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Today’s Agenda
1. Introduction to NI Science Park2. Angel Investing – What is it?3. Sources of Money4. Halo – NI Business Angel Network 5. Summary
Shipyard Titanic Quarter
Dereliction to Knowledge Economy
NI Science Park 2013
• Adds £80m+ pa gross GVA by playing host to 2000 staff in 110 companies,
• One of the UK’s leading innovation hubs• Facilitating ~£10m risk capital,• Mobilising 1000 business volunteers & 100
Business Angels helping 800 new starts (wantrepreneurs) and
• 100+ School visits & 60,000 Tourists
How are we doing it?
Simultaneously, NI Science Park:• operates agile, connected workspaces on
commercial but flexible terms, with easy-entry,
• founded and operates NISP CONNECT and the NISP Trust and
• delivers Government contracts e.g. Halo & Digital NI 2020
programmes
• Research• NI Knowledge Economy Index (the where we are now report)• Support* to Dept of Enterprise Trade & Investment MATRIX
(Science-Industry panel with links to Technology Strategy Board & EU)
• Education//networking• SpringBoard, Frameworks, £25k Awards• £25k Award Winner 2013- ProAX-SiS• Enterprise Forum, Frontiers in STEM, IP exchange• US-NI Mentorship programme, Generation-Innovation
• Investor Ready// Access to £/$• Entrepreneur In Residence /Springboard, Halo*, VC Forum
*=Affiliated
Today’s Agenda
1. Introduction to NI Science Park2. Angel Investing – What is it?3. Sources of Money4. Halo – NI Business Angel Network 5. Summary
Did you know?
“An individual who invests their own money (and time), directly in unquoted companies in which they have no family connection, in the hope of financial gain.”
What is an Angel Investor?
Its More than Just the Money
Angels have:
– Entrepreneurial experience
– Mentoring skills
– A willingness to be involved
– Contacts
“Smart Cash”
Why Do They Do It?
• Potential for high capital gain 72%• Personal satisfaction
53%• For income (dividends / fees ) 41%• To support social benefits
5%• To help a friend
3%• Community recognition
1%
Colin Mason / Richard Harrison
UK Angel Scene
• BBAA/NESTA report – Siding with the Angels• 4,000 – 6,000 business angels in the UK• £1bn invested pa• Average UK angel investment £42k a time• Angel investing £50-£500k per company• Average investment per company £180k• Review 20 pa and invest in 3 pa.
Investor returns
• Average return 2.2 times in 3.5 years• Equivalent of 22% compound interest• Sounds great – but …..• 56% of angel investments lost money• Average time to make a profit – 6 years• Average time to lose money – 3 years• Welcome to business angel investing.
You Can Make Money
• OK – 56% failed, but …• 44% of exits were at substantial reward• 35% of investments made 1x to 5x• 9% of investments 10x or greater• If you invest in 1 or 2, probably lose
money.
Spread your Money
• Spread risk across at least 10 companies• So 6 bomb, 2 crawl, 1-2 fly• The 1-2 pay must pay for all the failures• They should only look at companies which
could be that 1 in 10!• i.e might return 10x their investment.
So – What’s in the Mind of an Angel?
• Must look for high growth, 10x typically• High risk, high reward• Spread risk across at least 10 companies• Need to work in a syndicate otherwise 10
companies, 2 days per month = a job• Expect to stay ‘in’ for 6 years
How do they invest?
• Enterprise Investment Scheme – EIS (30%)• For example - angel invests £100k• If the company crashes, they lose £35k• If it makes eg £1m, they pay no tax
• Seed EIS from April, 50% relief, 25% risk!• Angel investing suddenly looks a lot more
attractive.
Valuations
• The right valuation is the one you and the angels can agree on
• Guide – UK university spinouts £500k• UK 85% under £2.5m pre-money• Most Halo valuation are <£1m• Some a lot less• Some great exceptions
Working in Groups
• Share the work load• Share the legal costs• More brains = more chance of the right
decisions• Semantics
– An angel group– Who may syndicate investments with other
groups.• Sustain company over time
• 2010 Scotland £18m angel investment• IE 30% UK angel investment, 8% population• No BANS in Scotland• 20 angel groups (syndicates)• Linc Scot develop 2 angel groups pa• Angels invest in groups, share the load• Groups share information/don’t compete• Angels invest less per deal, but wider• Scottish Co-Investment Fund follows.
Scotland is one of the leaders!
Today’s Agenda
1. Introduction to NI Science Park2. Angel Investing – What is it?3. Sources of Money4. Halo – NI Business Angel Network 5. Summary
The Sources of Money
• 3Fs• Invest NI Vouchers and R&D Grants• E-Synergy POC and NI Growth Fund• CFM Co-Fund • Halo angels• Halo EIS Fund• HBAN• UK angel networks• NI VCs - Crescent III and Kernel Capital• Dublin VCs, UK VCs.
