Catalyst Newletter Summer 2011

www.yaba.org.uk

catalyst
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 further
develop its novel medical device technology, with the YABA
members’ investment accounting for a third of this finance.
Other investors included members of the business angel
communities in Cambridge and London.

Based in Cambridge, Camstent develops patented
polymer coatings based on research from the University of
Sheffield. The coating resists the growth of bacteria,
known as biofilms, on medical implants and devices. The
first application of the technology will be to coat urinary
catheters for the prevention of urinary tract infections,
which account for 40 per cent of all hospital acquired
infections.

Business angel Neil MacDonald is one of the six YABA
investors. He says: “I’ve been really impressed with the
product, the company and the clarity of the business plan
both at the Investment Forum, where Camstent CFO Clare
Twemlow presented a very compelling pitch, and in my
subsequent dealings with the company. This platform
technology has huge potential because it could be applied
to 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 new
Over the next twelve months Camstent will focus on shareholders and we’re looking forward to accelerating the growth of
optimising 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 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. It's 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. It's 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,” www.frogtrade.com
says Gareth. “In fact, the investment from YTL allows us to
accelerate our UK plans.”

YABA information: 01423 810149 www.yaba.org.uk Follow us on

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 www.ftechmanserv.co.uk
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: maximising
the return for business angels
Securing Entrepreneurs’ 2011 budget geared towards partnerships, and assets used in
Relief (ER) is a key priority smaller businesses, the Chancellor businesses, may also qualify.
made the relief even more As with many simple-sounding tax
for business angels looking
desirable by increasing the lifetime reliefs, the opportunities to
for a tax-efficient route to allowance to £10 million per maximise the relief are great but
unlock capital invested in person, a potential tax saving of pitfalls for the unwary abound.
new enterprise. Katherine up to £1.8 million per individual. With careful planning, it may be Katherine Bullock
Bullock, Private Client and possible to ensure that more than
Private 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, ER
PwC in Leeds, explains saving even further – for example,
the shareholder: may be lost. This can often be
how business angels can • needs to hold at least 5 per cent by involving a spouse or adult resolved by planning in advance of
use 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 ensure
rate 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 can
speculation as to further tax Additionally, throughout the period, who otherwise would not qualify for ensure that proceeds are
increases to come, a vital area of the company must be a trading ER. This can be particularly maximised and that they are not
tax planning for those company, or the holding company attractive for key executives and out of pocket when it comes to a
contemplating the future sale of of a trading group. Insubstantial investors alike, particularly as there sale, avoiding aggressive and
their 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 later
lower 10 per cent rate by securing making it critical to monitor the shareholding to equate to 5 per date. ER is simply too valuable for
Entrepreneurs’ 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 www.pwc.co.uk/north

Join us on YABA information: 01423 810149 www.yaba.org.uk


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



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%). http://www.yaba.org.uk/news/survey-results



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
www.cargo-solv.com 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.



Angel mentoring pays off
Mentoring from YABA angel member with Jennifer’s business plan. She had a
Steve Naylor has helped University good idea, had done her market research
of Sheffield student, Jennifer Ashton, and had some great plans to scale up the
business,” says Steve. “During our mentoring
move a step closer to opening her time, I helped to distil Jennifer’s elevator pitch
business, Kolours. and to focus and define the core strengths of
her business plan.”
Kolours is a hair and beauty salon concept
which will specialise in Afro-Caribbean hair The help paid off and Jennifer went on to
and skin treatments. The idea for Kolours was beat almost 200 entrants at the University of
born when Jennifer moved to Sheffield and Sheffield Enterprise Award 2011. The prize
couldn’t find a suitable salon. She has just money of £2,000 will go towards an NVQ
completed a BA in Accountancy, Financial Level 3 at Sheffield College to formalise Jennifer Ashton
Management and Business Management at Jennifer’s own hair and beauty skills. At the
the 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 costly
Jennifer 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 I
YABA Ambassador Catherine Kennedy, along need a professional qualification to do this.” If you’re a YABA member interested in
with the University of Sheffield and Sheffield mentoring and you’re not already on our
Hallam 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 email
The prize for winning was some mentoring really benefit from some intense mentoring, charlotte@yaba.org.uk.
time with Steve. “We were really impressed

YABA – connecting business angels
YABA may be best known for made were instrumental in the formation
matching entrepreneurs with of this new venture.” With a common goal
of creating a market-leading business
investors, but what's less common
intelligence solution and with their wealth
knowledge is its power to bring of commercial expertise, Roger and Tony
together 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 prime
example of this. The company was started Knowing that most company directors
by YABA members Tony Bray and Roger spend too much time sifting through
Stocker and evolved from an initial reports looking for quality business
discussion at an investment forum in 2009. information and not enough time focused
on growing their businesses, Tony and l-r Tony Bray and Roger Stocker
Tony and Roger had previously been in Roger’s software solution helps to address
competition, owning highly successful this issue. Intuitive Dashboards links to the
document management software companies. existing data within a business, providing a other business
They 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 and
few weeks of one another in 2007. dashboard format. Business owners and Roger are now
managers can easily view potential employed full-time
Roger joined YABA in 2009 to take performance issues and spot trends and promoting their
advantage of the networking opportunities opportunities they might normally miss. product, but plan
and reconnect with the business community. to continue
It was at his first investment forum that he “We consulted a number of investors to find attending YABA events because, as Tony
bumped into some familiar faces, one of out what information they needed,” says says, “The networking opportunities are a
which 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 a
interested in the propositions on offer, but the
matter of hours as opposed to months for www.intuitivebusinessintelligence.com
connections I re-kindled and the new ones I



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
charlotte@yaba.org.uk www.lintonwood.com

27 July 20 September This Little Piggy
Angel members’ Investment forum www.thislittlepiggyinnovations.co.uk
seminar Location: Rotherham
Introduction to LinkedIn Time: 5.45pm
Location: Leeds
Time: 9.30am Godloves
11 October
www.godloves.co.uk
Angel members’ social
18 August lunch
Angel members’ Financial Leeds
seminar 12 October www.financialleeds.com
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 www.yaba.org.uk 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.

www.twitter.com/yaba1995

Copy: Campus PR
Contact us Yorkshire Association Barbara Greaves, Members of:
www.campuspr.co.uk
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
www.spiralcom.co.uk
or come to an Hornbeam Park T: 01423 810149 Tel: 0113 205 1400
investment forum, Hookstone Road E: admin@yaba.org.uk Photos: Simon x2 Photography
please get in touch. Harrogate HG2 8QT W: www.yaba.org.uk www.simonandsimonphoto.co.uk
Tel: 01937 844442

YABA information: 01423 810149 www.yaba.org.uk

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