Video: How to go from Idea to Investment

We’ve been helping startups raise money around the world since 2004. Over 900,000 entrepreneurs have used our site. And the question we get asked most is ‘How can I get my idea to investment?‘.

After all this time in the industry, you’d think we’d be well-placed to answer it. And we are. But it’s still not an easy question and the answer depends on the business in question.

We’ve been holding events and workshops to help entrepreneurs navigate this difficult first hurdle. Back in March we did a big one with global digital skills educator, General Assembly. And we filmed the whole event so we could share the wisdom with as many people as possible…

The film is quite long and you may want to watch specific sections at a time, so here’s a breakdown:

0:0017:06 Entrepreneur & Investor Olivia Sibony describes her experiences from the Grub Club idea to finding investors

17:0735:25 Ed Stephens, Head of Investor Relations at AIN & Host of The Startup Microdose Podcast, gives practical advice on optimising your processes for finding investment

35:26-END Ed Stephens interviews an expert panel of entrepreneurs on their experiences: Anthony Rose (Seedlegals, BBC iPlayer), Elizabeth Swanton (Feedr) and Wil Harris (Entale, Condé Nast)

idea to investment

Enjoy!

If you have any questions, please reach out to hello@angelinvestmentnetwork.co.uk

My 5 Tips for Raising Angel Investment

Back in 2013, I took a step that would change the trajectory of my career forever. After seven years at Goldman Sachs, I left for a new adventure. I was confident in my skill set, but terrified that I was abandoning the safety net of the corporate career path.

Fast forward six years, and how glad I am that I took that decision. I launched a foodtech startup called GrubClub, which I ran for five challenging but satisfying years, before EatWith acquired us in 2017.

olivia sibony grub club how to raise startup investment
A celebratory Grub Club evening

One of the things I learned on that journey was how hard and how important it is to raise funding. That’s partly why I joined Angel Investment Network last year. I had raised money through them for GrubClub and really bought into their mission to democratise angel investment.

So, here are my five key tips for getting investment:

1. Investors invest in teams

Many of the most successful businesses are at their core very simple ideas. Google allows people to search for stuff on the internet. Ford builds cars. But neither Google nor Ford were the first in their category.

Their success is commensurate to their ability to execute changes.

That’s why the team in charge of navigating this journey is so important. And that’s why investors invest in teams. So, keep that at the forefront of your mind both when building out the early team (obviously), but also when creating a story for your pitch.

Have you got an A team?

2. Remember that investors are not the same as customers

(This point is related to #3 below but is important enough to mention on its own.) Entrepreneurs often fail to communicate successfully with investors because they explain the benefits of their product/service as if describing them to a potential customer.

This is easy to do because during product and strategy meetings their focus has no doubt been on crafting the proposition to customers.

While your investors may also be customers, your proposition to them should not be the same. You will lose their interest if you talk to them as if they were customers. So, craft a story and a proposition specific to them…

3. Tell investors a compelling story

I hear a lot of people give advice like ‘tell a story in your pitch’. But they often fail to explain how to do that meaningfully. So, how do you tell a compelling story to prospective investors?

The most basic story that all investors want to hear is how they are going to make money. There may be other factors like the desire to make a positive impact on the world. But ultimately, an investor wants to make a return.

I heard a founder sum up this idea nicely on The Startup Microdose Podcast – he said, “Show investors what winning looks like.”

So, build the story of your pitch by putting dollar signs in the eyes of investors and by explaining to them how you are well-placed to execute on this grand vision.

Is your investor story compelling?

4. Create momentum

Investors are busy people. You will not always be top of their priority list. So, don’t be disheartened if they don’t get back to your message straight away.

But also, don’t be shy of sending them reminder messages.

The trick to doing this and engaging them is to try to include some impressive update that you’ve achieved since your previous message to them e.g. ‘Ex-CEO of Unilever has just agree to join the board’ or ‘1,500 new users sign ups in the last week’.

This creates the impression of progress and always helps to prove the competence of you and your team.

5. Don’t waste time

We live in a digital world. A world full of tools to boost your productivity and streamline your processes. Use them! There are some great ones for raising investment. My favourites are: Seedlegals – for digitally creating and signing all your legal documents; MixMax – for seeing if people have read your email and how many times and when; and, of course, Angel Investment Network – for meeting investors you could never otherwise hope to meet.

What do you think?

These tips are both from my own experiences. Do you agree/disagree or need more explanation? (Let me know in the comments!)

Author BIO

Olivia Sibony is an award-winning entrepreneur and ethical investment champion. She left a career at Goldman Sachs to launch foodtech startup, GrubClub, which she sold to Eatwith in 2017. She then joined Angel Investment Network (having previously raised money through them) to launch and grow SeedTribe, a spinoff platform focused on impact entrepreneurship.

She is also a Board member of UCL’s Fast Forward 2030, which aims to inspire the next generation of entrepreneurs to launch businesses that address the UN’s Sustainable Development Goals (SDGs). 

High-End London Baker Orée Raises £425,000 Funding in Angel Investment Round

London-based bakery, Orée, has raised £425,000 through Angel Investment Network (AIN) the UK’s largest online platform connecting angel investors with startup businesses.

The French-style, high-end bakery started trading in March 2016 and currently has two shops at 275/277 Fulham Road and 147 Kensington High Street. The concept is bringing ‘a taste of the boulangeries and patisseries of rural France to London’. The funding will finance the opening of the next shop based in Covent Garden with a further location in London Bridge set for later in the year. The ambition is for more than a dozen shops across London and an international expansion.

The raise is one of the largest for a food business in AIN’s 14-year history. The highest to date was the £600k raise for Rosa’s Thai Cafe which raised £500k through AIN in 2014 and has since delivered returns to investors via a private equity buyout.

The combination of Orée’s high-quality product offering and high-end, high footfall locations across London, gives it a strong position within the food retail industry and made it an attractive proposition for AIN’s network of investors. Orée bridges the £8bn bakery market and the £6bn café and coffee shop market, both experiencing annual growth of 2.5% and 5.7% respectively. According to data from AIN, food and beverage was the second most popular category among angel investors in the UK for 2018, losing out only to software.

Xavier Ballester, Director at Angel Investment Network who brokered the deal, said: “Orée was of strong interest to our investors with its offering of a premium, authentic French Patisserie to a market that is increasingly captivated by continental cuisine. It satisfies several consumer trends that have characterised the UK casual dining market in the past couple of years, including ‘premiumisation’ and a concern for provenance.

How to Make a Smart Angel Investment

This interview with Mike Lebus, founder and managing director of Angel Investment Network, was originally published in Sifted. You can read the full article on ‘How to Make a Smart Angel Investment’ with views from other industry leaders here.

Mike Lebus, angel investor & co-founder Angel Investment Network

Mike Lebus (UK)

Mike Lebus is co-founder Angel Investment Network, a platform catering to 205,000+ angels which has backed the likes of bed mattress startup Simba, geocoding business What3Words and kids media company SuperAwesome.

An angel investor for 6 years. 

Number of personal investments: I try to make two personal investments a year. Through the venture division of the company (me and three others), we have a stake in over a hundred companies.

Average cheque size: I normally invest £10-25k.

The biggest misconception about angel investing is… that investors should be based in startup hubs like Silicon Valley and London. Online platforms and digital networks now allow investors to find great deal flow wherever they are based.

Do… take the time to meet and get to the know the founding team. When you invest in early stage projects the idea takes second place to the team. This is because the idea will have to change and evolve to be a success; and it’s the team who are responsible for doing that!

“Investors don’t have to be based in startup hubs like Silicon Valley and London.”

Don’t… invest in only one company. No matter how good the opportunity looks, there are so many unknowns when it comes to early stage investment. It’s a much better strategy to invest smaller in more businesses.

The biggest mistake I made was… to miss out on a great opportunity because I failed to build a good relationship with the team. In the early discussions I should have focused on getting to know them, their vision and their processes; instead, I was too blinkered on the valuation and deal terms. It ended up being a waste of everyone’s time. The company went on to do very well!

My personal top tip is to… manage your expectations. If you’re obsessed with returns and timescales, you’ll end up being a burden on your portfolio companies. If you relax and trust the team to execute on their vision, then you can focus on finding meaningful ways to help them with your experience and connections.

