Catalyst Newletter Summer 2011


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Catalyst Newletter Summer 2011

  1. 1. Newsletter of the Yorkshire Association of Business Angels Summer 2011 Camstent raises finance Following Camstent’s presentation at the YABA Investment Forum in November 2010, the company has announced the close of its first funding round – and it includes six YABA members.In total, the company has raised £350,000 to furtherdevelop its novel medical device technology, with the YABAmembers’ investment accounting for a third of this finance.Other investors included members of the business angelcommunities in Cambridge and London.Based in Cambridge, Camstent develops patentedpolymer coatings based on research from the University ofSheffield. The coating resists the growth of bacteria,known as biofilms, on medical implants and devices. Thefirst application of the technology will be to coat urinarycatheters for the prevention of urinary tract infections,which account for 40 per cent of all hospital acquiredinfections.Business angel Neil MacDonald is one of the six YABAinvestors. He says: “I’ve been really impressed with theproduct, the company and the clarity of the business planboth at the Investment Forum, where Camstent CFO ClareTwemlow presented a very compelling pitch, and in mysubsequent dealings with the company. This platformtechnology has huge potential because it could be appliedto any number of implants and devices where biofilm –and infection – are a problem.” for regulatory approval and engaging with potential licence partners. Chief Executive Dave Hampton says: “We are delighted to welcome our newOver the next twelve months Camstent will focus on shareholders and we’re looking forward to accelerating the growth ofoptimising and refining its coating technology, preparing Camstent through this first catheter application and other future applications.” In this issue: 2 FrogTrade company update 4/5 Syndication: building portfolios & a 7 Angel mentoring pays off 3 Entrepreneurs’ Relief new fund 8 LinkedIn seminars Angel profile 6 May and June investment forums
  2. 2. 2 Newsletter of the Yorkshire Association of Business Angels Summer 2011 C O M PA N Y U P DAT E FrogTrade Leaping ahead Named in March as the fastest growing small business of the year in the Yorkshire Fastest 50, FrogTrade’s learning platform, known as Frog, is a flexible and engaging learning environment. Its also used by more than 600 schools in the UK and is rapidly expanding into the international market with schools in Hong Kong, Switzerland, Ireland and Bermuda to name a few. A recent deal signed with YTL Education – one of Malaysia’s largest listed companies – saw YTL pay £2 million for a 20 per cent shareholding in the business. The two companies are in the process of setting up a £5 million joint venture in Kuala Lumpur, with FrogTrade taking a 20 per cent stake. With a current turnover of over £5 million, the Halifax-based company is now aiming to increase this figure, using its flexible technology as a springboard. Gareth Davies, FrogTrade Managing Director, Gareth Davies, describes how Frog has become so popular with schools: “Rightly or wrongly, children as young as five are now joining the X-Box One person who has been instrumental in FrogTrade’s success generation. From Facebook pages and iPods to Playstations is YABA member Mike Booth. A non-executive director of the and Nintendo Wiis, their attention is dragged into a seductive company, Mike first met Gareth through connections at world of interactivity and creativity. Until recently this was Eversheds. “Mike became an investor, but more than that, he confined to just the more technically minded, but it has now hit also became our mentor,” says Gareth. “He’s a fantastic guy to the mainstream and schools are finding it increasingly difficult have around when times are tough and he made sure we had to compete for their children’s attention.” all the essential business processes in place – something that we hadn’t implemented before he came along as we’d been too Gareth continues: “Frog provides schools and teachers with the busy trying to sell our product. His insistence that we ‘build ability to ‘catch up’ with the children; creating learning value’ into our business – with strong products and service – experiences that can compete on both fronts – interactivity and has been key to our success.” creativity. Children, like all of us, have to be engaged in something before we allow ourselves to learn anything.” Mike added: “I have thoroughly enjoyed working with FrogTrade and seeing the company go from strength to strength. It has Frog has proven its ability to raise standards in schools and is only taken five years for Frog to frequently mentioned in Ofsted reports as contributing to school establish itself as the leading brand improvement. in UK schools and it is now rapidly gaining recognition in international Used in secondary schools across more than 100 local markets. Its an exciting time for the authorities, Frog is increasingly being sold to primary schools company and I’m looking forward to across the UK – mainly by word of mouth recommendation. seeing what the future brings.” “The quality of our product and service is helping our overseas sales rise but we won’t be taking our eye off the ball in the UK,” says Gareth. “In fact, the investment from YTL allows us to accelerate our UK plans.” YABA information: 01423 810149 Follow us on
