Start-up funding market as hot as it’s ever been for angel investors

Business angel investors are individuals who provide smaller amounts of finance at an earlier stage than many venture capital funds are able to invest – though they are increasingly investing alongside both seed venture capital funds and public co-investment funding on the island.

So, as might be expected, we found that the vast majority of our 100-strong group are people who have built successful businesses before as chief executives or executive directors and exited with not insignificant amounts of capital they now want to invest in the next generation of entrepreneurial companies.

HBAN is a joint initiative of Enterprise Ireland, InterTradeIreland and Invest NI dedicated to the all-island promotion and development of business angel investment, providing support for networks and syndicates and increasing the number of angel investors.

Since the HBAN Ulster network was formed in late 2018 we’ve seen our angels put £8.5m of investment into 38 early-stage companies over 55 investment rounds, with many angels opting to fund companies where they can actively use their past expertise to help the business progress. HBAN angels typically invest between £20,000 to £100,000 a deal.

Michael Black is one of those high calibre HBAN investors. After a successful career in the software sector Michael exited from Aepona in 2013 when it was taken over by Intel and then got involved with another tech company Clavis Insight in Dublin, which was sold to UK plc Ascential. He was also chief financial officer of Titan IC, a Queen’s University spin-out company, which was sold to NASDAQ-listed Mellanox Technologies.

He got into angel investing in 2015 and wasn’t put off when the first company he invested in failed.

“They say experience is the thing you get when you don’t get the thing you want,” Michael says.

“For me it was the start of a journey. I didn’t make a decision to become an angel investor, but I found that as I was at events or meeting people, I was discovering lots of interesting, up and coming companies who needed help. Usually, my involvement started with providing a bit of advice or looking over a business plan for an entrepreneur.”

Michael currently has five companies he’s actively involved in, including market intelligence platform SciLeads and online club management platform provider Team Fee Pay, which pitched at and raised funding through HBAN Ulster last year.

“I prefer to be actively helping – not in the sense of having a day job or exec role but actively helping the entrepreneur. For example, I have a call with one chief executive every Friday to talk over the issues of the day, whether that’s tech related or about running the business,” he says.

“In terms of the companies I support I have certain areas that interest me and where I think I can add value, such as software and data as a product.

“But when I’m asked how I choose who to invest in my first criteria is finding people a like spending time with. Being an angel investor means spending time with entrepreneurs over several years so you better like them and think of things the same way or it isn’t going to end well.”

Michael is of the view that there’s never been a better time to get into angel investing.

“The funding market is as hot as it’s ever been,” he says. “There is a hugely vibrant tech and start-up scene now with five or six local accelerators and incubators, providing a nurturing environment that has increased the volume coming through. And for today’s start-ups the capital is visible and easier to access, in the sense that they can connect with funders in a transparent process that wasn’t there before.”

His advice to potential new members of HBAN is to research the tax reliefs available to them, be thoughtful about what they invest in and only do it if they enjoy it.

“I’d also suggest new angels invest as part of a group unless they are prepared to put a lot of time and capital into a company. Investing in a group makes a lot of sense as it spreads the risk for the investor, gets the business a bigger funding round and is coordinated by a lead investor who acts as a link to the entrepreneur,” Michael says.

“I’d also advise people not to jump into the first thing they see, unless they really like it. You’ll see a lot you like as the start-up scene is much more vibrant now than it was even 10 years ago. You can afford to take a bit of time.”