My most recent investment was in… Sweatcoin, an app that tracks your outdoor steps and rewards you with digital currency. It’s been the fastest growing health and fitness app in history in every country it’s launched in on the App Store. I know the founder well, so knew how talented he was. I also loved the company’s innovative approach to incentivising people to become more active and get healthier.

Sweatcoin tracks & verifies your outdoor steps using your phone’s accelerometers and GPS location. Those steps get converted into our currency — Sweatcoins.

The deal I regret missing out on is… Funding Circle. We helped them with funding very early on, but I chose not to invest personally. Their IPO last year valued them at £1.5 billion!

If I could change one thing about the European angel scene it would be…More government incentives to encourage more people to invest into startups. The UK have the SEIS and EIS schemes, which have really helped stimulate early-stage investment. I think more European countries should introduce similar incentives.

TechRound Interview with Seedtribe CEO Olivia Sibony

This interview with Olivia Sibony was originally published in TechRound on 21st May 2019.

We caught up with Liv Sibony, the CEO of Seedtribe, a community hub for entrepreneurs, investors and change-makers interested in impact entrepreneurship and using business as a force for good.

Tell us a bit about your career…

I started out at Goldman Sachs before leaving to launch a foodtech startup called Grub Club. It was a platform for connecting diners with unique dining experiences. We sold to Eatwith in 2017.

I was only too aware, from my experiences at Grub Club, of the challenges entrepreneurs face in raising funds and I had always had a passion for seeing how business could be used as force for good, so I then joined Angel Investment Network (having raised money for Grub Club through them) to launch and grow their impact-focussed platform, SeedTribe.

I am also a board member of UCL’s Fast Forward 2030, which aims to inspire the next generation of entrepreneurs to launch businesses that address the UN’s Sustainable Development Goals (SDGs).

UN sustainable development goals millennial angel investor technology investors olivia sibony interview
The 17 United Nations Sustainable Development Goals

How did the idea for Seedtribe come about?

Seedtribe started out as a hybrid angel investment/crowdfunding platform with two complementary aims:

The first was to support impactful businesses and find them funding.

The second was to encourage non-traditional investors (including women and younger people) to back startups by simplifying the investment process and allowing them to invest smaller amounts.

We ran it like this for around a year and helped some awesome companies including:

  • Advanced Sustainable Developments, launching the first complete circular economy solution for food grade plastic recycling in the UK.
  • Airex, an alternative to traditional air floor insulation reducing unwanted heat loss by regulating air flow.
  • Hopes Initiative which maps, analyses, and optimises the energy consumption of businesses, managing energy expenditure, consumption and impact on the environment..

But we soon realised that we could do so much more to make our own impact and help the eco-system develop.

So, what is Seedtribe now?

Seedtribe is a community platform to connect entrepreneurs, investors, policymakers, jobseekers and volunteers and together inspire, create and support businesses for a brighter future.

We basically try to support the business-for-good eco-system by bringing together all the right people into events, online discussions, fundraising campaigns and educational workshops.

The new Seedtribe homepage coming soon…

What’s the mission?

We want to be the glue that brings the best, most talented, driven, passionate people together to be the change we all need to see in the world. We are the go-to place where impactful entrepreneurs connect with an invaluable network that help them scale.

Collaboration is the most powerful tool we have for inspiring and empowering change. At Seedtribe, we enable collaboration between individuals, startups, corporates and governments to create a better world.

By connecting the dots, we help each party or person find the right way to contribute. That way, we can get beyond all the noise and bluster, and allow everyone to take meaningful and positive action.

Our system will allow everyone to contribute positive action according to their experience, values and competencies.

What challenges do you face?

Despite reaching a market cap of $500bn and growing five-fold since 2013, the impact space is still in its infancy.

Some people still confuse investing in impact/business-for-good/profit-with-purpose with philanthropy. Even though this could not be further from the truth. ‘Impact’ business do not seek to achieve an environmental/social purpose at the expense of profit, but rather, the purpose and profit-creation are intertwined.

What’s your vision for the future?

I want to see more businesses working as a force for good. At the moment, investment is 100% tied to the idea of only caring about a financial return.

I wish we could see a paradigm shift where we feel more engaged in investing in the future, so that we can make more long-term, sustainable decisions that don’t just revolve around our personal financial returns.

If everyone were encouraged to see investment as the “triple bottom line”, companies would be incentivised to act in the interest of people and planet, we would see less short-termism, and I also think it might engage more people in the world of investing, as they’d see how it relates to their own values and future, not just a return in the next 12 months.

Where can people find out more?

We are currently rebuilding the Seedtribe site to create more of a community focus and attract users beyond just investors and entrepreneurs. They can visit the existing version at www.seedtribe.com and help us shape it at by answering this questionnaire.  I’m also always open to chat so they can connect with me on LinkedIn too!

New low-cost airline Flypop completes SEIS funding on Angel Investment Network

A new British-South Asian low-cost and long-haul airline, flypop, has raised £80,000 in SEIS funding through Angel Investment Network.


We gained a great deal of interest for the successful SEIS raise in Q1 2019 and hope this momentum carries on with the many global angels on the AIN platform. The low-cost non-stop aspect really resonated with a lot of investors from South Asia. They make these journeys frequently themselves and could really relate to this product.

Nino Judge, Founder offlypop

The airline focuses on point-to-point direct flights from the UK to secondary cities in several South Asian countries, starting with India. 
The list of affordable non-stop flights will be between the UK (initially London Stansted) and the Indian cities of Amritsar (Punjab) and Ahmedabad (Gujarat).

flypop ain airline investment
Targeting the 1.5 million Indian diaspora in the UK, flypop‘s service will offer return ticket prices from £350 (including taxes) with the first flights taking place in Q4.

The experienced founding team, with backgrounds including Ryanair, Team Lotus F1, British Airways, Emirates, JP Morgan and UBS, have stated that
flypop will be able to pass cost savings back to consumers via lower airport charges to tier 2 airports and its unique ‘wet’ lease start-up agreements.

There are ambitions to expand further from North America & Europe to South Asia via the UK and the business is now looking to raise £4m in its next EIS funding round. The team at flypop also intend to make the airline carbon neutral, offsetting each passenger that flies with the planting of a tree in a forest in the UK or South Asia.


Airlines still have an exciting allure to them and it was hugely exciting for our investors to invest in an SEIS round for one.

Ed Stephens, Head of Investor Relations at Angel Investment Network:

Good luck to Nino and the team! We will be following their progress with interest.

Former Spice Girl’s Startup breaks investment record on Angel Investment Network

Investors really really want to invest in Emma Bunton: £420k raise for Kit & Kin fastest in Angel Investment Network history

The commercial magic of the Spice Girls remains as strong as ever, as Emma Bunton’s ethical baby product business Kit & Kin, was responsible for the fastest raise in the Angel Investment Network’s 14 year history. It achieved its target of £420k in just one week.

spice girl emma bunton investment record
Spice Girl, Emma Bunton, Founder of KIT & KIN

More than £1m was offered in total for her eco-friendly nappies, wipes and skincare business but Kit & Kin decided to only accept £420k at this time, an amount which included a key strategic investor.

The raise received unprecedented interest from our 170,000 strong worldwide community of investors. The business was launched in 2016 by Bunton and business partner Christopher Money, with their products available through high street retailers as well as their e-commerce platform. The investment will be used for staff, expansion and stock supply to service larger orders.

According to Mr Money: “The raise via the AIN has certainly surpassed all expectations and we ended up having to cap the number of discussions. We’ve come away from the raise with a select few who will bring significant strategic value that will certainly strengthen our offering and help us realise our potential over the years to come.”

Money and Bunton will be hoping to emulate the success of another celebrity turned entrepreneur, Jessica Alba, whose business, The Honest Company, floated for just shy of $1 billion in 2017.

spice girl emma bunton investment record

According to Ed Stephens, global head of brokerage at AIN: “The level of interest for Kit & Kin’s business was unlike anything we’ve ever seen. It would normally take around 6 weeks to raise a similar amount – we had pledges for over one million and had to turn investors away…”

As a business it has some great fundamentals, but clearly Emma Bunton’s extra spice was a key ingredient.

