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Jenny Tooth CEO Accessing Angel Investment for your Low Carbon Business 26 th March 2013

Jenny Tooth CEO Accessing Angel Investment for your Low Carbon Business 26 th March 2013. The Funding ecosystem:. CAPITAL NEEDS. Trade Sale IPO (AIM). High Risk. Formal Venture Capital - BGF. Accelerators and Incubators. Business Angels & Co-investment Funds.

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Jenny Tooth CEO Accessing Angel Investment for your Low Carbon Business 26 th March 2013

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  1. Jenny Tooth CEO Accessing Angel Investment for your Low Carbon Business 26th March 2013

  2. The Funding ecosystem: CAPITAL NEEDS Trade Sale IPO (AIM) High Risk Formal Venture Capital - BGF Accelerators and Incubators Business Angels & Co-investment Funds Proof of Concept, R&D Grants & Loans Low Risk Crowdfunding & Peer Lending Friends, Family etc TIME Seed Start-up Early Growth Sustained Growth The Funding Ladder and ecosystem: Risk reward ratio driving valuation

  3. Angel Investing • UK Business Angels invest £800m- £1bn p.a. (UK EIS stats) • Approx 18,000 Angels (many invisible) • VC Investment :£340m pa (BVCA 2012) • Angel Investment = 3 x early stage VC investing • Currently about 13% investment in Clean Tech incl. LC

  4. Angel Investing • Angels invest their own money-Bring equity, together with business experience, contacts • Average Angel Deal : £50k to £500k first round- but recent deals done in syndication of £1.5m + • Angels invest in syndicates, pooling finance and skills, usually a Lead Angel • Entrepreneurial Angel Groups- “Super Angels” setting up angel funds and accelerators- often replacing VCs • Angels prepared to do follow-on funding rounds • Angels co-invest with VCs; Banks and crowdfunders , also R&D grants • Angels are prepared to wait- Patient Capital ! 5 to 8 years to Exit

  5. What are Angels looking for? • Entrepreneur or team with the skills and drive to build a growth business- passion and commitment! • Can address global/social/market challenges – eg Low Carbon! • Generally Post Proof of Concept- TSB grant validation is a bonus! • Scalable business model -10x x return • Can be pre-profitable, but must show how will achieve high turnover and growth

  6. Attracting Angel Investment • Customer validation – demonstrate customer commitment / orders/ will pay the price for your product /service • Built a defensible competitive position -IP protection(patents and scope), or first mover advantage • You know your competitors and how you differentiate • You are prepared to have investors on your Board and take strategic advice • You can identify how you will exit – angels need liquidity!

  7. Enterprise Investment Scheme • Investors can receive up to 30% tax relief and Capital Gains Tax- Deferral - Your Gift! • Investors can invest £1m each year- Company can receive £5m EIS investment pa • 250 or fewer staff; Restrictions on certain sectors(LV is OK) • The investor cannot be connected to the business already • Must hold the investment for 3 years • Gain advanced clearance from HMRC

  8. Seed Enterprise Investment Scheme SEIS • Investors can receive up to 50% tax relief for investing in your business- Even bigger gift! • Also exemption (2012-13) from Capital Gains- or 2013-14 (50%) • Investor can invest £100k each year • Maximum investment total for SME is £150,000 • Early stage -25 or fewer employees and assets up to £200,000 • Trading for no more than 2 years- can be pre-trading or business incorporated for longer. • Gain advance clearance from HMRC!

  9. £100m Angel Co-Fund • Fund Managed by Capital for Enterprise Ltd • Co-invests between £100K and £1M in SMEs alongside syndicates of business angels, with lead angel • Upper limit of 49% of any investment round and can do follow-on rounds- Invests on same terms as angels. • Application through the Syndicate- lead angel, not the entrepreneur • www.angelcofund.co.uk

  10. Finding Angels www.ukbusinessangelsassociation.org.uk • UKBAA Searchable online directory of Angel Networks; syndicates and individuals – filter by amount seeking/region • Networks and groups organise regular pitching events, meet 20-100 angels • Process can take 1-3 months • You need to kiss a lot of frogs!

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