On the Side of the Angels

On 16 May 2011 I received an email from the managing director of one of the UK’s leading national investment syndicates complaining that they, like all the other angel networks, were still seeing far fewer investible propositions than they did 3 years ago. Less than a fortnight later I received an email from the administrator of a regional angel network looking for investment ready, start-up or early growth stage businesses with high growth potential for its next investment forum.   Those emails surprised me as other sources of funding are drying up.   The regional development agencies and regional Business Link offices are running down. Their successors, the local enterprise partnerships, have no central government or regional funding.   Banks are lending less and imposing stricter conditions on their loans.   The Regional Growth Fund is a one-off initiative to create or preserve jobs in the areas most likely to be hit by public spending cuts.

I think the reason why so few start-ups and early stage companies are coming forward for angel funding is that there is widespread ignorance on the part of the public and even some professional advisors as to what angels are and what they do.  This ignorance is even shared by people who could become angels.   Earlier this week I was approached by a member of a local inventors’ club who had some capital that he wanted to invest in start-ups and early stage businesses and wanted my advice as to what he should do.   Warning him that I was not qualified to give investment advice I advised him to consult those who were and urged him to read as much as possible before consulting those professionals.

For him and others who need a place to start, here is a primer on angel investment.   On our Inventors Club website we publish a general overview explaining the differences between short and longer term funding and listing possible sources of both types.   We follow that up with an introduction to funding with links to articles on grants, loans and overdrafts, community development finance institutions and private equity as well as business angels.  On the angels page, I explain that most belong to syndicates or networks.   Some of these are national like Advantage Business Angels and Beer and Partners.  Others are regional like YABA for Yorkshire and North West Business Angels. We have tried to catalogue as many networks as possible for East Anglia, the East Midlands, London, the North East, the North West, South East, West Midlands, Yorkshire and the Humber, Scotland, Wales and Northern Ireland.  When we find a new one we list it in our Inventors Club blog.

Most angel networks belong to the British Association of Business Angels whose site contains a lot of useful information. I would also recommend the Business Link portal on business angels and the Angel News website.  For more detailed information see the NESTA/BBAA report “Siding with the Angels” which was published in May 2009. Angel News also publishes a regular email newsletter to which one can subscribe on the site.

While entrepreneurs and investors know less than they should about angels, it is also my experience that angels and private equity investors know less than they should about intellectual property.  To assist them, I have published a short guide to “What Business Angels and VCs need to know about IP” on the JD Supra website.   I have also outlined the services that these chambers offer to angels and private equity investors elsewhere on this website.   Anyone who needs further information on this topic should call me on 0800 862 0055 or use our contact form.

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About Jane Lambert

I am a barrister specializing in intellectual property, technology, media and entertainment and competition law. I specialize in helping SME (small and medium enterprises) protect and exploit their investment in brands, design, technology and the arts. SME require intellectual property (legal protection for their intellectual assets) at least as much as big business but their limited means restrict the way they can use it. Looking after such clients wisely requires skills and knowledge which have taken me years to learn.
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One Response to On the Side of the Angels

  1. Mark Sheldon says:

    The value of a shareholders agreement may not be widely understood by entrepreneurs (I certainly didn’t until faced with a “bad leaver” who retained equity placing the company in limbo for a year). It assists align expectations to allow the introduction of 3rd parties & investment capital to a business plan sharing both risk & reward. Considered exit clauses allow for fair realisation of investment & protection of value.

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