Ed Stephens, Global Head of Brokerage

Bunton was famous for promoting girl power and her business was promoted through a new section on our site focused on supporting female founders and investors. This initiative was set up to address the under-representation of women as investors and founders in the industry.

The Spice Girls (1997)

Our investor community in the UK consists of around 17,000 angel investors, but less than 10% of these are women. We want to lead the way in tackling this industry problem starting with increasing the visibility of women-led businesses and helping them to find investment and mentoring from investors.

Here’s a few of the press publications that leapt upon this story (enjoy the headlines):

https://www.cityam.com/275884/baby-spices-baby-startup-kit-kin-breaks-record-fastest

https://www.metro.news/business-briefing-buntons-top-of-tots-baby-business-hits-420k-target/1510388/

https://www.thisismoney.co.uk/money/markets/article-6896385/Spice-Girl-Emma-Bunton-raises-420-000-ethical-baby-business-just-week.html

https://www.angelnews.co.uk/blog/equity-crowdfunding/emma-buntons-kit-kin-completes-fastest-fundraise-in-angel-investment-network-history-/

https://www.rte.ie/entertainment/2019/0407/1041170-emma-bunton/

Technology investors must shine a light in uncertain times

£7bn was invested into private UK companies in 2018, down 19% from record levels in 2017 but still significantly higher than any year before 2017, according to Beauhurst. Could this be the beginning of a decline? These are dark and uncertain times; and even those ‘presiding’ over Britain’s exit from the European Union are unable to agree on what the first order effects of this momentous action might be.

technology investors
Data & Image from Beauhurst report on equity investments into private companies https://about.beauhurst.com/research/

Angel investors have far greater flexibility than any other investor type when it comes to adjusting their investment preferences. In times of macroeconomic uncertainty, they can easily defer activity until they have a clearer idea of the road ahead.

The warning signals, then, are there on a wider level. But on the Angel Investment Network platform, 2018 was a strong year with both UK investor and entrepreneur numbers rising to over 30,000 and 115,000 respectively. We now have over 1 million users globally. Our own analysis of the user activity on the site reveals some interesting insights into the angel investment landscape. And perhaps a light for the path forward.

Threadbare Fashion Sector

The High Street has had a tough time in the past year, with high profile fashion brands in trouble including House of Fraser and LK Bennett. According to user data on our site, investor willingness to back startup fashion brands has dipped dramatically with ‘fashion’ as a sector falling from the 6th to the 14th most popular sector in 2018, the largest slide of any category.

The poor performances of high street mainstays may have played some role in this, but more likely it is strong performances from other sectors that have contributed most tellingly to this dip in popularity. Judging from the performances of software, technology and the so-called ‘impact’ sector, it seems that fashion brands looking to raise investment will need to embrace workplace technology and/or ethical mission statements as part of their proposition to regain investor interest.

Fintech Finesse

It will come as no surprise that the technology and software categories grew impressively and retained top spot for both investor interest and number of pitches looking for funding.  The rise of AI and machine learning with applications across so many industries has meant that many new startups have some form of digital technology at the core of their value proposition. The prevalence of industry jargon terms like ‘agrotech’, ‘insurtech’ and ‘fintech’ speak to this intersection between specific industries and the super-industry that software and technology is fast becoming.

Fintech in the UK is a great example. London has developed a well-deserved reputation as a Fintech hub over the past couple of years, thanks, in part, to the growth of companies like Monzo, Starling Bank, Revolut, and payment-linked-loyalty provider, Bink.

fintech technology investors

Their success has inspired a surge of exciting innovation in the space with some very promising startups coming onto the scene including: Coconut – a current account with inbuilt accounting; and Novastone – ‘WhatsApp’ for the finance sector. Both of whom completed funding rounds through Angel Investment Network in 2018, taking their total funding to £1.9M and £5.6M respectively.

We expect the fintech space to go from strength to strength in 2019 and beyond, and it may offer some hope for carrying the UK startup scene on its shoulders if the going gets tough.

The rise of impact investment

Another area starting to show promise is ‘impact investment’. Investor activity on the website mirrored growing societal interest in ‘impact’ or ‘profit-with-purpose’ – the notion that businesses should have some societal and/or environmental good at the core of their mission while still working for growth and profit, allowing investors to invest in line with their conscience without risking their chance of generating returns.

Investor searches for impact-related terms were up an average of 24.9% from 2017. The fastest growing sector was ’renewables’ which climbed from 40th to 32nd (a 25.4% increase in number of searches,‘greentech’ showed a 25.7% increase while ‘environmental’ had a 23.5% increase.

UN sustainable development goals millennial angel investor technology investors
The United Nations’ Sustainable Development Goals

Some of the companies who benefitted from, or perhaps helped create, this growth in interest include: Verv – an AI home energy assistant – and Demizine – an end-to-end home water recycling system using technology originally engineered for space stations. In both cases, it is interesting to note the core role that cutting-edge software and technology plays in their value proposition.

Off the back of this, we recently launched a spin-off platform, Seedtribe, with the mission of building a community of impact entrepreneurs and investors. We are especially interested in the role technology can play for impact companies in bringing about positive change in the world, while generating returns for investors.

Equity property investments remain popular

As a final point, I should mention the property investment category which performed strongly on the site for the third year running. For context, our site was built to connect startup companies with angel investors, but from quite early on, property development companies would ignore our pitch framework (designed for startups) and submit their equity property deals on the platform. The appetite for their type of deal (25-35% returns per year over an 18-24 month period) was apparently strong among our investor community – perhaps as a less risky avenue for diversifying their portfolio. This remained the case in 2018 and we expect this to continue even with the current volatility in the property market.

Summary

Overall, investor and entrepreneur activity on our site has outperformed the sector at large. But in these uncertain times, we recognise that our efforts to support the early-stage investment community will have to go even further in 2019 and beyond.

Whatever the political climate, UK entrepreneurs will continue to bring out innovative solutions embedded in technology across a variety of industries in 2019. The Internet of Things, robotics and AI systems including software for autonomous vehicles are creating real excitement amongst our investor community, and rightly so. It is up to these investors to continue supporting the industry with capital, expertise and contact; and to light a way in these murky times.

Originally written by Oliver Jones, Head of Marketing at Angel Investment Network, for The Haggerston Times

The Sunday Times’ Q&A with Angel Investor Olivia Sibony

Every week The Sunday Times talk to a business angel investor, one of the early-stage investors who collectively inject £1.5bn a year into British start‑up companies. This week they featured our very own Olivia Sibony, Head of Impact at Angel Investment Network’s new impact-focused platform, Seedtribe.
Here’s the piece as printed in The Times:

Olivia Sibony runs SeedTribe, an online platform that connects investors who want to back ethical businesses with entrepreneurs looking for funding. It is part of Angel Investment Network, which has about 1.1m members.

SeedTribe raised £2m last year and is currently working on companies including gaming developer, Playmob, and 28 Well Hung, a “carbon-beneficial” steak and chips chain.

Sibony, 38, co-founded Grub Club, helping London diners find culinary experiences. Two years ago, it was sold and rebranded Eatwith.

Star investment

Playmob can be integrated into a company’s website to engage users with the United Nations’ sustainable development goals. Dove [soap] uses it, reaching more than 4m people in three months. It is profit-driven, but at the same time doing good.

Common misconceptions

People think we don’t want to make a profit. If you don’t have any money in your bank account, you’re not going to be able to make an impact.

Mission-focused

Impact has to be embedded in the business. If you create a medical device that helps scan for early signs of skin cancer, the more devices you have the more impact you’ll have.
UN sustainable development goals millennial angel investor

What I learnt

Building your own business teaches you what to do — and what not to do. I try to think of the next three things I need to do, rather than getting overwhelmed with 100 things at one time.

I wish I saw more…

Diversity among investors. That’s not just for the sake of diversity, which is important, but because we are missing out on so many potentially incredible businesses.

I wish I saw fewer…

Disposable cups and bottles all over the place. There is so much scope for creative entrepreneurship here. We can turn this growing and entirely needless problem into an opportunity.

