Business Angel Investing: Awareness Seminar

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  • 1. Business Angel Investing: Awareness Seminar 4 th March 2010 Brewin Dolphin, Newcastle upon Tyne
  • 2. Welcome Dan Brophy Chief Executive, Entrust
  • 3. Introduction John Duns Divisional Director, Business Development & Marketing, Brewin Dolphin
  • 4. 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
  • 5. Graham Thrower Board Member, North East Access to Finance
  • 6. Anthony Clarke Chairman, British Business Angels Association
  • 7. Angel Investing The Risks and Rewards
  • 8. 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
  • 9. CAPITAL NEEDS TIME SEED START-UP EARLY GROWTH SUSTAINED GROWTH HIGH RISK LOW RISK Co-investment Funds Business Angels Formal Venture Capital Exit IPO/Trade Sale etc Finance Ladder PRE-SEED Friends, Family, Neighbours
  • 10.
    • 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
  • 11. Trends in Angel investing
    • Syndication
    • 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
  • 12. Recent Research on Angel Investing
    • NESTA-BBAA “Siding with the Angels”- May 2009
    • Angel Investing = Most significant source of investment in 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
  • 13. Recent Research: Angel Returns % of Exits Multiple Category
  • 14. Industry Experience Affects Outcomes % of Exits Multiple Category
  • 15. Due Diligence Affects Outcomes % of Exits Multiple Category
  • 16. Board Involvement Affects Outcomes % of Exits Multiple Category
  • 17. 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
  • 18. 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
  • 19. Thank you [email_address] www.bbaa.org.uk
  • 20. Investor Panel Anthony Clarke Alistair Arkley Chris Thompson John Josephs
  • 21. North East Angel Fund Jonathan Gold Operations Director, Rivers Capital Ltd & Chief Executive, Finance Tree Ltd
  • 22. RCP is a joint venture between E-Synergy Ltd and Finance Tree Ltd E-Synergy Ltd is authorised and regulated by the Financial Services Authority As 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
    • 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
  • 23.
    • 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
  • 24. For more information contact: Steve Garbutt Fund Manager s.garbutt@riverscap.com 0191 230 6370 16-18 Hood Street Newcastle-upon-Tyne NE1 6JQ 0191 230 6370 www.riverscap.com To join AngelNet contact: Natalia Blagburn Investment Executive n.blagburn@riverscap.com 0191 230 6370
  • 25. North East Business Angel Network Jane Ridley Head of Operations, Entrust
  • 26. 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
  • 27.
    • Legal, Tax and Regulatory Guide
    • Upcoming Events;
    • Business Angel Master Class – 25 th March 2010
    • Business Angel Master Class – 22 nd April 2010
    • Presentation Evening – 29 th April 2010
    • Presentation Evening – 24 th June 2010
    • Presentation Evening – 23 rd September 2010
  • 28. Thank you to our host and sponsors:-