  3. 3. Summer 2011 Newsletter of the Yorkshire Association of Business Angels 3 ANGEL MEMBER PROFILE Chris Kay company in 1983, New World Micro Systems Ltd which blossomed into New World Computer Systems Plc in 1992. The Chris Kay joined YABA earlier this company was focused on making efficiency year. With a passion for technology, improvements by the introduction of impressive non-executive director technology to blue chip companies experience and a background in concerned with manufacturing and Chris Kay accountancy, he likes to roll up his distribution industry. It grew throughout the sleeves and really get involved in next twenty years, with Chris exiting in 2004. he says. “I’d like to have a portfolio of the companies he works in. companies I work with and I’m particularly “Our US partners took over the business at His interest in technology began back in the that point, and I focused my efforts on interested in new technologies.” 1980s, when he worked as Financial working with SMEs, mainly in a non- Director for a group of privately owned executive director role,” says Chris. “I have Since joining, Chris has participated in companies in a turnaround situation. “I was an equity stake in one company at the some of the workshops provided by YABA an accountant by profession and worked for moment, Logicor Ltd, which creates and has found them to be particularly a group which included vehicle reselling, intellectual property for commercial useful. “They’ve been great learning fast food and haulage divisions,” he says. “It exploitation.” This, he says, keeps him pretty experiences,” he says. “But more than that, got into difficulties during a severe busy. “But there’s always more I could be I’ve had the chance to meet other business economic downturn and as part of the doing,” he smiles. angels. I’m interested in syndication if the turnaround process, we installed a new opportunity arises, so it’s good to have computer system and I saw an opportunity Being semi-retired now, Chris is actively made some contacts already.” to bridge the communication gap which I seeking ways in which he can assist SMEs in the region. “I’m always looking for Chris manages his portfolio through his perceived existed between the accountants company Financetech Management and the IT people in the business.” companies I could help – either in a Services Ltd. See mentoring role, as a part-time financial for more information. This led to the formation of Chris’s own director, as an angel investor or as an NED,”Entrepreneurs’ Relief: maximisingthe return for business angelsSecuring Entrepreneurs’ 2011 budget geared towards partnerships, and assets used inRelief (ER) is a key priority smaller businesses, the Chancellor businesses, may also qualify. made the relief even more As with many simple-sounding taxfor business angels looking desirable by increasing the lifetime reliefs, the opportunities tofor a tax-efficient route to allowance to £10 million per maximise the relief are great butunlock capital invested in person, a potential tax saving of pitfalls for the unwary enterprise. Katherine up to £1.8 million per individual. With careful planning, it may be Katherine BullockBullock, Private Client and possible to ensure that more thanPrivate Business Partner at In order to qualify for relief on one individual benefits from ER likely to be in a form other than shares, for 12 months prior to sale, increasing the total potential tax cash, for example loan notes, ERPwC in Leeds, explains saving even further – for example, the shareholder: may be lost. This can often behow business angels can • needs to hold at least 5 per cent by involving a spouse or adult resolved by planning in advance ofuse it to their advantage. of the ordinary share capital and children in the business. an exit. The key is therefore to plan voting rights early and to retain flexibility.With an increase in the headline • must be an employee or director Simple restructuring may ensurerate of capital gains tax from 18 (executive or non executive). that the 5 per cent requirement is With upfront planning,per cent to 28 per cent and met for a number of shareholders entrepreneurs and investors canspeculation as to further tax Additionally, throughout the period, who otherwise would not qualify for ensure that proceeds areincreases to come, a vital area of the company must be a trading ER. This can