Next disrupted industry

Housing. There’s a growing crisis — and great potential to do something that is financially viable that enables fewer people to be homeless.

You can read the original piece published in The Sunday Times here

Industry Report: Key Trends in UK Angel Investment 2018

We are proud to be world’s largest online network of angel investors and entrepreneurs – we even passed 1 million users at the end of 2018. This scale means our data can reveal some interesting insights into the angel investment landscape. We’ve collected this information into a report which we’ve called the ‘State of the Angel Investment Nation’.

This first version of the report digs into the trends in the UK based on the data from more than 100,000 businesses and 30,000 investors.

Some Key Findings:

In a snapshot: Software retains its 2017 position as best performing sector, while food & beverage, fintech and property ventures showed strong growth.

• The UK’s position as a hub for food and beverage startups is highlighted by significant growth in both investors and pitch ideas. The sector climbed from the 4th to the 2nd most backed category by investors and remains the third most popular category for pitch ideas.

• Property remains an incredibly robust category for both investment and entrepreneurs. It matched its 2017 positions as third most popular sector for investors and second for pitch ideas. On the back of this, Angel Investment Network has launched BrickTribe – a platform focused specifically on property investments.

Bricktribe industry report

• Site activity mirrored growing societal interest in impact investment, with investor searches for impact-related terms up an average of 24.9% from 2017. The fastest growing sector was ‘renewables‘ which climbed from 40th to 32nd (a 25.4% increase in number of searches). ‘Greentech’ showed a 25.7% increase while ‘environmental’ had a 23.5% increase.

• Searches for ‘robotics’ were up by 7.8% becoming the 4th most popular search term for investors.

Discrepancies between number of Pitches and number of Interested Investors

The results also revealed a large discrepancy in some categories between the level of investment interest and the number of entrepreneurs looking for funding.

• Fashion was the 6th largest sector for pitch ideas, but drops to 14th in terms of the number of investors interested, with three times as many pitch ideas as investors.

• Technology sees a significant discrepancy between investors and pitch ideas. While it is the 4th most popular sector for investors, this falls to 9 for pitch ideas.

• The UK market seems to be under-served for investors in the medical sector. It is the 6th most popular category for investors but only 14th for pitch ideas.

View from the Founders

Angel Investment Network co-founder James Badgett commented:

“We are pleased to present our first public ‘State of Angel Investment Nation’. We hit the million-user mark just before the end of 2018 and so we feel the volume of our data is significant enough to yield meaningful insights.”

“Unsurprisingly, software and technology continue as strong performing sectors. We think the UK’s growing reputation as a FinTech hub, in particular, has helped these sectors maintain their positions. We’ve also seen a rise in other sectors including insurtech, AI/machine learning and IoT.”

Mike Lebus Co-founder Angel Investment Network report

Co-founder Mike Lebus added:

“The growth in investor interest for impact-related businesses is a rapidly rising trend and we expect this to continue over 2019 and beyond as investors increasingly become aware of the value of a conscience-driven approach. Impact projects we raised funds for in 2018 include Verv – an AI home energy assistant – and Demizine – an end-to-end home water recycling system using technology originally engineered for space stations.”

“Notable FinTech companies we’ve raised for include Coconut – current account with inbuilt accounting – and Novastone – a ‘WhatsApp’ for the finance sector. Another cutting-edge client in 2018 was Humanising Autonomy who’ve built the most advanced system for human-machine interactions using London pedestrians to train their algorithms.”

Industry Report Overview

The Top 10 Sectors by Number of Pitches:

1. Software
2. Property
3. Food & Beverage
4. Hospitality
5. Transportation
6. Fashion
7. Media
8. Agriculture
9. Technology
10. Manufacturing

The Top 10 Sectors for Investors:

1. Software
2. Food & Beverage
3. Property
4. Technology
5. Hospitality
6. Medical
7. Transportation
8. Business Services
9. Energy
10. Agriculture

For the Full Report…

We will be presenting the full report to investors at our next pitching event in London (date in March to be confirmed). For more information on specific parts of the data or to request a place at the event, please contact me on oliver@angelinvestmentnetwork.co.uk

This report was referenced in City.A.M on 30th January 2019

This report was also used in a piece on Angel News on 31st January 2019.

Real Business published a longer analysis of our report on 1st February 2019.

Everything you need to know about Fundraising for your Manufacturing Business

Fundraising is rarely easy. But the challenges faced vary between industries. The manufacturing sector, in particular, has its own pathways and hurdles to be navigated when it comes to fundraising.

Below, I cover the sources of finance available for manufacturing businesses and offer advice on which to choose for your business.

Why the right finance is so important for manufacturing businesses

Figures reported in January 2018 show that 17,243 USA companies like AMSC USA entered insolvency – a 4.2% increase from the year before. It’s no secret that the first few years of a business are a critical time for its survival. The survival rate of business to year 5 is 44.1%.
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“The UK is a great place to start a business, but survival rates are low. The recession has had an unsteadying effect on small and medium enterprises (SMEs) and we need to work hard to rebuild their confidence.”

David Swigciski, Head of Corporate, DAS UK Group

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The reasons that a business fails range from product failure, lack of market understanding and too much competition, through to the complexity of tax systems and too much red tape.

Financial planning is perhaps the biggest reason, especially for companies more than a year or two old. Without a stream of cash to sustain itself, a business will die very quickly. Lack of funding, late payments, increased business rates and maintaining your cash flow all contrive to limit the cash available.

When is the right time for a business to borrow?

The life cycle of a business needs cash injections at many stages, including:

• Expansion into new products or markets
• Fulfilling new orders above usual production demand
• Sourcing new suppliers
• Increasing inventory volumes to reduce costs
• Bridging a late payment from a large customer that is in financial difficulty

A good financial model for cash flow forecasting will highlight when your business may need more cash to continue to operate and understanding your working capital cycle is a vital part of this model.

The Working Capital Cycle Explained

The Working Capital Cycle (WCC) is the length of time it takes to convert net working capital (assets and liabilities) into cash in the bank.

If a business has a short WCC then it quickly releases cash from its production cycle which is then free to either reinvest or to purchase more materials. As a result, the business will require less funding.

If a business has a long WCC, then capital is ‘trapped’ in the working capital process and is not free to use. Businesses in this position are more likely to need funding and finance.

A business will try to reduce its WCC to as few days as possible, usually by increasing the payment terms with their suppliers and reducing the time to collect what it’s owed by its customers. Other ways to reduce the gap include streamlining processes, reducing manufacturing times and decreasing the sales cycle.

Understanding the WCC of a business is essential to plan for stability. As any CEO will tell you, the ability to weather all storms is the key to business success.

Once a business is aware of where the financial ‘gaps’ are to be bridged, it can then implement funding to ensure a healthy cash flow is available at all times in order to continue operating. This can range from organising a working overdraft, invoice financing or a short-term bridging loan for growth periods, for example when completing either a new order or launching a new product.

With this knowledge, a business owner can then look for sources of funding to support the business and to keep a healthy cash flow.

How to Choose a Finance Option

First, look for any government funding and loans that are either a non-repayable grant or a low-cost loan. These are regulated by specific guidelines and are often regionally based.

Failing this, you then need to look at equity or debt options…but which one?

debt vs equity angel investment netowrk manufacturing
Ask yourself the following questions:

1. How much money do you need?
Debt finance is suitable for anything between a few thousand to millions of pounds – dependent on finding a willing lender. Equity finance is usually from tens of thousands up to tens of millions and many VCs will only consider investing large sums.

2. Are you prepared to give away equity and a share of your business?
This is a clear choice between equity and debt. You will also have to consider how much equity you’re prepared to give away if you choose to go down an investment route.

3. What are your growth ambitions?
An equity investor is predominantly motivated by aggressive growth, for a return on their investment. A lender such as a bank is only concerned with their capital being repaid and growth is generally not an issue.

4. How long do you need the money for?
For a short-term cash injection, debt finance is the most suitable. If you have long-term needs, then equity investment could be a better option.

5. Do I need support?
An angel investor will also act as a mentor and can have significant input into helping you start up and grow a business. If you have a great product or a proven business but need help to take things to the next level, then an angel could be the best option for you.

