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 UK companies 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

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:

REVOLUTIONARY WAY TO GET FUNDED: ICO ROUNDUPS

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.

What are the UN’s Sustainable Development Goals?

In the past few years, there has been a dramatic surge in interest relating to so-called ‘impact’ companies and investments. Public awareness and concern for global economic, environmental and social issues are at an all-time high. We attribute this in part to the so-called ‘Blue Planet Effect‘ and in part, to the ever more ominous severity of the issues we face. As a result, institutions like United Nations have set out strategies like their Sustainable Development Goals to help solve these issues (more on these below).

The data from Angel Investment Network‘s 1 million users reflect this growth in interest. We’ve seen an astonishing 250% increase in the number of investors interested in the Greentech & Environment industry in the UK since 2016. The number of companies raising money who define themselves as ‘ethical’ and ‘sustainable’ has blown up at a similar rate.

And we don’t expect this interest to dwindle anytime soon. Our newest product, Seedtribe, was built to support investors and companies in the ‘impact’ sector. In a previous post, I described how Seedtribe is encouraging investors to commit more to this space and I defined ‘impact’ in this context as:

…when an investor backs a business which has a social and/or environmental mission at its core…[but is also] targetting profitability alongside its social mission.

This works as a general definition. And makes the important point that investing in ‘impact’ is NOT philanthropy.

This point is reflected in Seedtribe’s model for selecting companies. There two key focus areas in our evaluation:
  • We are committed to generating returns for our investors. We select businesses that we believe have the strongest chance of achieving high-growth and/or high-profit. These will ultimately have the best chance of producing returns for investors. Our investment committee has 14 years’ experience investing in and raising finance for startups. It employs due diligence methods honed over this period to pick the most promising companies.
  • We are also committed to working on ‘impact’ businesses. Our investment committee also evaluates businesses according to criteria developed by the United Nations, known as ‘Sustainable Development Goals’ (SDGs). It is these businesses which we believe will produce positive and lasting change in the world and allow our investors to invest in impact.

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But what are the UN’s Sustainable Development Goal (SDGs)?

The SDGs, or Global Goals for Sustainable Development, are a collection of 17 global objectives set by the United Nations in 2015.

The 17 goals focus on global social, environmental and economic issues. Their purpose is to produce positive and lasting change across key development problems in all countries.

The official title for the project is ‘Transforming our World: the 2030 Agenda for Sustainable Development’.

The goals are broad and interdependent, but each has its own specific targets. Each goal is described in brief below:

Goal 1: No Poverty

End poverty in all its forms

Goal 2: Zero Hunger

End hunger, achieve food security and improve nutrition and promote sustainable agriculture

Goal 3: Good Health & Wellbeing

Ensure healthy lives and promote well-being for all at all ages

Goal 4: Quality Education

Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

Goal 5: Gender Equality

Achieve gender equality and empower all women and girls

Goal 6: Clean Water & Sanitation

Ensure availability and sustainable management of water and sanitation for all

Goal 7: Affordable & Clean Energy

Ensure access to affordable, reliable, sustainable and modern energy for all

Goal 8: Decent Work & Economic Growth

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Goal 9: Industry, Innovation & Infrastructure

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

Goal 10: Reduced Inequalities

Reduce inequality within and among countries

Goal 11: Sustainable Cities and Communities

Make cities and human settlements inclusive, safe, resilient and sustainable

Goal 12: Responsible Consumption & Production

Ensure sustainable consumption and production patterns

Goal 13: Climate Action

Take urgent action to combat climate change and its impacts

Goal 14: Life Below Water

Conserve and sustainably use the oceans, seas and marine resources for sustainable development

Goal 15: Life on Land

Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

Goal 16: Peace, Justice & Strong Institutions

Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

Goal 17: Partnerships for the Goals

Strengthen the means of implementation and revitalize the global partnership for sustainable development

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How is Seedtribe helping?

