Business angels are high net worth individuals who invest in private equity, acknowledging the high risk but also high reward potential. They typically aim to have a portfolio of 10 small-to-medium enterprises (SMEs), expecting 4 to fail, 4 to maintain their value, and 2 to grow exponentially. Successful exits within 3-5 years allowing for 3-5 times return on investment are motivating. Angels invest for growth, using their experience and networks to add value beyond just capital. They seek strong management teams and business plans with realistic projections of doubling their investment. Tax reliefs make angel investing an attractive asset class.

1. Angel Investing
Steve Wall
North West Business Angels
Steven.wall@A2Fnw.co.uk
07824472105

2. Who are business angels
• They are high net worth individuals who wish
to invest in private equity
• They acknowledge high risk /reward
• Often experienced business leaders

3. How do they invest
• They generally aim to have a portfolio of SMEs
• They look for around 10 businesses
• They expect 4 to fail
• 4 to tread water
• 2 to grow exponentially

4. What's in it for them
• Growth businesses can increase their values
substantially in a short period of time
• Typical exit term 3-5 years
• Typical exit multiple 3-5X investment ,can be
more
• 50% fail thus the exit value of the successful
businesses needs to be high

5. What motivates the Angel Investor
• They all have different reasons ,but all desire
good returns
• Tax incentives
• Putting something back
• Building a greater investment return via a
class of asset not available through
institutional investing

6. Tax Reliefs
• E.I.S 30% tax relief on initial investment
• S.E.I.S 50% tax relief on initial investment (up
to £100K per investor ,max £150K per
company less than 2 years old )
• Capital gains tax relief – 14%
• All gains are inheritance tax free
• All gains are C.G.T free
• Tax loss relief available at 50%

7. Angels invest in
• Start-ups pre-revenue
• Start-ups pre-profit
• Expansion to next level
• Distressed businesses

8. Angels invest in
• Where they can add value
• Right ‘personal chemistry’
• Agreement with founder’s vision
• Not having to teach business basics
– That is for ‘mentors’, not the same thing
– There are minimum skill levels to succeed

9. Angels don’t invest in
• Bank fundable projects (eg real estate)
• Loans only (insufficient return)
• Very large (>£500k)
• Unwieldy share agreements
– ie too many other shareholders
• Non-UK, or even not local
– Angels always get involved

10. Angels don’t invest in
• Projects without a medium-term exit
– or no influence over exit
• Full-time attendance requirement
• Poor or un co-operative management
• Absent or unrealistic business plan
• Projected return less than double
– because at least half fail

11. Case Study – Door Manufacturer
• Breakaway management team
• Sales director /Operations director
/Foreman
• High growth/ fast start
• Required £375K - £10K available
• Profitability projected in Year 2

12. Door Manufacturer
• Turnover £2M by year 2
• Turnover £3M by end year 3
• £125K invested – Sales finance £250K
• Year 4 saw the business expand due to
demand to £5M- new premises purchased
with Commercial Mortgage £1M
• Last heard to be up to £11M t/o
• Investors 30% stake now worth £2m plus

13. How can we help you
• Provide the business angel support to enable
capital introduction .
• Help you bolster your balance sheet
• Support for distressed businesses .
• Provide support for you to become Business
Angel Investment ready .
• Provide growth funding otherwise not
available

14. How can you help us
• We need to continue to refresh our investor
network – we are continually looking for new
Investors .
• We want to help young businesses to grow -
more opportunities required .
• We want to help mature businesses that need
capital injection to capitalise on opportunities.

15. Any Questions?
Steve Wall
North west business angels
Steven.wall@A2FNW.co.uk