It is worth noting that equity finance is a more expensive way to borrow money, but the investor is taking most of the risk. Debt finance means that you keep control of your business – and at a lesser cost – but most of the risk is yours.
Manufacturing fundraising angel investment network

What do I need to prepare to apply for funding?

1. Evaluate your business to understand what it requires

2. Draw up a business plan to clearly outline your strategy for growth and how you will use the required funding

3. Use research to show that your plan is realistic and achievable. Know your business, the market and your figures inside out.

4. Get advice on the application process, especially if you’re seeking equity investment. Speak to an adviser who can help you prepare your plan and who can give you advice on how to apply and pitch.

Sources of Finance for Manufacturing Businesses

Government Grants and Regional Agencies
The government has a variety of schemes, grants and funding options for businesses at every stage, from startup to innovation and exporting, and every business should review what funding and support is available. This type of funding is focused mainly on small businesses but not exclusively.

Grants and schemes are all subject to strict criteria and some are match-funded, which means the business must either self-fund or find external funding to match the grant on offer.

Funding support is available for businesses around the UK, with a variety of grants and loans on offer, all with specific regional criteria. Grants are constantly changing; therefore, it’s best to review what’s currently available here.

• For business innovation, Innovate UK has a series of competitions to fund between £25k and £10m for a product development project.

UK Export Finance can offer advice and support to businesses who are exporting, usually though underwriting loans and finance.

Business Finance Partnership helps small to medium-sized businesses find finance from private sector investors.

The Prince’s Trust has helped small businesses and entrepreneurs under the age of 30 since 1983. They offer mentoring, grants and loans.

For more info, I wrote a separate post on grants here.

Startup Loans

For a new manufacturing business struggling to get finance, the government-backed Startup Loans can offer a personal and unsecured loan of up to £25k. The benefit of this loan is that you do not need any assets to secure funding but the individual is personally liable for the loan and not the business.

To be eligible to apply you must be:

• Unable to have secured funding from elsewhere
• Your business is less than two years old and is based in the UK
• You are 18 or older and a UK resident, with the right to work in the UK

If there are multiple partners, each person can apply for a loan of £25k up to a maximum of £100k investment in one business. The loan is to be repaid over one to five years at 6 percent.

With the funding, a business also receives one year of mentoring and support to prepare a business plan.

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“Bank Loans and commercial mortgages are the fourth most popular form of external finance among UK SMEs”

British Business Bank Analysis, SME Finance Monitor

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Bank Business Loan

For an established business with a trading history, a bank loan is one of the most popular choices for securing finance.

Your options are based on the credit history of the business (including the business owners’) and whether you have any assets that you can offer as security. Property is usually the bank’s first consideration for security but machinery and equipment may be considered.

The business must prove that it can afford to repay the loan.

The other option, of an unsecured loan, will usually require a personal guarantee from the owner or directors of the business and will be subject to higher interest rates.

The benefit of a business loan is that you retain control of your business and can arrange funds quickly.

For a manufacturing business, a close relationship with their bank is essential to support their financial plans and to facilitate expansion and growth. Business loans are suitable for buying equipment, machinery or to fund the development and launch of a new product.

Bank Overdrafts

Another option for established businesses to support cash flow is a working capital overdraft with the bank. 16% of SMEs use an overdraft.

An overdraft is not a loan but is a means to both facilitate growth and to manage cash flow. An overdraft is expected to be used to bridge gaps on a monthly basis with the account being in credit for part of the month.

Overdrafts tend to have high interest rates but this is only paid on the overdrawn balance and so offers a flexible solution on a short-term basis to bridge gaps. There will also be an arrangement fee to pay.

Venture Capital (VC)

One of the most popular ways to fund a start-up or a business in its early stages, that has aspirations to scale quickly.

A VC is a fund of investors who are motivated to make an above-average return on their investment and in return they’re prepared to take a risk on early-stage, unproven businesses. They do factor that a certain percentage of their investments will fail but the ones that succeed can deliver massive returns.

The VC is focused on investing in a business that has long-term growth potential and will require a significant percentage stake in the business to reflect the risk that they’re taking. They expect to hold an interest in the business for five to seven years before they see a return.

Investment is delivered in a series of ‘rounds’, beginning with the seed round to test a proof of concept and then ‘series A’ onwards will be large cash injections to allow the business to scale.

A VC is not only looking for a strong business plan, they’re also concerned with the founders and the management team, and are investing in their ability to quickly scale and grow their business, as much as the business idea itself.

Venture capital investment can be used by a manufacturing company that has a new product to launch and expand into new territories or on a worldwide scale but in return, they will have to give away an equity stake in the business.

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“VC is an incredible partnership between financial professionals and founders. Many VCs are often ex-entrepreneurs, so their advice can be invaluable.”

David Mott, Chairman, Venture Capital Committee, BVCA

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Private Equity (PE)

Where a VC is focused on early stage investment in a business, PE is a medium to long-term finance option. It’s more relevant for a proven business that wants to grow or move to the next level and which needs help to achieve that.

The PE investment comes from individuals or specific private equity businesses, rather than funds made up of investors looking to speculate.

The PE investor will take a significant share of the business, often taking control. For this reason, this source of finance is relevant for owners who feel they have taken the business as far as they can and who now need help to achieve the next level, and are willing to relinquish control in return for this. Or, they may want to retire or step down from running the business and instead, retain a minority stake.

For a manufacturing business, growth could represent developing new and existing products, reducing costs and streamlining processes for more profitability and expanding into new markets.

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“You build relationships in Private Equity over three or four years. So, if you’re thinking of retiring and there’s no obvious succession plan, Private Equity makes your exit easier.”

Tim Hames, Director General, BVCA

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Angel Investment

Angel investment is finance provided by private, high-net worth individuals.

An angel investor usually has substantial business experience, with the knowledge and contacts to help other businesses succeed. They often take a hands-on approach and have significant input into the business. A strong working relationship is essential between an angel investor and the business owner they invest in.

Our service at Angel Investment Network is to connect entrepreneurs with our network of 180,000 angels investors worldwide.

A manufacturing business that has developed a new product would benefit from angel investment or a startup that needs the expertise of an experienced business owner to mentor them.

Expansion Capital

Once a business is established and has proven its success, it will want to grow. Rather than relinquishing control with private equity funding, expansion capital can be a partner to help the business achieve its goals by having the ability to inject funds at each growth stage with subsequent investments.

Expansion capital tends to be for higher amounts, such as £1-20m and an investor will expect a 10-30% stake of the business in return.

For a manufacturing business, expansion capital can be applied to the production of new products, entering new territories or even the strategic acquisition of another company (for either their manufacturing capability or even the intellectual property of another product).

Asset Finance

For an established business that has a trading history and which can show assets (that have value) on the balance sheet, finance secured on those assets can be an option to raise funding for growth, without giving away equity.

Banks often require a security guarantee for a loan but are restrictive in what they accept as security – usually only property. An asset finance lender will accept a wider range of security such as, the debtor book, machinery, equipment and stock. In some instances, intellectual property rights or patents can be used.

Traditionally, asset finance was considered a ‘last option’ to raise funding but has become more popular for any business that needs to quickly raise cash.

Leasing and Hire Purchase

A form of asset finance that is so popular in the UK with small to medium businesses that it’s second only in use to overdrafts.

The difference is:
Leasing means you pay a ‘rental’ on the item that you require, such as a van or a piece of machinery. At the end of the rental period the item is returned.
Hire purchase is an agreement to buy an asset over an agreed period of instalment payments. This means the business has the equipment it needs immediately without a large upfront investment and keeps the item once it’s paid for.

For a manufacturing business that needs to invest in a new fleet of delivery vehicles or production equipment this is an option to quickly put in place what is needed. Ideal for start-ups and growth periods.

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“It does the job that businesses need it to, allowing them to get the asset on board quickly and simply so they can start using it within their business.”

Sam Dring, Senior Product Manager, Asset Finance, Lloyds Banking Group

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Invoice Financing

Also known as factoring, invoice financing is a way to reduce the working capital cycle by releasing the value of an invoice as soon as it’s issued to the customer.
An established business will need a trading history and payment terms of less than 90 days on their invoices. They will also need to show that their customers are reliable payers.

