment Fund
Objectives
• To improve the quantity and quality of business angel
investing in England and so to:
– Create or safeguard between 5,000 and 9,000 long-term high-
quality jobs
– Encourage new business angels through more attractive network
propositions
– Invest in and support high growth companies
– Attract a target of at least £2 of private money for every £1 of public
money invested.
– To recycle public funding to create a lasting legacy
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4. Business Angel Co-Investment Fund
Methodology
• Acting as a private investor within ‘partner’ networks and
syndicates. Access to all deal flow on the same basis as
other investors.
• Making rapid decisions in the way a business angel would
be able to, but
• Only investing where appropriate due diligence has been
carried out and the deal is properly structured
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5. Business Angel Co-Investment Fund
Methodology 2
• Able to invest up to c.£1m in any one company in any 12
month period or up to 50% of the total investment in a
round
• Modest fee paid to syndicate manager on completion of a
deal. Manager then responsible for information flows
• Standard paragraphs for legal documents to cover any
HMG needs otherwise syndicates lead the deals
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6. Business Angel Co-Investment Fund
Investment Decisions
• An investment committee to reflect that this is not a VC
fund and that it is administered but not ‘Fund Managed' by
CfEL
• CfEL will:
– Screen for eligibility
– Pre-screen for complete proposal
– Ensure management information received
• Investment committee will consider:
– Is the proposal complete (CfEL pre-screen)
– Any glaring omissions in DD e.g. customer referencing
– Is there a reasonable chance of this investment making a positive
return
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7. Business Angel Co-Investment Fund
Network/Syndicate Role
• Fund would be open to all networks or syndicates (Partners) that meet
its standards. Guidance will be developed on this but essentially need
to produce an investment paper that demonstrates DD and structure
and be able to sign up to legal agreements
• Partners expected to commit to bringing all deals that fit within fund
criteria to the fund; and that the fund will have access to all deals on the
same terms as their most favoured members
• Fund will pay a fee on investment but will not pay membership, joining
or any other ongoing fees
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8. Business Angel Co-Investment Fund
CfEL Role
• Capital for Enterprise Ltd will administer the fund, carry out the initial
checks on proposals from Partners and provide the secretariat for the
Investment Committee and any Governing Board activities.
• CfEL will also provide aggregate reporting (e.g. on numbers of
investments and jobs created) to the Regional Growth Fund
(Government)
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9. Business Angel Co-Investment Fund
Initial Bid Partners
• The initial bid partners represent a cross section of the angel
investment community. They have helped to put this bid together and
are potential partners of the fund.
• The initial partners will be consulted before any changes to the
administration or operation of the fund. They might be considered as a
kind of governing board.
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