The UN recognises that successful implementation of these targets will be most realistically achieved by individuals and institutions working towards them on a local and regional level. Lasting global impact will then be realised provided there is a sufficient collective effort across different regions.

Seedtribe aims to contribute to this collective effort. We help investors and entrepreneurs use their skills and resources to create impactful businesses with the potential to affect positive change across all these SDGs.

Watch this space.

Impact Investing Interview #3: How what3words are Changing the World

My first project when I joined Angel Investment Network back in 2014 was to organise a pitching event in central London. We selected five of the most exciting UK companies who were fundraising; we had no specific agenda to include impact companies – we just wanted innovation! We prepped them to pitch to 150 investors whom we had specially invited from our network.

what3words was one of those companies.

Mike Lebus & James Badgett, the founders of Angel Investment Network, had already invested in what3words’ seed round – so they were keen for Chris Sheldrick, the CEO and co-founder, to put in a good performance.
chris what3words impact

He obliged. His understated charisma perfectly complemented the visionary nature of the project – dividing the globe into 57 trillion 3×3 squares and giving each a three-word “postcode”.

I was thoroughly impressed. The investors appeared less so, preferring to engage the other companies (some SaaS products and a few apps) in conversation during the post-pitch drinks. This lack of impact baffled me. I asked some of them what they thought of what3words – it was a cool idea but apparently, they couldn’t see its application.

Four years later they must be kicking themselves!

Since closing £600k through Angel Investment Network, they have gone on to raise $13.8m across several funding rounds with Intel Capital leading a $3.5m Series A; and Aramex International leading a $8.5m Series B. Their most recent round was a corporate one with German car manufacturer Daimler buying 10% of the company in January 2018.

And that application problem?

Well, I’ll let you read for yourself in my interview with the what3words team below.

Prepare to have your mind blown…

The Interview

Part 1 – About what3words

What’s your mission?

We are on a mission to make the world more efficient, less frustrating and safer. Our goal is to be a global standard, giving everyone and everything a simple, accurate and reliable address they can use whenever they need it. what3words impact 7

We want businesses, governments and services worldwide to use 3-word addresses to become more efficient, and improve their customer experience.

At the same time, we look forward to showing how better addressing can reduce businesses’ environmental impact, ease pressure on crowded cities, fuel economic growth in developing nations and save lives.
what3words impact 3

Who are your clients?

Our 3-word addresses are now used by over 650 businesses, government agencies and NGOs across over 170 countries, and by sectors including automotive, e-commerce, logistics, automotive & mobility, travel & navigation, post, national infrastructure, events, humanitarian, disaster response and emergency services.

Our customers include Mercedes-Benz, who are about to launch the world’s first car with built-in what3words voice navigation. Drivers will be able to say a 3-word address and navigate to a precise destination, anywhere in the world.

Global logistics giant Aramex has integrated what3words to optimise its last mile operations in the Middle East and South Africa. Many other couriers and food delivery customers are using 3-word addresses, including Domino’s Pizza in Saudi Arabia.

National postal services in 10 countries to date have adopted what3words, giving over 200 million people an accurate and reliable address, many for the first time. Many of our customers are innovative future-facing companies including DXC Drones and IBM’s #AccessibleOlli.

Our humanitarian partners include the United Nations, who have adopted the what3words system for its disaster response and recovery app UN-ASIGN, alongside the Red Cross. Other NGOs include Gateway Health in South Africa, who are using what3words to address township homes on the outskirts of Durban, and who have trained local ambulance drivers to use 3-word addresses to reach pregnant women faster in the township areas, saving lives.

(Remember that application problem?)

What stage are you at?

what3words started in March 2013. A team of three managed it through its early development and funding. We now have over 70 employees across the world and we’re growing fast.

what3words can be easily integrated by businesses, governments and NGOs into apps, platforms or websites, with just a few lines of code using our online API or SDKs. Our free what3words app, available for iOS and Android, and the online map enable people to find, share and navigate to 3-word addresses is available in 22 languages. 3-word addresses can be switched instantly into any supported language, and even looked up in one language and shared in another.

what3words impact 4

Our newest product, 3WordPhoto, allows people to easily label photos with a 3-word address and share them in any language. This means that a simple photo, shared in a message or on Twitter, can give a precise location.