An invoice financing lender will lend up to 90 percent of the value of the invoice and then manage the payment recovery from the customer. The cost of the financing is a percentage of each invoice.

Especially relevant to manufacturing businesses who want to reduce a long working capital cycle, release finance out of the cycle quickly and manage their cash flow more efficiently.
The business owner has access to cash and retains control of the company without relinquishing equity.

Summary

It’s very rare that a business is so cash positive from the outset that funding is never needed. Even cash positive businesses often need external finance to accelerate growth and scale quickly.

Fundraising is, therefore, a bridge that almost all business owners face. Making the right choice for your business will save you time, stress and money; and could, ultimately, be the difference between success and failure.

Thanks to Sage for allowing us to use and share their original copy and images. You can view the original post here

The Impact of Regulation on the European Tech Sector – Report by Allied For Startups

Policy and regulation have a huge impact on the tech sector. A recent report by Allied For Startups takes a deep dive into how current regulatory systems are affecting the landscape for European startups…

We are in a period of unprecedented innovation and development across a wide range of sectors. Many of the new and impending technologies are so novel that it is unclear how existing regulation systems will manage them.

AI, drones and autonomous vehicles are just some examples of technologies giving regulators pause for thought. All three examples raise difficult moral as well as practical questions; and given the rate of innovation, it now seems like too many questions are coming at once.

The role of regulators is to ensure new technologies can be deployed in safe and meaningful ways. But this often slows the speed with which a new technology can come to market.

Regulators have to balance safe deployment with not hindering the release of exciting new tech. A difficult task – and one about which the investors interviewed in the report are concerned.

Who are Allied For Startups?

Allied For Startups is a worldwide network of startup associations and advocacy organizations focused on improving the policy environment for startups. Their report on ‘The Impact of Regulation in the Tech Sector’ provides insight into the views of technology investors (among others) on reactive regulation and policy decisions that impact the development of the sector.
regulation allied for startups

What’s in the Report?

Tech ecosystems take time to develop, but the benefits to the economy are substantial as new companies are spun out of existing ones, and the sector as a whole creates jobs and wealth. Based on 185 interviews, this report flags areas of opportunity and risk for the European tech ecosystem in the coming years.

The report also highlights that tech investors are highly conscious and aware of the regulatory environment and that this can have a huge impact on their decision to invest or not. Furthermore, there are particular concerns among investors that regulation and taxes are designed to target larger companies but can have unintended consequences for startups, and that regulation is often reactive as opposed to strategic.

Allied For Startups conclude their report by stating that a fairer and more stable regulatory environment is needed to ensure the tech sector continues to flourish.

Read the Report here

For more information on Allied for Startups please see here.

Top 5 Startup Podcasts for Entrepreneurs & Angel Investors

The term ‘podcast’ was coined to describe audio content (other than music) that you could download to your iPod – you know, that Apple product long since ingested by the iPhone. But the term lives on and its popularity is on the rise.

According to Edison Research, 64 per cent of Americans are now familiar with the term “podcast” and over 4 in 10 have listened to at least one podcast. 73 million Americans listen to podcasts every week; their average weekly listening time is an astonishing 6 hours 37 minutes.

There is a number of reasons for this including:

  • A shift in audience entertainment expectations towards on-demand content
  • A desire for long-form content where listeners can, by degrees, come to understand fully the topic under discussion
  • A recent UCL study even showed that emotional responses are stronger from auditory content than visual

But the medium itself shouldn’t take all the credit for the popularity of podcasts. Podcast creators have contributed their time, creativity and expertise to produce compelling and informative audio experiences.

Today, the selection of top-quality podcasts is almost limitless. And that is true of any industry from gaming to politics; from children’s books to investigative journalism.

The startup and business space is no different. There is so much choice – it can be a little bewildering. Especially given that you are probably pressed for time and want to start by listening to the best podcast that is most relevant to you!

We love podcasts. We listen to many of them. And we even host our own podcast (see below).

To help you get started on your journey of discovery, we have compiled our list of the Top 5 Startup and Business Podcasts.

1. This Week in Startups

twist podcast

Tech entrepreneur Jason Calacanis interviews successful entrepreneurs to share their experiences and offer advice to people thinking of starting their own businesses.

2. The Pitch

Josh Muccio presents real entrepreneurs pitching in the hope of securing venture funding from investors. Entertaining and informative!

3. Masters of Scale

Linkedin podcast

LinkedIn founder, Reid Hoffman hosts guests with expertise and insights into scaling a startup. The focus is on growth rather than starting out…

4. How I Built This

Guy Raz presents the journies of some of the most famous companies as told by the entrepreneurs who drove them.

5. The Startup Microdose Podcast

The only UK-based podcast to make our list is our own (hosted by yours truly and my colleague, Ed Stephens!).
startup microdose podcast
Recently tracking at the number 1 in the Apple Business podcasts list, the Startup Microdose has exceeded all our expectations in its first year.

With guests including the founders of Huel, What3Words, Depop and Sweatcoin, we unpack the stories and secrets of companies right in the moment of their success.

Check it out on iTunes, Spotify or new podcasting platform, Entale.

Let me know your favourite (even if it’s not mine)!

Since we published this post, FeedSpot released their list of the ‘Top 30 Startup Podcasts on the Planet’

We are delighted that four of our list (Startup Microdose, Masters of Scale, TWiST and How I Built This) all made the cut.

Check out the full list here

What the UK Chancellor’s Budget 2018 means for Entrepreneurs and SMEs

At a glance, the Autumn Budget 2018 is a win for entrepreneurs and SME’s. If your personal income is less than £100,000 and you’re a ‘genuine’ entrepreneur, taxation rules and entrepreneurs’ relief remain favourable. The more indirect budget effects could also be highly beneficial.

Established entrepreneur and founder and MD of globally-recognised, Absolute Translations, Sergio Afonso summaries the 2018 Budget’s impact on UK entrepreneurs and SMEs.

1. Entrepreneur Relief Timeline Extended

Phillip Hammond decided to meet halfway regarding the contested £10m entrepreneurs’ relief allowance, choosing to revise rather than abolish. The change is an increased minimum holding period from one year to two prior to selling a business.

This is meant to reward ‘genuine’ entrepreneurs who recognise that establishing a successful business ready to sell takes time.

Those who build and sell a business within 24 months will no longer qualify for the tax allowance.

2. Rates slashed for independent businesses

Businesses of all sizes have generally gained.

High-street based small businesses are the biggest winners. Up to £8000 in tax savings are now available for small businesses who have a rateable value under £51,000 for the next 2 years.

The fight to protect independents from corporations like Amazon from running local enterprise out of business is additionally supported through co-funding to local councils, with Hammond committing of £675m to the transformation of streetscapes, infrastructure and transport access.

3. VAT Raid scrapped & allowances raised

Despite reports of a VAT raid on small business lowering the minimum required turnover amount required to pay VAT from £85,000 to £43,000, no such decision was officially made.

In fact, the chancellor raised the personal tax allowance from £12,500 for basic rate taxpayers and £50,000 for higher rate taxpayers in 2019.

Businesses seeking capital expenditure will also be pleased with the “Annual Investment Allowance” being substantially increased from £200,000 to £1m.

4. Digital Services Tax a win for Start-ups

Tech-based startups are likely to benefit indirectly from the digital services tax that will be placed on “established technology giants”.

Public calls for companies such as Facebook and Google to contribute to local tax and “pay their fair share towards support of public services” has encouraged Hammond to show the way to the international community.

The “UK digital services tax” introduces a 2% tax for tech companies with sales over £500m. This strategically avoids the UK startup and SME market and potentially creates an opportunity for them to gain market share.

Critics hope it has been designed in a way that doesn’t prevent home-grown tech innovation or international business investment in the UK.

5. Brexit’s Impact

budget brexit
The Budget 2018 cannot be evaluated without taking into consideration the broader implications of Brexit.

Hammond’s Budget aims to reduce austerity but, in the event of a no-deal Brexit, he concedes that the economic situation will continue for another 5 years.