be particularly maximised and that they are nottax planning for those company, or the holding company attractive for key executives and out of pocket when it comes to acontemplating the future sale of of a trading group. Insubstantial investors alike, particularly as there sale, avoiding aggressive andtheir business is how to access the non-trading activities are permitted is no requirement for a 5 per cent high-risk tax planning at a laterlower 10 per cent rate by securing making it critical to monitor the shareholding to equate to 5 per date. ER is simply too valuable forEntrepreneurs’ Relief (ER). impact that any “investment cent of the value of the company. today’s entrepreneur to ignore. activity” may have on the relief.Amidst a raft of measures in the Sole trader businesses, interests in Where proceeds on an exit are us on YABA information: 01423 810149
  4. 4. 4 Newsletter of the Yorkshire Association of Business Angels Summer 2011 Syndication: building an investment portfolio Is it easier to invest on your own investments.” David or is it better to join forces with agrees and adds: “As other investors? Two of YABA’s well as the benefits of not having to carry the full longest-standing angel members weight of the investment, discuss the pros and cons of it’s just more fun to be syndicate investment. part of a syndicate. The investors involved are One of the most important factors in the usually a different group success of a syndicate investment is the each time and it’s a way relationship between the entrepreneur or of meeting and working management of the investee company with new people.” and the syndicate. Jennifer Ryan has made a number of syndicate investments “There’s a possibility that during her years as a YABA member, the group dynamic of a David Thornton including surgical instrument syndicate could become manufacturer, Single Use Surgical. “In unwieldy or difficult, this case I was the syndicate’s lead especially if a number of David. “The leader is not necessarily the investor and my fellow investors were a the investors want to get involved in person who has made the largest mixture of the more and less running the business,” says David. “I investment – although that’s usually the experienced. Having a competent MD believe that an investor should be there case – but it’s essential that they have like Matthew Tully on board made my on the end of a telephone for advice and the right qualities. Being part of a role much easier. Many investors like to support, attend meetings when needed syndicate can be very helpful when be ‘hands-off’ as they’re employed full- and take a step back if that’s the best investigating the prospective investment time elsewhere or don’t have the time to approach.” as angels come from various business get involved in the company. Those that backgrounds with differing expertise and prefer to be ‘hands-on’ often don’t want Having an experienced leader is key to knowledge. When it comes to due to join a syndicate as it’s easier for them the success of syndicate investment, as diligence, this can also be carried out to operate by themselves.” Jennifer says: “Without a leader the collectively.” investment becomes riskier as no-one YABA founder and experienced investor takes overall responsibility or charge and Summing up her syndicate experience, David Thornton has had similar that’s true of all types of investment.” Jennifer adds: “It’s essential that the experiences: “Chemistry between leader of any syndicate has the entrepreneurs and investors is vital, With both Jennifer and David having had experience and capability to influence especially when times are tough and experience as syndicate leaders, they’re and guide the management of the things start to go wrong,” he says. “It in agreement as to the best approach for investee company. It’s a role I’m happy to also helps when the investee company is a successful investment. “A syndicate take on – especially if it’s crucial to the reasonably close geographically so that needs someone to head it up,” says success of the investment.” investors can be on hand to solve any problems that arise.” A major benefit of syndicate investment is the spreading of the financial risk. “When a larger investment is required, syndicate investment is ideal,” says Jennifer. “It’s possible that the risks are higher when a larger amount of money is required, but that’s mitigated by the number of investors joining forces. If a company, its management and its product are sound, the risk reduces anyway – that’s the case in all YABA information: 01423 810149 Follow us on
