Angels Den Founder – Bill Morrow – helping business angels get back in the saddle

We interviewed Bill Morrow, founder of Angels Den, to find out how ‘the worlds largest business angel network’ is growing and what tips Bill can share for angels and entrepreneurs looking to succeed with growth businesses…
bill morrow angels den

What is Angels Den?

“Angels Den is a network which introduces business angels to growth companies looking for growth capital. “We have business angels – not investors! “Our angel are looking for more than a money making opportunity. Investors care only about their ROI (return on investment). “Our business angels typically want to: – help change the world – invest for alturistic reasons – find something to do / need a reason to get out of bed – are looking to invest less than 10% of their wealth (the rest of the money is busy working for them).

What’s the latest on Angels Den?

“We now have 63 people working for Angels Den worldwide and our volume means we are seeing important nuances in the business angel market. We are using this to help both the business angels but also the entrepreneurs too. “So, our experience has taught us that guys need to pitch differently from women. Geeks need to pitch different from the rest and academics shouldn’t be allowed to pitch. “We are now offering business angel master classes and have seen that this raises their average investment from £100k to around £340k. We have 6,200 registered business angels and we are adding 50 per month.

Are you, Bill, an entrepreneur or investor?

“I’m absolutely awesome at building Europe’s largest angel network – but possibly one of the worlds worst investors – I’ve invested in 27 deals and half have collapsed in flames. “My home credit committee has stopped me investing any more!

Have you exited or sold a business?

“Quite a few – I sold a financial company to a Wall Street bank three weeks after 9/11 but the reason the bank bought the company wasn’t the same as mine for running it. “I ran it because I was feed up working for large companies (eg Virgin and then the investment banking industry) whereas the US bank bought the company for its IP assets and not its market place and products. That was an interesting experience.

How important is failure to business success?

“Failure is a necessary part of entrepreneurship – when I was working for Richard Branson he taught me something when I made a grave error – Branson told me that what he respected was not that I had made the mistake but that I had learnt from it and wouldn’t do it again. “I’ve also learnt from my mistakes that I’m a really bad accountant and that because I am an entrepreneur I change the business process. I don’t follow process – in fact, I naturally act as if there isn’t any process at all.

What did you learnt whilst building Angels Den?

“One of the reason Angel Den has been successful is because we have made every mistake possible – and we’ve kept changing our business model until it works.

“With Angels Den we’ve learnt that if we lose the ‘why are you (the business angel) investing’ and the ‘how did you (the business angel) made your money’ then our ability to match funding and entrepreneurs will suffer. So I make that insight and knowledge my priority, not the business process.

“I kind of concur with the US view that people need to make mistakes before they are investable – but I admit that I prefer that to be on someone’s account. 🙂

How has Angels Den changed in the past 12 months?

“We are now focused on growth companies and we haven’t funded a startup in 16 months – a pure startup an idea but with no team and no proof is just too risky. “For us to be interested, the business needs minimum proof. What is that absolute minimum? They must have sold something. “Equally, we look for realistic entrepreneurs. So the entrepreneur who says ‘My only competitor is google!’ is politely shown the door! 🙂

How is it different from a traditional Business Angel Network?

“We keep it simple for both sides – it is neither free to pitch nor is it expensive. “If we offered pitching for free, business angels would need to do a lot more work! We look at 140 deals per day – and select one to go forward to our angels – this sifting work means we keep our quality high for our Business Angels. “Some angel networks charge £000s to pitch (and to write a business plan), our angels say ‘if you need help with business plan and need to pay someone to do it for you – then you can’t run a company’ and they won’t invest. “Globally we have 19,000 enterpreneurs and 6,000 angels “Our Business Angels also tell us what they to invest in and they are typically looking for just 5 or 6 things (and a list of not looking for)

What are the key questions an entrepreneur needs to be able to answer to raise funds via Angels Den?

“These are the key questions for entrepreneurs

‘Can you explain his / her business in plain English in a couple of sentences? ‘What pain are you solving, what is the point of this product? ‘Do you have any IP, do you have an unfair advantage, have you been able to caputure the advantage’ ‘How much money do you NEED not WANT’ If you need £250k – can you split down what you will spend the money on in £20k chunks? ‘Who is the team?’ ‘What mistakes have the team made and what have you learned?’