We have already had great success integration our system with voice input with specific automotive partners, and intend to roll out voice capability into our own products in the future.

What is your business model?

what3words is free for individuals, and qualifying not-for-profit and humanitarian entities.

For business use, we sell licenses for our products including our API and SDKs, and services such as very large-scale batch conversion of 3-word addresses to GPS coordinates or vice versa.

How much funding have you raised to date?

To get to where we are today we put a lot of energy into seeking out the right investors to bring the business credibility, contacts, experience, and knowledge as-as well as funding.

We are incredibly lucky to have a range of industry-experts backing what3words, all drawing upon extensive expertise, following successful careers in the automotive, technology, venture capital, and challenger sectors.

Earlier this year, Daimler acquired a 10% stake in the business, following the announcement that Mercedes-Benz is about to launch the world’s first car with built-in what3words voice navigation. Our Series B investment round was led by Aramex, with other notable investors including Deutsche Bahn and Intel Capital.

What’s next?

Within the next year, we will launch our 28th language, allowing 3.8 billion people to use 3-word addresses in their home language (that’s 51% of the world).

We also expect to open more local offices to add to those we’ve opened in Mongolia and South Africa.

Our growth plans involve more global integrations to add to Daimler, Aramex and the UN, along with focused local market activity targeting all sectors within one country or region, creating an ecosystem in which 3-word addresses become a standard.

An example of this is Mongolia, where what3words is already used for post, e-commerce, taxis, banking, fast-food delivery, tourism and microfinance.

Part 2 – What3Words on Impact

What does “impact” mean to you as a profit-driven company?

We believe that companies should do good by doing business. We want to make our system as accessible as possible – what3words is free for individuals, and qualifying not-for-profit and humanitarian entities.

The practical impact of what3words is very clear: we give everyone and everywhere a simple address. Providing a simple way to communicate the location of homes, remote areas and disaster zone enables social and economic inclusion, the delivery of mail and facilitates emergency responses, registering to vote or opening a bank account.

We recently conducted global research and discovered that an astonishing 33% of people are open to trying an entirely new form of addressing.
what3words impact 2

Can you give me an example of how what3words is used in the UK? And in the “developing world”?

The what3words technology is being used all across the UK: from a number of police forces to the emergency response teams at Glastonbury, delivery companies and Black Tomato a luxury travel company.

But it’s not just companies benefiting from the technology; individuals in the UK are using what3words every day to meet friends at festivals, organise running clubs in Hyde Park, planning hikes in the Peak District, communicate the location of injured animals on farms and to guide guests to their AirBnB entrances.

We are enabling everyone, everywhere in the world, whether they are in cities, on remote islands or even in tents on the Mongolian plains, to have a simple and reliable address.

An example of this, as mentioned above, is the fast developing country of Mongolia – remote and nomadic in culture – who have adopted what3words as their official addressing system. Now, for the first time, Mongolians are able to receive mail, register for a bank account and receive food deliveries – all by using a 3-word address. Similarly, we have been adopted by countries such as the Republic of Côte d’Ivoire, Djibouti, and Nigeria as a recognised form of address.

Do you support any charities?

what3words is, and always will be free for not-for-profit and humanitarian entities. We are used by diverse humanitarian partners, and it’s powerful to see our technology supporting those in need. We were used by the Mexican Government to aid disaster relief during last year’s earthquake, and are being used today by the Red Cross, NATO and the United Nations to provide humanitarian aid.

We are also used by a number of smaller nonprofits – one of our earlier partnerships which still remains incredibly special to us is Gateway Health. The Gateway Health Institute provides healthcare and community services in disadvantaged areas across South Africa. They run programs to deliver medicine, supply emergency transport for women in labour, and identify hot spots for human rights abuses. But many of these programs struggle due to the lack of reliable addressing.

