Loving Angels Instead

LBA became part of the Newable family in April. On election day, we presented seven early-stage businesses seeking equity investment, each with products and services leveraging big aata and AI. In the audience, 150 angel investors, looking out for the next big thing.

Seeking a mandate

Our company presentation event took place, rather appropriately, on general election day. The format was a series of ten-minute investment pitches. A kind of election hustings where companies present their business manifestos. This is a short question and answer session where each entrepreneur was given the “Paxman” by 150 potential investors / voters. The event also included a product demo area where investors could get to grips with both the technology and the people behind it. This event was supported by the City of London Corporation and held at The Alan Turing Institute. The location was particularly apt given the Institute, housed within the British Library, is the national institute for data science, with research interests covering data-centric engineering, high-performance computing and cyber-security, to smart cities, health, the economy and data ethics.

Great business in the making

The seven businesses were all early stage in their evolution. The point where the requirement for capital outstrips an ability to generate revenue and scale. All of the businesses had tested their market viability by generating revenue and the strongest candidates were those who indicated significant potential to scale. Angel investment is crucial for these companies. Often it is the difference between these companies going on to achieve their potential and, put bluntly, failing. Entrepreneurs find themselves requiring external support as they have already invested heavily in getting their business to this stage. Loans are not a realistic option as they are unlikely to have been trading for the requisite time period and their only significant asset will probably be their Intellectual Property. Private equity and VC firms will typically only look at larger deals with more mature companies. Angel finance therefore provides a vital role in the UK economy by supporting and sustaining these start-ups. However, it is not only about the money. Companies that take on angel investment also benefit from the advice and counsel of the lead angel investors who often have previous successful backgrounds in the same field.

Small business. Big ideas.

Here are the big ideas behind the seven companies that presented at the event:

  • Real-time customer experience intelligence for the insurance industry.
  • AI and machine learning to transform medical prognosis.
  • Enterprise software for autonomous 3D printing.
  • 3D Simulation and E-Learning technologies to aid medical & surgical training.
  • Intelligent robotic process automation.
  • Big data analytics for retailers.
  • Cloud and AI algorithms to transform supply chain management.

Raising funds

Businesses typically look to raise up to £1m and many arrive at the event having already secured a significant proportion of the amount they require. Inevitably, with such early-stage investment, the risk is considerable. The government acknowledges this and supports investors by offering some of the most attractive tax breaks available anywhere in Europe. The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) offer tax relief and exemption from capital gains and inheritance tax, providing certain criteria are met. Any investment loss can also be offset against tax.

Individual angel investors can make investments in individual companies. However, many time-poor angel investors invest into LBA / Newable’s EIS SEIS funds. Some angels do both.

Early-stage business

These events work. LBA closed 28 angel-funded deals in 2016, raising circa £33m, including £5m of capital from LBA and its associates. It will take a while to see which of the companies that presented last week secure the investment they seek. Early indications are positive, with feedback collected at the events showing all the presentations scoring highly. The higher the score, the higher the chances of securing investment.

The Newable edge

LBA joining the Newable family makes perfect sense. Newable’s mission is to help people start, sustain and scale their businesses. Equity investment is a natural extension to our debt offer. Newable is uniquely placed to provide a whole range of support services to early-stage businesses. Representatives from Newable teams that can help businesses access grant funding, Innovation to Succeed support as well as exporting expertise were on hand meeting the companies at the event.

This is just the beginning. Like the companies we work with, these are just the early stages of the plans we have to scale the LBA’s activity.