  5. 5. Summer 2011 Newsletter of the Yorkshire Association of Business Angels 5 Syndication: new fund to support syndicates A new angel co-investment fund, designed to application and also undertaking the monitoring and reporting support business angel syndicates, will provide to the Fund. funding of between £50,000 and £1 million for investment deals of £200,000 upwards. The Co-Investment Fund has been designed to support new investments rather than existing ones, however once investments The Business Angel Co-Investment Fund for England, which has have been agreed, follow-on funding may be available. made a total of £50 million available, is the result of a joint bid Syndicates will need to agree to share all future investment by five private sector partners to the Government’s Regional opportunities although the Fund is not obliged to invest. Growth Fund. It is planned that the new Fund will be fully operational by autumn 2011. Further details will be advised to members in due course. “With syndication on the rise among business angels, this is really good news both for angels and SMEs in the region,” says Barbara Greaves, YABA’s General Manager. “It’ll obviously boost the amount that syndicates may be able to offer to businesses and it will also encourage more angels to get involved in syndicate investment.” Viking Fund Managers Limited (VFM) are registered as gatekeepers for syndicates looking to approach the Co-Investment Fund and will assist in facilitating bids through developing the necessary documentation for FACTS & FIGURES The Department for Business, Innovation & Skills • 67% of smaller investors were members of published its annual report on the business angel syndicates compared with 28% of the larger market in the UK, 2009/10 in June this year. (over £100,000) investors Key findings included: In over half of the deals [reported by BBAA • Almost 60% of angels had invested with a networks] angels invested less than £100,000 and syndicate in three-quarters of deals angels invested less than £200,000. More than half of all investments • 40% had invested exclusively through angel involved at least two angels, while 18% involve syndicates more than five angels. • Smaller investors – those investing less than £50,000 in 2009/10 – were most likely to invest To see the full report, go to exclusively through a syndicate (48%). us on YABA information: 01423 810149
  6. 6. 6 Newsletter of the Yorkshire Association of Business Angels Summer 2011 I N V E S T M E N T F O RU M S : YO R K A N D L E E D S 10 May 2011 A second online proposition came from Howard Mould of B2E Ltd. His website rehabilitation and improved co-ordination skills. John is looking for £100k, and has provides a comparison already received licensing enquiries from the Held at the beautiful and historic site for freight shippers, enabling them to US and Italy. Merchant Adventurers Hall in York, source the best shipping option for their the May Investment Forum featured business, comparing not only type of a mix of start-up and more transport, but also cost and environmental established companies. credentials. It was somewhat fitting that Sophie Jewett, The Forum was held in partnership with whose business Little Pretty Things was Garbutt & Elliott, long-time supporters of presenting at the event. The Hall is the very YABA. Chairman David Dickson, also a place where Mary Tuke had applied for member of the Company of Merchant permission to import chocolate, laying the Adventurers talked of the growth of foundations for what later became one of knowledge businesses in York. He said: “As York’s major employers, Rowntrees. Sophie’s an early member of YABA, it’s great to hold a business is a unique chocolate experience forum here, where so many deals have been centre and is also involved in retailing done over the last 650 years.” Skore Fitness specialist chocolate products. “Mary Tuke didn’t get a warm reception when she first came here,” she said. “So I hope you’ll receive 14 June 2011 Joanne Lowe’s Sheffield-based company, me better!” Cojolo, provides equality and diversity training Indeed the audience enjoyed all the The June for both managers and recruitment agencies presentations, of which there were five in total. investment with the aim of improving employment For horror fans, Shudder Films presented their forum took opportunities for disabled graduates. The sci-fi horror film, Further Instructions, for which place on a beautiful balmy evening company also sources work and provides match funding is sought. With an offer of at Grant Thornton’s city centre mentors for disabled graduates. Joanne is offices in Leeds on the Waterfront. looking for £40k to expand the operation’s £100,000 already from Northstar Ventures, the Grant Thornton both hosted and coverage from regional to national. company is seeking an additional £100,000. sponsored the evening and YABA Other presentations included one from members, guests and entrepreneurs Perry Uniform offers design, manufacture and Graham Whitby, who some of the audience were given a warm welcome by retail distribution of uniforms to independent may have remembered from Dragon’s Den. Senior Business Development schools. Bernard Bunting outlined the Leeds- Graham’s business, Natural Sleep