“If you can answer these, then you’ll get to meet our business angels. Note: the average angel spends 2 mins and 12 seconds reading the business plan! We have a templated business plan.

 “Our business angels are not looking at numbers (that’s what investors do) because angels know the numbers are a wild guess – in truth they are laughable nonsense. If an entrepreneur believes his business plan will play out as described in the spreadsheet then he is naive and stupid. A 3 year cashflow forecast for a 2 year old business is nonsense.

“We look for entrepreneurs who realise this. “It is important for entrepreneurs to realise that getting the money is the easy bit – it is what you do with the money is much harder.  My view is that if the money has a £100k then the value of the mentor/ business angel can (or should) be worth £500k.

How is Angels Den different from a equity crowdfunding site?

“We did £1m in fund raising last week. One deal had 26 and another 28 angels – so effectively, we’ve been crowdfunding for 5 or 6 years. “The difference is that our crowdfunding comes with the angel experience time and energy contacts and mentoring. “412 investors (say) is not the same as a valued business angel. “Too many entrepreneurs see funding as the means in itself – but actually the hard bit is growing the company afterwards.

How is AngelsDen different from Angels List (US)?

“We hold events – we marshal entrepreneurs and business angels etc.   I wouldn’t leave it in the hands of the entrepreneur to find the right angel for them.

Is Angels Den restricted to UK?

“No, as well as the UK and Europe, we are very active in Asia – Hong Kong, Singapore, Kuala Lumpa, Qatar, Abu Dabi and Kuwait etc… “We handle Europe from London and we have Gibraltar to manage Spain, Portugal and North Africa  The benefit of Gibraltar is that the tax regime is very attractive which is why there is a lot of money there and entrepreneurs are drawn to the location.

What value of deals have you completed in the UK in the last 12 months?

“Circa £5 and £6m – I really don’t know the detail because my team won’t let me get near the computers that hold this information. See, I’m an entrepreneur not an accountant.

What future do you see for equity crowdfunding?

“I still think there are lots of uncertainty about legalities – some players are not complying fully or FCA (previously FSA) standards and the authorities need to make it clear how it is supposed to operate. “Having said that, what is not to love about crowdfunding? It is a great mechanism for early stage companies that business angels won’t invest in. I believe it will become a vital part of the supply chain of growth companies. And yes, we’ll be looking to fund these deals in a couple of years. “However, I do worry about startup businesses trying to manage 412 unsophisticated investors. “What many entrepreneurs miss is that getting the capital is easy – how you spend and use the money and handle the hurdles and mistakes that you are going to make is the hard bit. “I like FundTheGap as they are looking at investors and the crowd. “Reward crowdfunding sites, like Kickstarter, these are amazing, what’s not to love? “However, some of the crowdfunding horror stories are starting to appear… and it is to do with the fact that the entrepreneurs just weren’t up to running and growing the business. “Of course, failure and rebirth is a necessary part of the system maturing but it does make me cautious about it all. “What crowdcube and Seedrs have achieved is amazing.

What kind of business angels use Angels Den?

“We see – on average – 140 business plans per day and typically will take one on just one. That means we are focussed on helping the angels by sifting through many many proposals to bring them the best and the most appropriate. “We will have cemented our footprint across the world as the world’s largest investment network. “Having a variety and multiplicity of angels is often the best solution to getting the right match of money, experience and the business. “Cross border investment is significant and powerful “We used to think that Angels Den is a service to entrepreneurs and now, we see it more as a service to angels. That is why we train business angels for free. However a major motivation for our business angels to invest is to give them something to do – not just to make money. It is about us helping them get back on the saddle.

What is the future of Angels Den?

“We’re going to keep growing and doing what we do best. That is, helping business angels get back in the saddle of supporting growth businesses and helping entrepreneurs to get funded with the right mentoring and support. “We may move into entrepreneur education side – for every business we help, we see 39 good deals but turn them down as not quite ready (we also reject around 100 deals outright). Could we work with the entrepreneurs to get them further down the line and ready for investment? I’m sure we could. “We are also talking to governments about a sustainable entrepreneurial system. In some countries there’s lots of money but no entrepreneurs – eg. Qatar! We can advise on how to set up incubators – how to deliver business angel education etc…

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