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.