Manager, Sandra O’Neill. based company’s Innovations Ltd (formerly Baby Dream approach: online Machine), was on the lookout for investment to Kicking off the evening was Neil Seaton of intelligent sizing widen its product range. Nationwide Caravan Buyer, based in Bedale. and first class The company generates essential used stock customer service. data for caravan retailers, offering immediate The company is valuations to sellers and forwarding collated looking for £150k enquiries to buying agents. The business has to aid expansion the potential for rapid growth and £45k is and is especially required to fully roll out its offer across the interested in country. investors with Stuart St Paul returned to YABA with another experience of the opportunity to invest in the making of a new textiles supply film through Leeds-based 102 Productions. chain. Perry Uniform The company has proven its ability to make profitable films on low budgets with its first Steve Roberts of Site Tools in Sheffield offer to YABA, the award- winning Freight. The rounded off the evening by presenting the Site Natural Sleep Innovations company is looking for £150k for its new film Vice which grips pipes and other objects and investors will be given priority repayment simply and securely, eliminating the hazards of Robin Hilton and Jonathan Clough may also plus interest and profit share. using other cutting devices. Developed with have been familiar faces to some, having been the support of a national alliance of UK John Dike, of Skore Fitness in Sheffield, construction companies, Site Tools is looking involved with the incredibly successful Dubit presented a fitness ball with a unique shape for £150k and believe that the Site Vice could business. The proposition they presented, designed to allow the user a safer and more be adapted to be the “next Workmate”, Research Bods Ltd, has built on the success efficient workout. The ball’s not only aimed at offering opportunities to move into the DIY of Dubit, creating an online consumer athletes and fitness fanatics, it’s also highly market. research offer for businesses looking for new useful for disabled people requiring physical ways to conduct market research. Disclaimer: Investment in new business carries high risks as well as the possibility of high investments of this kind. Yorkshire Association of Business Angels (“YABA”) cannot advise on rewards and potential investors should be aware that no established market exists for the the merits or risks of investment and is not authorised to arrange transactions or circulate trading of shares in private companies. Before investing in a project about which information offer documents under the Financial Services and Markets Act 2000. YABA is an exempt is given, potential investors are strongly advised to take advice from a person, authorised body for the purposes of arranging deals in investments under statutory instrument 1201 of under the Financial Services and Markets Act 2000 (“FSMA”), who specialises in advising on 2001 as a non-profit making organisation. YABA information: 01423 810149 Follow us on
  7. 7. Summer 2011 Newsletter of the Yorkshire Association of Business Angels 7Angel mentoring pays offMentoring from YABA angel member with Jennifer’s business plan. She had aSteve Naylor has helped University good idea, had done her market researchof Sheffield student, Jennifer Ashton, and had some great plans to scale up the business,” says Steve. “During our mentoringmove a step closer to opening her time, I helped to distil Jennifer’s elevator pitchbusiness, Kolours. and to focus and define the core strengths of her business plan.”Kolours is a hair and beauty salon conceptwhich will specialise in Afro-Caribbean hair The help paid off and Jennifer went on toand skin treatments. The idea for Kolours was beat almost 200 entrants at the University ofborn when Jennifer moved to Sheffield and Sheffield Enterprise Award 2011. The prizecouldn’t find a suitable salon. She has just money of £2,000 will go towards an NVQcompleted a BA in Accountancy, Financial Level 3 at Sheffield College to formalise Jennifer AshtonManagement and Business Management at Jennifer’s own hair and beauty skills. At thethe University. same time, she will be looking for premises for because it helps get them off on the right foot, the first Kolours salon. “My plan is to have self- and it can help in the avoidance of costlyJennifer and Steve met when she pitched her employed consultants in the salon,” she says. mistakes in the future.”business plan at a panel event organised by “I’d like to also have my own clients and IYABA Ambassador Catherine Kennedy, along need a professional qualification to do this.” If you’re a YABA member interested inwith the University of Sheffield and Sheffield mentoring and you’re not already on ourHallam University, earlier this year. Says Steve: “It’s great to see ideas at such an register of mentors