Background 30 th Anniversary 2012 Angel Investing in Fashion Jenny Tooth, UKs Oldest formal angel network Part of Angel Capital Group Director, Angel Capital Group 50 million available for equity investment 13 th April
SLIDE 1
Background
30th Anniversary 2012
UK’s Oldest formal angel network
Part of Angel Capital Group
£50 million available for equity investment
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
Angel Investing in Fashion Jenny Tooth, Director, Angel Capital Group 13th April 2012
SLIDE 2
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
SLIDE 3
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
SLIDE 4
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 businesses
Not enough reliable data gathered on
success stories or deals done/M&A
Lack of market intelligence on returns
r exits
Too risky-I am out of this deal!
SLIDE 5
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
SLIDE 6
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 6th April 2012
SLIDE 7
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
f 49% of any investment round.
Could Attract new specialised Fashion investment syndicates
with up to £1m extra investment capacity to invest
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
SLIDE 9
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
SLIDE 10
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
