UKBAA Angel Investment Summit 2016

KEY INSIGHTS FROM

CONNECTING GLOBALLY

GLOBAL CONNECTIONS ARE VITAL

Our place in the world as global citizens – part of a global village – was a theme that recurred throughout the Angel Investment Summit. A resonant view was that international expansion was important before, but is even more so in the aftermath of the Brexit referendum.

Sarah Turner, founder of Angel Academe, was clear that we need to be more creative, more international – and that trade deals with other parts of the world are required. As Simon Thorpe, Angel Investor of the Year 2016-2017, succinctly put it: “The internet is global; the banking system is global – we can’t be an island on our own.”

A key factor in building global, successful businesses will be assuming our place as global citizens and working hard to build relationships abroad. Lara Morgan, founder of Company Shortcuts and Pacific Direct (pictured right), told attendees that the world is now a very small place; and underlined the remarkable achievements that can be made by building relationships abroad.

Jenny Tooth, CEO of UKBAA, summarised: “There continues to be an appetite among the investment community post-Brexit to back UK entrepreneurs, but if we are going to maintain this capacity to invest it is vital that we act now to build our international connections. By establishing a strong and connected global investment ecosystem we can ensure there is enough capital available in the UK to take growth companies from startup to scale up and beyond.”

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PRESERVING ACCESS TO TALENT IS A KEY CONCERN

82% of scale-ups say the number one thing they need is

access to the skills they require to serve their customers and

thus succeed, Sherry Coutu, founder and chair of the Scale-Up

Institute told attendees.

Throughout the day we heard multiple calls for getting

immigration policy right so that we are able to attract talent to

UK growth businesses. Brexit may mean that we are less able to

attract talent to this country, but this should not stop businesses

from hiring talent wherever it happens to be – and this means

putting in place operating models that accommodate a

workforce comprised of talent based in numerous geographies.

There should be no doubt, said many of our speakers,

that there is enough intellectual property in this country

to support radical innovation and growth. Gerard Grech,

CEO of Tech City UK (pictured left), reminded us that

there is a critical mass of expertise in the UK – we have

more than 90 of the top 1000 universities worldwide.

A REGIONAL FOCUS WILL PAY DIVIDENDS

Concentration of capital in

London and the South East was

highlighted as a key issue. This

was underlined by Keith Morgan,

CEO of the British Business Bank

(pictured right), who spoke of

his organisation’s commitment

to ensuring the progress of

the Northern Powerhouse

Investment Fund and Midlands

Engine Investment Fund, both

soon to go live.

There would also be a benefit in

celebrating growth businesses

locally – on a city-by-city basis –

said Sherry Coutu: “Celebrate the

top 50 in Birmingham, Sheffield,

Southampton, and so on.” This

attracts talent and leadership

partners, such as corporates

that can help with international

expansion; and can help growth

businesses solve practical

issues such as office space.

WE NEED TO GET BETTER AT CELEBRATING SUCCESS IN THE UK

A theme that frequently arose

throughout the Angel Investment

Summit was the need for the early-

stage and angel investment ecosystem

to draw attention to companies – and

investors – that are doing well. Sherry

Coutu of the Scale-Up Institute

(pictured left) said:

“We need to celebrate successful

businesses and also help them, so they

can continue to do well and overcome

barriers in front of them. Collaboration

is critical.”

Bragging is not a very British trait,

but by celebrating entrepreneurs’

successes and promoting positive

role models – such as women who

are developing tech-enabled, scalable

businesses – we can drive further

innovation, jobs and growth in the UK.

BUT THERE REMAINS A LATER-STAGE FUNDING GAP

More capital is needed for later-stage

businesses, said many of our speakers,

recognising that scale up remains a

challenge in the UK, with the majority

of growth capital being allocated to

startups.

Keith Morgan, CEO of the British

Business Bank, agreed that there is a gap

in later-stage venture capital funding,

stating this is “a missed opportunity for

investors and the wider economy.”

There is no natural expansion for funding

UK businesses from startup to scale-up,

agreed Stuart Chapman, co-founder and

partner of Draper Esprit (pictured right,

holding microphone). There is a gap

between Series B investments and “the

£30-50million type deal” due to a lack

of crossover investors: public company

investors who will go private to help

businesses along. Domiciled funds of

this character are missing and herein lies

an opportunity.

THE UK HAS MANY OF THE

INGREDIENTS FOR SCALE-UP

SUCCESS…

Anne Glover, CEO of Amadeus Capital

Partners (pictured left), outlined key

pillars required for successful scale-up,

including: a) an ambitious entrepreneur

with a differentiated product / strong

idea; b) a much more disciplined set

of processes than is required at startup

phase; and c) an experienced team

that can imagine and envisage what a

much larger business would look like.

Key to the latter, she added, is hiring

in people who have done it before,

people from different countries who

can help organisations expand into

those territories, “occasionally people

with a few grey hairs!” This can be

a recruiting challenge and there is

sometimes a capital challenge to

fund that level of recruitment.

