Angel Investor Peter Cowley: Thoughts on Angel Investing

Welcome to my third (very) occasional UKBAA Blog about angel investing.


Those that have read my previous UKBAA Blogs know that I am keen to promote transparency within our industry. Therefore I am pleased to see that fellow Cambridge Angel and friend, Jonathan Milner, is also being transparent about his investment failures. This article is two years old and I expect all his statistics (including failures) will have increased.

There is no doubt that more needs to be shared on early stage investment failures not, in any way, to name and shame entrepreneurs and investors (although all experienced investors have a list (hopefully short) of founders and investors with whom they will not work again), but to ensure that less sophisticated investors, particularly those investing solely through crowd equity platforms, are fully aware of the dangers of:

  1. Investing in a business where there is no investor director representing their interests and adding governance and coaching/mentoring/connecting and helping with the exit;
  2. Investing at too high a valuation, meaning that when professional investors (eg: VCs) get involved, the investors are not subject to:
    a. a value correction down-round and subsequent dilution, or much worse:
    b. a lack of any investment and hence failure;
  3. Eventual failures that sit uneasily on the fence between board level incompetence and a degree of fraud. Many startups will not have reached breakeven before they need the second, third, fourth etc, round of funding, but it is an incompetent board that closes a business down leaving creditors (other than shareholders, of course) owed money. Several examples of these such as Rebus and Solar Cloth have hit the press recently.


Since the last UKBAA Blog, I have invested in:

Light Blue Optics-a Cambridge technology company that has pivoted for the second time in 10 years, retaining the original two founders, who have learnt a tremendous amount from a very interesting and at times, rocky journey. Now creating interactive whiteboard devices.
Transparent Choice – again Cambridge – a decision system for teams in larger corporates.
Oxford Space Systems – using proprietary materials to develop satellite components. My only investment in Oxford and the furthest from my home – part of the “new space” ecosystem, where agile smaller companies are providing satellite asub-systems.
Focal Point Positioning – Cambridge-based technology to improve location positioning in mobile devices.
Converge – graduated from Entrepreneur First (in my view the best accelerator in the UK), Raph and Gideon have chosen to improve construction projects using connected sensors. I joined the board as investor director.
Spectral Edge – technology from the University of East Anglia (and based in Cambridge) using algorithms to enhance image and video quality and colour perception.
Gene Adviser – an online platform to connect customers and providers of genetic testing analysis.


I have lost two potential investments as they were aqui-hired during the due diligence process, and two where I backed out during due diligence.


Amongst several other smaller follow on rounds, these larger ones stand out:
Vantage Power – who have now sold several double-decker bus hybrid engine systems to operators in London, recently winning this UKBAA award for an IoT business
Arachnys – due diligence and compliance platform supporting strong growth in financial services and supply chain sectors.
SyndicateRoom – equity crowdfunding platform now supporting IPOs through the London Stock Exchange, the investment is to support significant growth.


Two positive exits:
Cambridge CMOS Sensors to Austria Microsystems

A data analysis investee company has exited to a UK public company, which can be announced only when they publish their next results.

And two not so positive:
Worksnug – one of my early investments that has closed due to lack of traction and has kindly returned some cash to investors. A B2B sales model, with consumer users accepting free usage in return for subtle adverts.

Lumejet – failed due to a combination of very slow market adoption and insufficient capital, which unfortunately fits well with the top two of 20 reasons that startups fail according to CBinsightsThis company had had many £M of investment as it was incorporating patented technology into a printer using photographic paper and a wet chemical process, selling for more than £100K. The printed output is disruptively better and cheaper, but the print market is very conservative.


  • A robot strawberry picker
  • A retina disease drug
  • A B2B opto-electronic interface
  • A facemask using technology to improve its efficacy and life PIPELINE


I’ve heard both of these from fellow panel members:
“VCs are professional judges of the future”
“We have a sphincter restricting the release of unicorns ” – which, in my view, is good, not bad. How many of the 168 “unicorns” (6 in the UK, 8 in the rest of Europe) in this list will still exist in three years’ time?


At the 2016 US Angel Conference where I spoke on a panel discussing startups coming out of universities, it was clear that the UK and US have the same issues, with senior university personnel having a very strong influence on the process and efficiencies of technology being transferred out and funded.

The 2015 US Angel Survey showed that the average seed pre-money valuation has gone up by 54% to $3.4M (circa £2.6M) and investment rounds going up proportionally so that the investors own about 20-25% after investment. Longer term returns (if one can believe the numbers) remain around 20-25% IRR.

Crowd equity funding legislation eventually became law on the 16th May 2016, so that the US is three or four years behind the UK. The rules are complex and difficult to enforce, for instance platforms must collaborate to ensure that folk on average income invest no more than circa $2K per year across ALL platforms. In Italy, the limits are 500 Euros per deal and no more than two deals per year!

Overall, I think the US has more to learn from the UK regarding seed funding, than vice versa (I hope they listen!)

And finally, I would like to congratulate Simon Thorpe for being elected as the new UKBAA Lead Angel of the Year

As ever, please do feedback your thoughts and experiences.

Best wishes