This is a potential worry for UK-only entrepreneurs and businesses. Opportunities to take a global view is an option for relevant business owners to avoid the expected financial fallout. Others must hope that the unconfirmed but rumoured spending increase of 1.9% will come into fruition.

You can read more detailed takeaways from the Budget 2018 here

Why Female Founders find it harder to get Investors

The gender pay gap has come under intense scrutiny in recent years. Movements like #MeToo and #TimesUp have brought sexism issues to mainstream attention. This is true across a spectrum of industries. But there is a nuance when it comes to the startup investment space. Female founders are still underfunded compared to their male counterparts.

As an industry, it’s time to close this gap. To do so, will require a concerted effort from all parties – founders, funds, networks and investors – to overcome biases and to support merit wherever it is found.

Elite Business Magazine recently did a feature on this to discuss why female founders find it harder to raise funding than males.

The feature includes an interview with our very own, Olivia Sibony. Olivia recently sold her startup to EatWith before joining our team. In the interview, she describes the difficulties she faced when fundraising including discrimination because she was “…of childbearing age”.

She now runs our impact crowdfunding arm, SeedTribe. Her mission encapsulates two main aims. She wants to help anyone fundraise evaluated purely on merit. And she wants to encourage more people to invest. She is confident that SeedTribe will be a great platform to achieve this. (A fact she discussed in an earlier interview for The Guardian).

You can read the full feature and Olivia’s thoughts on the Elite Business Magazine website.

SeedTribe & Angel Investment Network make waves in the Press

The team at Angel Investment Network and SeedTribe have received a lot of positive press coverage recently including the Financial Times, the Guardian and BBC Radio 4.

It’s always rewarding to get public attention for your hard work. But more importantly, it’s great that our message is reaching a wider audience. Especially those people we can potentially help to find funding or great investment opportunities!

The most recent publications build a nice picture of what we are trying to accomplish over the coming months.

The focus falls, in particular, on our mission to drive positive change in the world. We are trying to increase the accessibility of the early-stage investment space, opening it up to a more diverse spectrum of investors (women and younger investors in particular). And we are helping ‘impact’ entrepreneurs get the right sort of investment for their projects.

Raconteur: Angel Investment Network & SeedTribe advocate a change in attitude towards Plastic Use

oliver jones olivia sibony plastic raconteur press
David Attenborough’s Blue Planet and the more recent BBC film “Drowning in Plastic” have brought the plastic epidemic to a global audience.

Universal horror has propelled action and a number of entrepreneurs have come forward with innovative solutions to the problem. One of these, Ahmed Detta, is currently fundraising for his recycling solution on SeedTribe.

In the midst of this backlash against plastic, we felt it important to make the point that plastic is an awesome resource with so many applications –

the real problem is not plastic, but our attitude towards it.

Raconteur picked up and published our argument – you can read it in full here

Financial Times: Angel Investment Network & SeedTribe support Impact Ventures

This September, the FT produced a special report on the ‘Impact Investing’ movement.

Regarding SeedTribe as one of the companies at the forefront of enabling the growth of this promising space, they included an interview with SeedTribe’s Head of Crowdfunding, Olivia Sibony.

olivia sibony seedtribe financial times press
Liv gives her thoughts on the important role companies like SeedTribe have to play in empowering impact entrepreneurs to enact positive and sustainable change in the world.

Read Liv’s interview in the special report here

The Guardian: Angel Investment Network & SeedTribe support Women Investors

Liv gave another interview with the Guardian, this one focused on the importance of encouraging more women investors and how the rise of the impact space could play a key part in bringing about this change.

olivia sibony seedtribe guardian press
Read ‘The Rise of the Female Investor’ interview here

Angel News: Angel Investment Network & SeedTribe support Millennial Investors

I wrote a comment piece for Angel News which ties in with Liv’s argument for women investors and the impact sector.

My thoughts centred on how younger generations of investors are motivated by conscience as well as the desire for wealth generation. I argue that companies like SeedTribe should do everything we can to harness this for the good of impact projects and the future of the planet.

Check out my two cents here

(Or if you don’t want to register on Angel News, I posted the article in a previous blog post.)

The Value of Press Coverage

This press coverage is all very flattering. But what has been most encouraging is its reception throughout the entrepreneurial and investment communities. Inbound LinkedIn requests are resulting in a number of exciting partnerships as people buy into what we are trying to do.

If you’re interested in this space as a potential partner, entrepreneur or investor, please do get in touch:

liv@seedtribe.com or oliver@angelinvestmentnetwork.co.uk

Incentivising Millennial Investors is Key for Impact Investment

Impact investing is a hot topic at the moment. And rightly so! We find this so encouraging because it is timely validation for the work we’ve been doing at our impact crowdfunding platform, SeedTribe. But there is more work to do before this industry can deliver the positive outcomes it promises. Part of this work involves incentivising the millennial generation of investors by giving them access to the best impact investments. Last month I wrote a piece on this ‘democratisation’ of impact investments for Angel News.

I wanted to share the message on here too:

Why Millennial Investors are Key for the Impact Space

“If you think you are too small to make a difference, try sleeping with a mosquito.”

This oft-quoted and amusing aphorism attributed to the Dalai Lama captures the spirit of bloody-mindedness (literally) that can drive anyone, irrespective of category, to their desired destination.

But in some industries, one can’t help but feel that size really does matter.

Early-stage investments are top of the list. For a long time, this space was a stomping ground for suits and wallets; a predominantly male sphere where prestige was gained by backing risky and exciting ventures.
investor stereotype millennial
This (slightly) unjustified stereotyping is not to undermine the important role those traditional types of investor have played in driving innovation.

But it’s important that this model evolve to become more inclusive and conscience-driven.

The advent of crowdfunding kicked off this shift: now individuals could invest in projects based on what they could afford and how much they valued the enterprise. Equity crowdfunding then allowed people to get a stake, as if they were a professional investor, in their chosen companies.

This democratisation helped spur an interest in innovation and startups among those previously unable to contribute. Now anyone could make a difference no matter how small.

However, it has become increasingly apparent that the quality of investments available on mainstream crowdfunding is still far below the level of deal flow available to professional investors.

You are never going to find the next AirBnB on a crowdfunding site. The traditional investors still hold a monopoly at the forefront of innovation.

So what? They will keep investing and funding visionary businesses and the merry parade will go on. We all benefit, right?

But the future they are creating is not one they will have to live with, at least not for very long. And that alters the motivation framework for them.

I’m not trying to denounce these investors or ascribe to them intentions which may or may not be there. But the truth is, the motivations for investing in a company inevitably differ between a 25-year old millennial and a 60-year old.

It’s not unreasonable to assume that, in most cases, the 60-year old will be more interested in wealth creation for themselves and their immediate family, while the younger person will have more concern for the future of the world they hope to inhabit for another 60 years or so.

The Rise of Capital with Conscience

The dramatic uplift in public concern over issues surrounding sustainability and the environment supports this. And it is the millennial generation who are driving this. They have come to realise that the effects of inaction will have irreparable consequences for their futures.
millennial impact investors
Sharing articles, protesting and walking to work are some ways individuals are trying to make a difference. We do these things but still feel too small to make a real difference.

Investing in impact businesses is a potential avenue for a new breed of investors to make a quantifiable difference. Impact or ‘profit-with-purpose’ businesses aim to change the world for the better while turning a profit and generating returns for investors. Included in this open attitude to positive change is a willingness to explore more inclusive methods of raising investment.

Young people, who are more environmentally engaged than ever before and willing to invest in ‘good’, neither have the resources nor the network to invest using traditional methods in the companies their conscience demands of them for a better future.

Luke Gavin, a 26-year old Greentech consultant, knows this difficulty: “One of the frustrating things about the low carbon energy sector is its inaccessibility to the average person – so much of the money comes from large institutional investors.”

A report by Barclays also shows the high appetite among younger generations with millennials four times more likely than older generations to put their money in impact funds.

How are we helping millennial investors?