please do get in touch. early stage. This is when businesses can Call 01423 810149 or emailThe prize for winning was some mentoring really benefit from some intense mentoring, with Steve. “We were really impressedYABA – connecting business angelsYABA may be best known for made were instrumental in the formationmatching entrepreneurs with of this new venture.” With a common goal of creating a market-leading businessinvestors, but whats less common intelligence solution and with their wealthknowledge is its power to bring of commercial expertise, Roger and Tonytogether angel members in new decided to start a business together,business ventures. launching their Intuitive Dashboards product in January this year.Intuitive Business Intelligence Ltd is a primeexample of this. The company was started Knowing that most company directorsby YABA members Tony Bray and Roger spend too much time sifting throughStocker and evolved from an initial reports looking for quality businessdiscussion at an investment forum in 2009. information and not enough time focused on growing their businesses, Tony and l-r Tony Bray and Roger StockerTony and Roger had previously been in Roger’s software solution helps to addresscompetition, owning highly successful this issue. Intuitive Dashboards links to thedocument management software companies. existing data within a business, providing a other businessThey met regularly at awards ceremonies consolidated viewpoint of key business analysis software.”and sold their respective companies within a information, depicted in a graphical Both Tony andfew weeks of one another in 2007. dashboard format. Business owners and Roger are now managers can easily view potential employed full-timeRoger joined YABA in 2009 to take performance issues and spot trends and promoting theiradvantage of the networking opportunities opportunities they might normally miss. product, but planand reconnect with the business community. to continueIt was at his first investment forum that he “We consulted a number of investors to find attending YABA events because, as Tonybumped into some familiar faces, one of out what information they needed,” says says, “The networking opportunities are awhich was Tony. Roger. “There is a huge market for our valuable part of being a YABA member and product and we’ve made sure that the networking remains an important aspect of“YABA was invaluable to me for its software is cost-effective and can be the way that we intend to build awareness of implemented quickly, so that businesses can our products.”networking opportunities,” says Roger. “I was reap the benefits of our dashboard within ainterested in the propositions on offer, but the matter of hours as opposed to months for www.intuitivebusinessintelligence.comconnections I re-kindled and the new ones IJoin us on YABA information: 01423 810149
  8. 8. 8 Newsletter of the Yorkshire Association of Business Angels Summer 2011 Diary dates New faces YABA runs a full and varied events The YABA associate membership continues to calendar each year – if you’re interested in attending any of these events, please grow – our most recent new recruits are: contact us on 01423 810149, or email our Communications and Events Manager, Charlotte Atkinson at Lintonwood Consulting 27 July 20 September This Little Piggy Angel members’ Investment forum seminar Location: Rotherham Introduction to LinkedIn Time: 5.45pm Location: Leeds Time: 9.30am Godloves 11 October Angel members’ social 18 August lunch Angel members’ Financial Leeds seminar 12 October Making the most of LinkedIn Master class Location: Leeds Intellectual property – Time: 9.30am traps in due diligence Location: Sheffield 14 September Master class We regularly update our events online. Coming seminar will concentrate on a Selecting and evaluating an equity Go to soon for beginner’s guide to LinkedIn: how to create an effective investment deal to find out more. YABA angel profile, connect to others and Location: Sheffield Time: 9.30am members – understand the power of this social network. This will be LinkedIn followed by a second LinkedIn seminar on 18 August which seminars will help you build upon your existing profile by utilising key We plan to hold two interactive features, finding valuable LinkedIn seminars for our angel connections, promoting you as investor members. Beginning an individual and as a business on Wed 27 July at Brookfield along with becoming a Court in Leeds, YABA’s first reputable online networker. Copy: Campus PR Contact us Yorkshire Association Barbara Greaves, Members of: If you want to know of Business Angels Charlotte Atkinson Tel: 0113 357 2100 more about YABA 1 Hornbeam House or Jordana Beattie Design: Spiral or come to an Hornbeam Park T: 01423 810149 Tel: 0113 205 1400 investment forum, Hookstone Road E: Photos: Simon x2 Photography please get in touch. Harrogate HG2 8QT W: Tel: 01937 844442 YABA information: 01423 810149