Background 30 th Anniversary 2012 • Angel Investing in Fashion Jenny Tooth, UK’s Oldest formal angel network • Part of Angel Capital Group • Director, Angel Capital Group £50 million available for equity investment • 13 th April 2012 Key Statistics: • – 110 Active Business Angels – 800 Business Plans – 42 -45 SMEs selected to present – 7 Events Per annum – 90% of deals syndicated – £150,000 - £1 million per company
The Market • EU Angel Market: €3-4bn pa • UK Business Angels invest £850m-£1bn p.a. (UK EIS stats)- over 50% of angel deals are pre-revenue • UK VC Investment £314m pa ( BVCA 2011)- Only £11m in start-up • Angel Investment = 3 x early stage VC investing • US Angel investing $24bn
The Market � Fragmented market place for supply and demand side measures � Around 30 dedicated CI equity schemes across EU – many for film/media- also risk guarantee schemes and tax credit schemes � but very few dedicated risk capital schemes for Fashion � Few dedicated Investment readiness schemes to support Fashion Businesses � Several EU MS and regions have established overall frameworks for support for CI businesses – very few focused on fashion � Overall disconnect between initiatives- constrained by public funding ERDF requirements- lack of cross-border schemes � Need for innovative measures to connect the Finance Market place for Fashion
Investing in Fashion? • We don’t know how much is going on ! • Stats not specifically captured by EVCA, BVCA or BBAA –cross cutting data e- commerce/retail/CI Potentially around 20 VCs in Europe • investing in fashion (mainly later stage – Private equity investing in High fashion) Evidence of successful investment in e- • commerce fashion platforms eg “net-a- porter” • But not enough angels investing in start-up and early stage fashion Too risky-I am out of this deal ! businesses • Not enough reliable data gathered on success stories or deals done/M&A • Lack of market intelligence on returns or exits
Angel Investors perceptions � Too risky! � Lack of core management skills � Unclear business model- how to build scalable revenue � High development costs- high costs of materials and production � IP often difficult to protect – brand and trade marking � Lack of clear defensible market position- easily ripped off � Cannot easily value or identify 10x return
New Incentives to Investors in UK New Seed Enterprise Investment Scheme • Investors can receive up to 50% tax relief • Also one year exemption (2012-13) from Capital Gains Tax- Investor can invest £100k each year • Maximum investment total for SME will be £150,000 • Target: new early stage companies with 25 or fewer employees and assets of up to £200,000 • Trading for no more than 2 years- can be pre- trading or business incorporated for longer . • Commenced from 6 th April 2012
New Incentives to Investors New £50 Angel Co-investment Fund: Angel Co-Fund • Co-invests alongside Angel Syndicated deals £100m up to £1m per deal • Administered with the support of Capital for Enterprise Limited • Initial equity investments of between £100K and £1M into SMEs alongside syndicates of business angels • Subject to certain geographical restrictions and an upper limit of 49% of any investment round. • Could Attract new specialised Fashion investment syndicates with up to £1m extra investment capacity to invest • www.angelcofund.co.uk
New Models for funding Fashion • Crowdfunding - Investors: Kiva; Kickstart; Crowdcube; Seedrs; • Peer to Peer Lending - Funding Circle; Peoples Fund • Invoice Lending - MarketInvoice • Potential for specialist Fashion investing platforms ? • As a platform for first funding - or as a long term solution? How do these connect with traditional sources? • Next Generation Finance - new platform for non bank finance • in UK www.ngf.org.uk
What EC can do to increase the Supply of Equity Capital to Fashion • COSME - to fund more Investment readiness schemes and support showcasing to investors • HORIZON 2020 – to build New Fund of Funds to support cross- border investing in Fashion innovation - leverage private sector/corporates – EIF to support[ New Co-investment Funds to increase Angel Investing – Use of EIB/ Jeremie and ERDF to support new regional co- investment funds for Fashion- but must allow cross-border – New CI-Factor Project under ECIA to support access to finance- potential to have a focus on Fashion
What else can be done to attract investment in Fashion? • Develop dedicated Investment readiness schemes to ensure Fashion propositions are investor attractive- Involve investors early as mentors/advisers • Make more market intelligence and success stories on fashion investing available to investors • More Dedicated Showcasing of investment opportunities and pitching events - including online models • Create new communities of investors around Fashion- strong focus on recruiting Women- eg UK Fashion Angels with CFE? - EU-wide Campaign to identify Fashion/design entrepreneurs to become angel investors - Promote dedicated tax measures for angels at MS level
Contact: jenny.t@angelcapital.co.uk www.lbangels.co.uk www.bbaa.org.uk
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