At SeedTribe, we want to encourage this new generation of conscientious investors. We evaluate and vet the most exciting impact investment opportunities using the UN’s Sustainable Development Goals (SDGs) alongside commercial frameworks and allow people to invest online from £100 in exchange for equity.
UN sustainable development goals millennial
Young people want to invest in the most promising impact businesses. It is a concern for the future motivated not simply by financial reward, but more importantly by the hope of a better world for themselves and future generations. We need to do everything we can to support this.

You can read the original article on Angel News here

Should you Invest in ICOs?

The cryptocurrency market has caught the attention of many people in recent years – from traders who want to make a quick profit to angel investors concerned about the authenticity and transparency of the system. Within the startup community, ICOs (Initial Coin Offerings) have come into prominence.

So far, ICOs have helped many entrepreneurs raise funding far more rapidly than traditional avenues. Many investors too have reaped the rewards of being able to exchange an asset that would normally only realise its value when and if the business exited via trade sale or IPO.

How does an ICO work?

Before a currency is put on the market, ICOs are made available for sale as tokens, which can be converted into currency or resold as tokens once the company becomes successful. When an ICO is started, the tokens are usually sold at a very low price making it easy for investors to buy lots of them.

Once the ICO hits the exchange platforms, there are very high chances that their value will increase. Investors who bought the tokens can sell them at higher prices if there is demand.

There have been lots of success stories on ICO funding, and people are already anticipating that there will be an increase in the number of ICO fundings within the next five years. We have certainly seen a rise in the number of companies offering ICOs on Angel Investment Network in the last year or so.

Btxchange.io mentions the example of SpectreCoin in their infographic, as one of the most successful ICOs of all time with a whopping 37,175% increase in their crypto coin value.

Are ICOs all good news?

While ICOs can have advantages compared to conventional funding methods, there are some downsides that investors should be aware of.

ICOs are poorly regulated by nature, and there have been incidents of fake fundings like the Benebit case in 2017. The initiators of the coin offering scammed people into investing large sums of money, and then just disappeared with the funds, without a trace.

Also, even if the ICO is legitimate, there is no guarantee that the new coin will gain enough value for you to make a profit. It’s a gamble like any other investment!

The bottom line is that, if you are interested in ICOs, and you don’t mind taking the necessary risks, then there is an excellent opportunity to generate quick returns from startup investments. Initial coin offerings have fast returns which could double or triple your capital in just a few months.

If you are either a complementary investor or an angel investor, it’s a good time to get involved with ICOs.

Btxchange.io have produced a helpful infographic to explain the ICO landscape further:

https://btxchange.io/ico-roundups-infographic/

Infographic: How Startup Funding Works

Raising funding for your startup is, in part, a navigation problem. This is especially true when you are doing it for the first time. Entrepreneurs often focus on the problems right in front of them and so lose sight of the bigger picture. It is always helpful to approach immediate problems with knowledge of the lie of the land ahead.

This infographic on how startup funding works is one of my all-time favourites. It neatly and concisely sets out a typical map of what a fundraising journey looks like over the lifetime of a successful company.

startup funding infographic

I hope you find it useful.

Credit to Anna Vital for producing such a great graphic.

Startup Due Diligence for Investors – Best Practices & Checklists

What is Due Diligence?

‘Due diligence’ sounds awfully serious.

When it came into use in the mid-fifteenth century, it simply meant ‘reasonable care’. It became a specialised legal/business term in the 1930s when the US government passed a law to ensure that securities brokers disclosed sufficient information when selling to investors.

It is now used as a general term for the process of verifying information.

The level of due diligence required and the level of due diligence possible varies depending on the information being checked. Naturally, a high-level corporate merger would require extensive due diligence.

When it comes to investor due diligence on early-stage companies and startups, the due diligence need not be overly laborious. It is necessary but should not be daunting, even if it’s your first investment of this kind.

So, for the remainder of the post, I shall refer to it as DD. It’s less daunting that way. (And easier to type!)

Why is due diligence different for early stage companies?

Any sort of institutional or corporate investment requires sophisticated and extensive DD.

Investment institutions tend to invest in companies who are well past the proof-of-concept and early growth stages. As such, they can examine substantive data in their assessment and check its validity. They also need to check it so that they can justify the investment to their own shareholders.

It’s only when a company has achieved a certain level of tangible traction that you can reasonably run analytics on it in the hope of predicting the eventual outcome and the risks involved. The later stage the company, the more data, the more due diligence, the more predictable the outcome.

Early-stage companies accepting investment from private investors tend to have less tangible evidence available for checking because the company simply hasn’t been operating long enough. This means that the checks an angel investor carries out are mostly formulaic.

Due diligence at the level of early-stage investments is predominantly about checking the claims of the company in their documents/

This does not mean you should carry out minimal DD. Evidence suggests that investors who spend longer on DD get higher returns (UKBAA research has shown that at least 20 hours due diligence has a positive impact on the likelihood of a multiple investment return (Siding with Angels; Robert Wiltbank, Nesta-UKBAA)).

Correlation or causation, it doesn’t really matter. You should carry out thorough due diligence.

But the point is that it is not a complicated process. People making their first skirmishes into angel investments are sometimes put off by the idea of DD. They think that they don’t have sufficient experience to do it properly and as a result, they’ll be throwing away money.

They think like this because they have the expectation that their DD ought to be as rigorous and detailed as that carried out by a private equity firm, for example.

But this is an unfortunate belief. It’s naïve to think that the same level of DD should be carried out – there is not enough information on early-stage companies. Because they are early-stage!

If there was more information to check, then the investment would probably not be open to private investors. Nor would the opportunity for the huge returns possible for early-stage investors be available because the risk quotient would be so much reduced.

It’s important to remember the reasons why we choose to invest in early-stage companies:
  • We want to bring our experience and network to bear so that we have an active role in helping the company grow and succeed.
  • We want to take a calculated risk to help a team of founders we believe in to achieve something cool.
  • And in so doing, we want to make a good return on our investment.

The early stage means that we have the opportunity for all those things but, naturally, the risk is larger. Proper due diligence is your armour against this risk.

due diligence

Is there an optimum way to carry out due diligence?

DD research can be divided into six principal sections as set out in the following section.

But how should you approach them?

It’s simple enough to work systematically through each, but this can be time-consuming and, human as we are, we are all prone to mistakes and oversights.

It can make the process less burdensome and pressured if undertaken with one or more investment partners. You can divide the labour, check each other’s research and discuss to form an opinion.

If you then all decide to invest, it can make the process even more enjoyable and less pressured.

What DD should you carry out on early-stage companies?

Your DD should cover six main areas (I have written a downloadable checklist for each):

1. Team & Management

Early stage investment is often said to be in people rather businesses. This is because it’s the execution that counts…

This checklist will help you form an impression of whether you think the team has what it takes to execute.

Download checklist

2. The Business

Do you believe in the idea?

This checklist will help you work that out.

Download checklist

3. The Market

Market research is the process of finding out information about demand, trends, size and competition in the target market. It’s an important process for gauging sales volume, pricing and ultimately whether there is sufficient opportunity to develop an idea into a lucrative business. Entrepreneurs will present you with certain claims about their market – your DD should aim to verify their claims.

This checklist will help you decide whether the company has identified a viable market opportunity.

Download checklist

4. The Technology/Product (if applicable)

The team is often considered more important than the starting product. But it’s still essential to check the product is a great solution. A great team with a great product ticks a lot of boxes!

This checklist will help you assess the tech.

Download checklist

5. Finance & Tax

When entering into an investment agreement, you need to be aware of any information that may increase or decrease the risks involved. Financial DD ensures that you are aware of all the existing assets and liabilities.

This checklist will help you assess the company’s position.

Download checklist

6. Legal

It’s a good idea to send a legal enquiries check sheet to any company you are interested in. Use this template drawn up by Tony Littner at Harbottle & Lewis LLP, Jon Gill at Eversheds LLP and Sandy Finlayson at MBM Commercial LLP for the UK Business Angels Association. (If you’re looking at a company based outside the UK, it should work for you too.)

Download legal letter checklist template

Summary

These checklists are in no way exhaustive. Your DD questions will vary according to the type of business you are evaluating. But these should serve as a useful starting point. And they should indicate the level of due diligence required for these types of investments.

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*Thanks to the UKBAA whose own due diligence checklists were the inspiration for this article.