Gateway Health uses 3-word addresses in the township of KwaNdengezi, near Durban. The what3words grid system means that every part of the township – including homes, community centres and facilities like water pumps – already has a pre-assigned and fixed address.

what3words impact 5

Once a home knows its 3-word address, its residents can share the location accurately and reliably. Medical services can identify where pregnant women live and provide them with essential pre-natal care. Should any complications occur during labour, ambulance crews also know exactly where to go, to provide life-saving assistance.

What is your current biggest challenge?

Our biggest challenge is that we’re trying to effect a huge, global behavioural change. People have been using street addresses their entire lives, without questioning them. They get lost, packages go astray and billions of people worldwide have no address at all but, until they’re challenged to really think about it, some people don’t inherently feel there’s a problem.

We’re overcoming that challenge by refining how we clearly and quickly demonstrate the problem, finding examples (and there are so many) of when poor street addressing frustrates individuals and costs companies billions. As soon as people see how poor addressing affects them personally, they immediately see the need for our solution.

What are you most proud of/excited about for your business?

The Mercedes-Benz partnership was a huge achievement, and the announcement at CES was an incredible memorable moment for us. The process was also especially fast – taking only 6 months from inception to integration – and there are already over 700,000 cars on the road which are what3words enabled.

what3words impact 6

Because poor addressing affects so many industries – from navigation to travel, logistics to events – it’s exciting to see the tangible impact that our technology brings, and the room for exponential adoption. Bad addressing is so universal that our potential partners and use cases are unconstrained.

So where does what3words come on the Impact Scale?

The vision of this company is extraordinary. Four years ago it was so extraordinary that many of our investors could not see its application and potential impact. The what3words team’s execution over the past four years has made a mockery of that.

Here is a company that can count itself among the most innovative to come out of the UK tech scene in recent years. Who knows what the future holds for them but I’d put my money on good things!

Angel Investment Network’s latest project SeedTribe, which focuses on angel-led crowdfunding for impact companies, was built to help companies like what3words get off the ground and change the world. You can view latest impact companies here.

I hope that what3words’ story can inspire budding impact entrepreneurs and investors to build impactful companies.

Impact Investing Interview #2: Netflix for Independent Films

Last month, I published our first ‘Impact Investing Interview’ with Work For Good who are revolutionising the market for corporate charity donations. Since the publication of that interview, Work For Good is now overfunding (accepting pledges until 30th April) on SeedTribe (Angel Investment Network’s impact-conscious crowdfunding platform). Thanks to those of you who contributed and shared!

For those new to impact investment, the post starts with a concise definition of impact investment, its benefits to investors and its ability to bring about positive and lasting change in the world.

The purpose of this series of interviews is to edify and entertain investors and entrepreneurs with an interest in impact and socially responsible investment/entrepreneurship.

Today’s interview is with Dean Fisher, the Director of Bow Street Media whose latest project ‘Film Ahoy‘ is bringing a socially-conscious angle to online film distribution. It’s an enormous market but often considered ethically-bankrupt.

Film Ahoy is working to change this…

The Interview

Part 1 – About Film Ahoy

What’s your mission?

Our mission is to create an alternative film distribution platform for both consumers and filmmakers. The product we’ve been developing will change the industry and offer great alternative programming. We plan to launch the platform soon with the aim to be online on mobile and eventually on smart TV’s.

Who are your clients?

The digital distribution market has now outgrown the physical distribution market. On one side, our clients are consumers who watch films online; and on the other side, content providers and filmmakers complete our client base.

Norjmaa_poster_awards impact

What stage are you at in your business?

We have developed the technology and the website is ready to go live. We have also got on board an advertising partner who can start selling advertising on the site. So far we have secured over 150 titles to the site and will continue to grow the films on offer. We are going to soft launch the website and then start marketing it to consumers to build traffic and awareness for the Film Ahoy brand.

