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<p>1 The building blocks of investment R o d B e e r , U K B A A 2 WE ARE THE TRADE BODY FOR EARLY-STAGE INVESTING A B O U T U S W e c o nne c t , pr o t e c t a nd t r a i n c o m m u ni t i e s o f i nv e s t o r s a nd e nt r e pr e ne u r s . 68 Over 15,000 angels represented by these groups ANGEL GROUPS 23 From micro funds to major PE funds INVESTMENT FUNDS 13 And all the major crowd funding platforms ONLINE PLATFORMS 20 Including incubators and universities ACCELERATORS 3 About the early-stage investment ecosystem A N O V E R V I E W What sort of startups should you be looking for W H A T T O L O O K F O R Some golden rules of early-stage investing S T R A T E G I E S 4 A N O V E R V I E W 5 WHAT IS A BUSINESS ANGEL? We've all seen Dragon's Den, it's great TV. But it is just that: TV. The reality is very different and far more akin to Angels than Dragons. 6 IT'S NOT JUST ABOUT THE RETURNS Research in the states shows a healthy 22% IRR. This does not include any tax relief. But there's more to angel investing than returns. 7 S E E D & E A R L Y S T A G E E A R L Y G R O W T H E X P A N S I O N Bu s i ne s s a nge l s , a nge l gr o u ps , c r o w d f u nd i ng V C s , a nge l gr o u ps , a nge l s VC s a n d p ri v a t e e qu i t y THE INVESTMENT LANDSCAPE W H E R E A N G E L S F I T I N S T A R T U P Fr i e nd s a nd f a m i l y fu n d i n g t o g e t t o p r oof of c o nc e pt 8 1.8BN W a s i n v e s t e d l a s t y e a r ( a re c o rd y e a r) u n de r E IS a n d SEI S t a x r e li e f 65% O f a nge l i nv e s t i ng t a k e s pl a c e i n t h e G o l d e n T r i a ngl e EARLY STAGE INVESTING S I Z E A N D S H A P E O F 9 GOVERNMENT SUPPORT T h e r e ' s s o m e I n c r e d i b l e Invest up to 100k per year 50% tax relief Loss relief CGT relief IHT relief S E I S Invest up to 1m per year 30% tax relief Loss relief CGT relief IHT relief E I S Angel Co-Fund Regional Co-funds C O - I N V E S T M E N T F U N D S 10 W H A T T O L O O K F O R 11 Does the CEO inspire confidence? Do they have what it takes to build a business to exit? Are they truly committed? GREAT TEAM The harder it is to scale a business, the harder it is (or the more money you need) to grow. TRULY SCALABLE Do they stand above all other competition by an order of magnitude? PR O PER USP THREE KEY STANDOUTS 12 A REALISTIC FUNDING JOURNEY T H E Y S H O U L D H A V E The business should have a strong idea as to how much investment they will need until breakeven and beyond and to have a firm idea as to the source of that investment. 13 A VIABLE, SENSIBLE EXIT STRATEGY T H E Y S H O U L D H A V E If there are no obvious buyers of this business then how will you exit? Do the team have an idea of what size and shape their company needs to be in order to attract a buyer? Beware the lifestyle business! 14 I N V E S T M E N T S T R A T E G I E S 15 A PORTFOLIO APPROACH TO YOUR INVESTING A L W A Y S T A K E R e s e a r c h s h ows a n a b s olu t e mi n i mu m of 1 0 - 15 b u s i n es s es , i d ea l l y m o r e. T hey n eed t o c a r r y l o s s es a n d c r ea t e t he r et u r n s . 16 70% 20% THERE IS A HIGH FAILURE RATE T H I S I S H I G H R I S K Or worse never give a meaningful return and allow you to claim loss relief beware the zombie! W I L L F A I L Of 1 to 2 times your money. On an IRR, there are better places to invest. S M A L L R E T U R N Will out-perform your portfolio. In fact, 90% of your returns will come from these businesses S T A R P E R F O R M E R 10% 17 SUPPORT YOUR INVESTMENTS B E A N A N G E L R E - I N V E S T M a k e s u r e y ou c a n follow y ou r mon e y I N T R O D U C T I O N S O th e r i n v e s to r s , p o te n ti a l c u s t ome r s , h e lp fu l s er v i c es A D V I S E I t' s to u g h s ta r ti n g a b u s i n es s , t hey' l l n eed g u i d a n c e fr om p e op le wh o' ve d on e i t b e for e L E A V E T H E M A L O N E I f y o u c a n' t br i ng r e a l v a l u e t hen l ea v e t hem a lon e t o foc u s on b u i ld i n g a bu s i ne s s I t ' s t he o n l y a s s et c l a s s w her e yo u c a n ha v e a m ea n i n g f u l i mp a c t on t h e ou t c ome s of y ou r i n ve s t me n t s 18 BUILD AN INCREDIBLE PIPELINE OF NEW OPPORTUNIT IES I N C R E A S E V I S I B I L I T Y The more deals you see, easier it is to pick the best. You need to tune your deal barometer. 19 FOLLOW SOMEONE YOU TRUST AND RESPECT I F Y O U ' R E N O T S U R E If you're new to investing or you don't know a huge amount about an industry, you can always just follow someone who does. Lead investors are experienced investors and entrepreneurs that you trust and respect. 20 DON'T TAKE TOO MUCH EQUITY B E F A I R A N D By taking too much equity, the founders may get diluted down to much in the future. This kills their drive and sometimes the appetite from VCs. 21 BE PART OF A GROUP S A F E T Y I N N U M B E R S B e i n g p a r t of a g r ou p c a n n ot on ly r e d u c e y ou r r i s k s b u t r e d u c e t h e wor k loa d t oo. S H A R E D U E D I L I G E N C E A wider set of skills means a more holistic approach to researching target companies. S H A R E D E A L F L O W The more deals you see, the better idea you'll get of what's good and what's bad. M O R E S U P P O R T & C A P I T A L More investors in this round means more investors in future rounds too. 22 Next Steps and Resources H e r e a r e s o m e u s e f u l Guides, groups, events and resources U K B A A . O R G . U K First certified course on how to be an angel investor (coming soon) E - L E A R N I N G Multiple groups in the North J O I N A L O C A L G R O U P 23 T H A N K S F O R L I S T E N I N G </p>