Innovation Vouchers
•Voucher Value: £4000 – can get 3 of these, with
each voucher being for a different project
•Expiry: 12 months from date of issue
•Company Eligibility: Registered Small Enterprise
(holds a NI Company Reg No & below 50 employees)
This is an issue for Invest NI – being reviewed
• The level of funding for subsequent vouchers decreases to 90% (i.e. £3600) for the 2nd voucher if the same individual at the same knowledge provider is used, and funding at 80% (i.e. £3200) for the 3rd voucher in all instances.
Invest NI Grant For R&D
• Funding for Invest NI clients and potential
Invest NI clients
• Support for technically risky projects
• Ideas must be exploitable
• Support for future work - not retrospective
E-Synergy
• POC - Support at £10k (mini) and £40k (full) Uses - business mentoring, IP and copyright protection
• Queen’s University Fund - post Proof of Concept, pre-commercialisation spin-out companies - £50-200k
• Growth Fund - start-up and early-stage businesses - £50-200k (70-30% Matched)
Clarendon Fund Managers Co-Fund
• Financial Conduct Authority approved Venture Capital Fund Manager
• Manage £20m of regional VC Funds in NI incl £13m of fully invested Funds
• Invested in 33 companies.• Recently established Co-Fund NI- £7.2m• Sectors: ICT, medical devices, biotech,
renewable energy, computer gaming.
CFM Approach
• Only invest in NI based companies• Technology or knowledge-based
companies• Investment range £250k-£1m• Help with investment readiness &
strengthen management• Helps companies up the funding ladder
and achieve value milestones
CFM Co-Fund Portfolio
• 11 investee companies- equity stake between 4% and 25%
• Match 55% Business Angels or Private Investors with 45% from the co-fund giving overall “fund” size of £16m
VCs
Kernel capital• Founded 2002, raised over £140m in funds• Funds managed by teams based in Cork,
Dublin and Belfast• Team of 6 partners- led over 100
investments, named inventors on over 30 patents
• Key resource Alumni- Comprising of over 250 influential well networked people
Cont..
• Frequent catalyst for deal syndication• Driver of new business opportunities• Portfolio of 70+ companies have gone
forward to raise £415m and employ over 1,100 people
• Most at graduate and post graduate level.
VCs
Crescent capital• Belfast based venture capital fund manager• Primary investment focus is with NI based
companies operating in the IT, life sciences & manufacturing sectors
• Don’t just provide the cash- actively help to grow a world class business with hands on involvement
Cont..
• Manage two funds totalling £36.5m• New fund opened- £22m• Invests between £250k and £1.5m• Invests primarily in early stage and
development stage technology companies in NI
Today’s Agenda
1. Introduction to NI Science Park2. Angel Investing – What is it?3. Sources of Money4. Halo – NI Business Angel Network 5. Summary
Halo
• Restarted in 2009, over 100 angels• Over £6m invested in over 40 companies• BBAA Angel Network of the Year 2010• Project of InterTradeIreland and INI• Admin funded by Invest NI and NISP• Delivered by NI Science Park• Any company except property or retail• 2012 - best year, £2.6m investment
Huge Variety
Children’s Car Seats
Data search
Vouchers for treats
Healthy chocolate
Short film – Oscars!
‘Peanut’ Putters
What Does Halo Do?
Runs few but large meetings- 5-6 paRelaxed sociable formatDinner, companies/angels mixed at tablesAlso runs angel masterclassesWorking to create angel groups.
About a Halo Meeting
• 5-7 companies pitch, strictly timed• Hard to get in, 25 – 40 entries• Halo selects, prepares and rehearse
companies• Audience 40 angels+• Don’t pitch for money• You pitch for another meeting!
After the Pitch
• Halo joins up interested angels with companies
• Follow up meetings• On-going discussions / syndication• Pitches available on video afterwards via
private Halo website• Recruiting angels widely – 15% not NI• Usually 70 sets of angels eyeballs• But Halo does not advise.
Increasing your chance of investment
• Previous sales – de-risks proposition• Talk to customers – build what they want, not
what you think they want!• Focus on benefits, not features!• Credibility – been there, done that!• Clear exit plan – creating value.
Why companies don’t get funding
• ‘Fail to prepare…’• ‘Uncoachable’ CEOs• IP not in company• Crazy valuations• No exit strategy.
Today’s Agenda
1. Introduction to NI Science Park2. Angel Investing – What is it?3. Sources of Money4. Halo – NI Business Angel Network 5. Summary
4 things to take away
1. Lot’s of help when starting out on your own!
2. Business angels are here to stay - £6m invested in 4 years
3. Not just start-ups and technology4. Want to grow more successful
entrepreneurs who will do it again (and again)
Go and make a shedload of money and then join Halo!
