Leanna DaviesXénos the Wales Business

Angel Network and Finance Wales

Who are we?• Operating from 5 regional offices, we provide funding for Small and Middle Sized Enterprises (SME’s) throughout Wales.

• We have over 100 million of funds currently under management and completed our 1000 th investment earlier this year.

• Finance Wales is the premier regional development fund in the UK.

• We have recently secured an additional £30m interim fund – a reflection of its success in investing in Small businesses.

What do we offer?

Products Investment Limits

Secured Debt £150k First Round, max £600k

Mezzanine Debt £750k First Round

Equity investments £750k First Round, max £1.5m

£2.5m Maximum overall investment in any Company.

Commercial funding, priced for the risk presented.

Historically….Early stage technology ventures and other high risk ventures.

Over last 18 months….Streamlined our strategy and focussed on creating sustainable businesses.

For 2006….Development and growth capital deals & Encouraging MBO’s.

What is our focus?

Operate in the space where other venture capitalists don’t.

Don’t take majority shareholdings.

Work closely with banks and WAG.

Proven track record of investing.

We understand the local market and the challenges for SMEs.

We have access to a range of sector specialists and NEDs to deliver added value to our portfolio companies.

Why choose FW?

Growing businessesTES Aerospace.• Aviation services business- customers include Airbus

and easyJet

• Manage aircraft engines, and trade engines/parts

• 2 Development Capital rounds- organic growth and engine purchases

• Round 1: Total funding package £1.4m, £200k FWI plus GE Capital, Barclays, RSA

• Round 2 – Total funding package US$10m to acquire 5 Rolls-Royce engines:– US$8m from DVB (German investment bank)– £0.6m FWI (3 year term)

Supporting succession

ETL Solutions.• Based in CAST and Blaenau Ffestiniog. Company

offers transformation software for data Extract, Transform and Load Applications.

• MBO of division of larger software business.

• Original package £680k funded through management contributions, RSA and Mezzanine Loan.

• Has steadily built blue chip customer base e.g. HSBC, BNP Paribas, JP Morgan, Exxon Mobil.

• Recently completed £400k second round equity deal as part of a £525k funding round.

Creating value

Crystal Reference• Reference content and contextual search company.

• FW attracted by strong management team and product innovation.

• Expansion funding to support strategic move to attract purchaser through growth.

• Three rounds of FWI funding totalling £465k, with bank and angel investor support.

• £175k RSA grant to support growth.

• Exit in just over 2 years with FWI nearly doubling its original investment.

The premier regional development fund in the UK.

Range of debt and equity based financial packages.

To grow sustainable businesses in Wales.

Summary

xénos The Wales Business Angel Network

Understanding Angels (1)

• Not philanthropic• Seek financial gain from investments• High net worth individuals• Male (97%), average age 48• 18,000 in UK, control funds of £2 - £10bn• Make investments between £50 - £250k• Invest their own funds• Active role in investee company• Value added expertise

- Experienced, successful business people

Understanding Angels (2)

• Typical angel - does not really exist!• Individuals who have

– Investment Preferences– Geographic Limits– Investment amounts

• Stages – Seed; Pre-revenue; Early Stage; Established

• Personal - Gut Feel• Take tax breaks on investments

What investors want?

• Management (3C’s)– Capability, Commitment, Chemistry

• Business– High growth potential (to achieve high returns)– Sustainable competitive advantage (IPR, if

possible)– Identified route to market– Realistic valuation and financial forecast– Exit route– Investment Ready– Local

Role of the business angel network?

• Critical mass of investors and investees- Transparency on the market- SMEs access “invisible” investors

• “Matchmaker”• Honest broker• Encourage syndication• Improved knowledge of investors

Management

• Leanna Davies – Programme Manager• Four regional managers• Two administrative staff

How Does Xenos Operate

• Investment Forums and Fairs• Investor Club meetings• Methods of Matching

– 1:1 introductions– Database Bulletin– UK networks.