INTERNATIONAL INVESTMENT COMMUNITIES

CAN HELP GROWTH BUSINESSES

Many great networks, groups and initiatives

already exist in the angel and early-stage

financing space globally – connecting this

ecosystem could yield huge benefits for

both investors and entrepreneurs. Canada

House was the appropriate venue for

the Summit: Aaron Rosland, economic

counsellor for the Government of Ontario

(pictured right) explained that the UK

and Canada are seeking to increase their

commercial linkages and outlined ways in

which Ontario welcomes and aims to help

UK companies seeking to scale up globally.

We also heard during a panel on cross-

border investment that existing networks

such as the African Business Angels

Network, Angels Unleashed and Cocoon

Networks can use their contacts and

connections to help high growth-potential

UK businesses to expand internationally.

The trick is to join the dots within the global

early-stage ecosystem in order to help

companies navigate it and enable better

outcomes for all.

OPPORTUNITIES ABOUND IN KEY SECTORS AND MARKETS

As we focus on the opportunities for innovation and investment post-Brexit, we need to build on our core sector strengths in the UK. Susanne Chishti, founder and CEO of FINTECH Circle told attendees that the UK is leading the world in fintech, with investors backing some global unicorns in this sector. Space applications also represent an exciting investment area: Mark Boggett, MD of Seraphim Capital’s new space fund explained how there is a great opportunity to bring together the investment potential of leading players in the aerospace and space technologies sectors. Blockchain is emerging as an important new area for cross-sectoral investment, explained Jamie Burke, CEO of Outlier Ventures and the newly-founded Blockchain Angels; and there is a clear opportunity to build on the UK’s leading position around impact investing, said Rod Schwartz, founder and CEO of ClearlySo.

THE STARTUP WORLD AND CORPORATES – A MATCH MADE IN HEAVEN

The relationship between the corporate and startup world was identified as something that can be very beneficial to both sides, if it is played right. Brent Hoberman, co-founder of Lastminute.com, Made.com, Founders Forum and Founders

Factory (pictured left), said:

“Startups are like free R&D to corporates because they have the right to fail; and corporates provide a scaling dimension for startups and also give them credibility, a key criterion for startup success.”

The UK has world class corporates, which can support scale ups by offering access to a multifaceted business ecosystem that does not exist in many places, including Silicon Valley.

Corporate investments in startups are not a fad and will not disappear any time soon, we heard, as they help big organisations consider what they need from a talent and tech perspective, and map a future that takes into consideration future entrepreneur-led market disruption.

AMBITIOUS OPTIMISM – A PREVAILING POSITIVE SENTIMENT POST-BREXIT

A positive outlook prevailed at the Angel Investment Summit, with a range of leading investors reporting that so far there has been no change in their investment activity level since the June referendum and some reporting an increase. Most indicated that with Brexit must come new opportunities.

There is likely to be some uncertainty, particularly over the next 2-3 years, but the majority view was that the future looks bright for the UK – if we adopt a global outlook.

Andrew Pipe (pictured top), chief economist at Lloyds Banking Group, underlined that the IMF’s growth forecast of 1.7% post-Brexit is respectable when compared with peers and the fact that the nation is undergoing a massive change. He also said that we have a great opportunity for exporting outside the EU if the exchange rate stays low.

Kerry Sharp, head of the Scottish Investment Bank (pictured right) said:

“Dealflow for us is going through the roof at the moment – lots of companies are growing, lots of demand on us, we expect to deploy around £70m this year. Given that’s in deals up to around £2m that’s a lot of deals, a lot of investments.”

There are both challenges and opportunities on the horizon – and it is key that the angel and early-stage community does not lose sight of the opportunities. The focus needs to be on growth, on global connections, and on what – with a dose of ambition – we can achieve.

UKBAA Angel Investment Summit 2016

View speakers’ Powerpoint presentations

Gerard Grech, CEO of Tech City UK – view his presentation here.

Sherry Coutu, CEO of the Scale Up Institute – view her presentation here.

Andrew Pipe, Chief Economist of Lloyds Banking Group – view his presentation here.

Rod Schwartz, Founder and CEO of ClearlySo – view his presentation here.

Watch video footage of speakers and panels

We are grateful for permission to share video footage of some of our speakers and panellists, accessible via the links below:

Keith Morgan, CEO, British Business Bank

Lara Morgan, Founder and ex-CEO, Pacific Direct; and Founder, Company Shortcuts

Gerard Grech, CEO, Tech City UK

Brent Hoberman CBE, Co-founder, Lastminute.com, Made.com, Founders Forum and Founders Factory

Sherry Coutu CBE, Founder and Chair, Scale-Up Institute

Aaron Rosland, Economic Counsellor, Government of Ontario

Jenny Tooth OBE, CEO, UKBAA

Panel: What are the implications for the growth of the angel and early-stage ecosystem under Brexit

Panel: Scaling internationally to achieve successful growth.U

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