Transcript Today’s Agenda

Introduction to Halo NI
4th November 2013
Kathryn Baird, Halo
Email: [email protected]
Today’s Agenda
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Introduction to NI Science Park
Angel Investing – What is it?
Sources of Money
Halo – NI Business Angel Network
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 easyentry,
• founded and operates NISP CONNECT and
the NISP Trust and
• delivers Government contracts e.g. Halo &
Digital NI 2020
*=Affiliated
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
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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
Today’s Agenda
1.
2.
3.
4.
5.
Introduction to NI Science Park
Angel Investing – What is it?
Sources of Money
Halo – NI Business Angel Network
Summary
Did you know?
What is an Angel Investor?
“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.”
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?
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Potential for high capital gain
Personal satisfaction
For income (dividends / fees )
To support social benefits
To help a friend
Community recognition
Colin Mason / Richard Harrison
72%
53%
41%
5%
3%
1%
UK Angel Scene
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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
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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
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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
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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?
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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?
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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
Scotland is one of the leaders!
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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.
Today’s Agenda
1.
2.
3.
4.
5.
Introduction to NI Science Park
Angel Investing – What is it?
Sources of Money
Halo – NI Business Angel Network
Summary
The Sources of Money
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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 CoFund
• 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
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• 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
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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.
2.
3.
4.
5.
Introduction to NI Science Park
Angel Investing – What is it?
Sources of Money
Halo – NI Business Angel Network
Summary
Halo
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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 pa
Relaxed sociable format
Dinner, companies/angels mixed at tables
Also runs angel masterclasses
Working 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
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‘Fail to prepare…’
‘Uncoachable’ CEOs
IP not in company
Crazy valuations
No exit strategy.
Today’s Agenda
1.
2.
3.
4.
5.
Introduction to NI Science Park
Angel Investing – What is it?
Sources of Money
Halo – NI Business Angel Network
Summary
4 things to take away
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Lot’s of help when starting out on your
own!
Business angels are here to stay - £6m
invested in 4 years
Not just start-ups and technology
Want to grow more successful
entrepreneurs who will do it again (and
again)
Go and make a shedload of money and then
join Halo!