Bill Morrow, Angelsden co-founder and former city banker, set up the UK speed funding pioneers in 2007 after several years researching the business angel market.
He remains a firm believer that plenty of funding exists out there for good business ideas. He also believes that most business angels will see a return on their investment inside three years…
What does the Angelsden investment group offer that others don’t?
Angelsden connects entrepreneurs and companies that need funding with angel investors providing a successful ‘investment ready’ service for entrepreneurs. We brought a radical new model of angel investing to the market place, which is still only three years old. We made it accessible to the person-in-the-street. We do not vet companies looking for funding and we have no minimum funding requirement. However we do provide free advice to companies or those with ideas and do tell them if their idea is not investable. Those with investable ideas are then put through our investment readiness program which includes free advice from a leading accountancy and leading law practice.
We are fast, straightforward, transparent and get results. These clear messages resonate with both entrepreneurs and angel investors as this might not have been their experience of angel investing to date. We are open and accessible to all new businesses and we don’t push deals – we let our angels select the deals they want. This means that deals that we don’t expect can get funding.
Raising money for a business has previously been a stressful, intimidating and expensive process for many people and Angelsden set out to change that. We pioneered SpeedFunding, based on Speed Dating, where entrepreneurs pitch to a business angel individually on a one-to-one basis, seeing up to 12 angels at one session. We are still the only company in the UK to offer this pitching format so SpeedFunding events are generally oversubscribed. Their success is attributed to the chemistry that starts to evolve during a face-to-face chat between the entrepreneur and angel, which simply doesn’t happen when an entrepreneur presents to angels ‘en masse’.
Is it better for your average business angel to join a group rather than going it alone?
We make it easy for business angels, who often haven’t got the time to go searching for new ventures.
We stay in close contact with our angels and know many personally, including their investment wish lists. For our top angels, we offer private viewings of selected businesses and we run angel masterclasses to cover areas such as EIS, due diligence and how to value a company.
As a high net worth individual, why would I choose to be a business angel as opposed to putting money in another asset?
Some angels are successful business people who are looking to expand their portfolios, broaden their business risk or re-invest their profits. Others are retired self-made individuals who are looking to keep their grey matter active. Still more are interested in helping start-ups and small businesses to succeed. There really is no single reason that motivates a business angel, but the one thing that they all have in common is a desire to fund only those ventures that have the potential for great success.
It’s probably good to have a spirit of adventure as well!
How long on average do your members take before they exit an investment?
It really depends on the organisation and the agreement, but most angels would expect to see a return in three years, some less, but no more than five years. Bearing in mind that no returns can be guaranteed, an angel investor could ideally expect to double their money over a period of around two years, or treble their money on a period of around 3-4 years. Another way of looking at this is to say that they can expect a cumulative return of approximately 50% for each year of the partnership. Of course the reality is often quite different, depending on the quality of your investment decisions and the assistance you are prepared to give a business to ensure its success.
What is the success rate of businesses who receive funding through Angels Den?
Our role is fundamentally as match-maker ensuring that businesses with a good idea and a good business plan have the opportunity to access funding but that doesn’t mean that we aren’t interested in the final outcome.
We know that following our SpeedFunding events, where up to 225 individual pitches will have been made in one evening, entrepreneurs, on average, will then have at least three angels interested in having further discussions with them.
Much as we would like to know the outcome of every meeting, it is not always possible to follow up each meeting that takes place a year between entrepreneurs and investors.
We have 15 case studies on our website of companies who have successfully secured funding through Angelsden. Some companies and often angels prefer not to be profiled as they do not want the publicity for reasons including they do not want their competitive advantage to be promulgated or where a dilution of family control would make news and we are not left with very many to case study.
What are the benefits of speed funding for the angel investor?
SpeedFunding gives an angel investor the opportunity to meet up to 12 companies, on a one-to-one basis, who are looking for funding and have a solid business plan in place. All the entrepreneurs will have received significant guidance from Angelsden including attending ‘Pitch School’ so they are equipped to give a good presentation with the facts and figures that an angel investor needs to hear. There is also a good networking opportunity at the end of the session for angel investors to speak again with companies that interested them as well as network with other angel investors.
With bank lending restricted are you seeing more businesses seeking help via Angels Den?
The economic climate has been excellent news for angel investors. Traditional business funding sources such as banks and venture capitalists have greatly cut back their investments, opening up a huge funding gap that is being filled by angel investors. Small businesses are continuing to launch, although valuations are down, so angels have found that they are able to achieve a higher shareholding in their new relationships.
What’s the next stage in the development of Angels Den?
We have Regional Directors across the UK and are now in the process of expanding our regional teams further and we are planning more SpeedFunding events to support the Clean Tech industry.
We already hold SpeedFunding events in Singapore, followed shortly by Malaysia and Hong Kong, Angels Den is also researching the Middle East market with a view to holding events there, then planning activity in North America, Russia, China and more – watch this space.