What’s your business model?

We acquire and place films on the Film Ahoy platform where consumers can watch them for free. All they have to do is watch 2-minute commercial breaks every twenty minutes. If they don’t want to watch the commercials, they will pay £1 per film to own the title and be free of commercials. All revenue is split 50/50 with the filmmakers. We will also generate additional revenue through ad placements on the site.

How much funding have you raised to date?

We have raised £67,500 through SEIS.

What’s next for your company?

We are launching the site in the next couple of weeks. There are a few tweaks being done by our developer next week and then we are ready to go. All of our marketing materials are in place and ready to go live. Each film’s trailer will also be promoted on the web through social media and advert placements. (Here’s a link to the new consumer advert).

Once the site starts to build traffic, we are going to produce the app for IOS and Android. We also have some options to put the site on Smart TV’s which will give the consumer every chance of using the platform.

Part 2 – Film Ahoy’s Potential Impact

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What does “Impact” mean to you as a profit-driven company?

We will generate 50% from all advertising and pay per view revenue. We can also generate revenue from Google adverts, product placement, merchandise and the sale of statistics on how many times each film is viewed. The overheads of running the company are quite low so we feel we can turn this into a profitable business in a reasonable time frame.

What are the metrics you will use to track/measure your impact?

We have targets each year on how many views we are looking to achieve. We can assess our progress on a month by month basis. Our reporting system gives us the stats we need to monitor our progress. We can also what campaigns will help drive traffic to the site.

How do you go about choosing and confirming the films to list on your platform?

We attend film markets all year around. The three key film markets are Berlinale in February, Cannes in May and the AFM in November. At the markets, we meet with as many content providers as possible. These can be in the form of filmmakers, sales agents who represent films or distributors. So far we have some signed deals with a large number of companies. They provide us with multiple titles which we curate by initially watching the trailers and the films. At the end of the American Film Market, we had received over 1000 films.

What is the vision for the company?

The vision for the company is to launch in the UK first of all. We want to focus on building the brand and making the platform the go-to place for free independent films. Once we have established ourselves in the UK, we will then move into the US market.

Can you tell us more about the need for Film Ahoy in the film industry? What do you see as the biggest challenges in the film/media industry at the moment and how do you hope to address any of them?

The market has many subscription service providers for every genre. We feel we have a different angle and will appeal to both consumers and filmmakers. For consumers they do not want to subscribe to every service available and some people cannot afford monthly fees. Film Ahoy is an easy-to-use, no-commitment service. Consumers will put up with adverts if the content is free.

We don’t feel that an independent film should be £9.99 to purchase online. Independent films need to be more competitive and priced accordingly. When iTunes came out tracks were £0.69, this took away the need for people to download illegally as it was easier to purchase the track then look over the net and download a virus. Pricing films at £1 to own means that independent films can be competitive.

The industry is becoming more and more challenging. Hollywood Comic book films perform consistently but independent films have to fight to find their voice. We have got the support of the industry and many companies have signed up to provide content. For filmmakers, they can use Film Ahoy as an additional revenue stream. We will also be encouraging people to promote their films on the platform which will drive traffic to the site. Eventually, people will be making films just to go up on Film Ahoy which will give us unique content.

What is your current biggest challenge and how are you seeking to address it?

We feel we need a reasonable marketing budget to grow the company and create awareness for the brand. If we do not raise as much as we hope the growth of the company will be slower.

What are you most proud of/excited about for your business?

We feel this model can really shake up the industry. Cynical people would say how can you compete with Netflix or Amazon. The marketplace is big enough for new players and services which gives the consumer an alternative viewing experience. We feel that Film Ahoy can break into the market and become a global brand.

Interested in Impact Investment?

If you want to find out more about Film Ahoy and their current fundraising round, visit their pitch page on Seedtribe.

Do you anyone who might consider using Work For Good for their business?

Do you know anyone interested in impact investing?

Please consider sharing. You’ll be doing good!