YABA and Hull Bondholders Accessing Finance 1 st November 2011 Susanne Gilbert YABA Ambassador North & East Yorkshire, North & North East Lincolnshire

What do Business Angels want? Sectors/types Business plans Valuation/percentages/returns Deal structures Angel inputs Exit routes Returns

The trouble with business plans! Usually what’s promisedWhat gets delivered Greater upfront due diligence = more-successful investments

Usual minimum Right to appoint a director, as a group, or individually Limits and consents Rights to information (how much and when) – Monthly management accounts – Draft budgets at least one month prior to year – Audited annual accounts – Rights of remedy if requests are not heeded Non-compete clauses Confidentiality

Involvement? What they want What they often get

Angels and exits Consider before entering the deal What are options for exit? – AIM float - only small %age, not always a real exit – Trade sale - more likely, grooming needed, timing vital – MBO - may lead to break down in relationships EIS term – will it really be worth holding out? Is there more potential to grow? Is this enough return? Finally - any exit really has to suit the founders

Which Angels are more successful?

Previous entrepreneurs (no surprise!) Portfolio Angels – 2 essential, 5 minimum, 10 good Angels with industry expertise Much better returns if on the board Active Angels = bigger deals and higher returns, less likelyhood of failure BUT if the Angel gets too involved in the business returns are likely to be much lower. Which Angels are more successful?

What can YABA offer in Yorkshire & the Humber?

Yorkshire Association of Business Angels Founded 1995 Not for profit Supported by Yorkshire Forward Over 190 Angel Members and Associates Bi-monthly Investment Forums across Yorkshire

What does YABA offer Entrepreneurs? EXPERTISE +

YABA for Entrepreneurs Circulation of opportunities via & on- line Access to over 135 business angels who wish to invest in Yorkshire businesses Unique combination of funding and expertise Presentation opportunity at bi-monthly investment forums & sector forums Access to mentors and NEDs Supported by a network of associates

How much does it cost?

Cost for Entrepreneurs No success fees or charges on deals £55.00 for circulation of executive summary to all members £ to present at Investment Forum – Includes proposition enhancement workshop

What does YABA offer Business Angels?

Access to new investment opportunities Review opportunities at bi-monthly investment forum & sector forums Networking with other angels through exclusive social events Angel master classes Opportunity for syndicate investment Joining and annual membership fee

Sectors and Types of Business No single type, all stages, all sectors – What they understand – What they like the look of – What others are interested in Pre-starts – for the brave, add credibility? Start-ups – can Angel open doors? Growth – add governance, discipline? Turnarounds – timing and input needed

Shopping List Compelling customer/market proposition Strong, defensible IP Basis of management team – qualities/mix/experience Personal commitment – foregone, investment, effort References - customer need, trials, user belief Tactical plans, prospects pipeline, international view Potential for minimum 10x growth over 5 years

What do Angels usually add? Time – Nearly always part-time, often flexible role – Usually NED or mentor “Putting something back” – Feel-good factor can be a motivator Skills and experience – Add credibility – Like to fill gaps, add market knowledge – Technical skills – e.g. finance, law, etc – Strategy, governance, exits Which Angels are more successful?

Does it work? £5M business angel investment and resulting leveraged investment in Yorkshire and the Humber over the last 3 years YABA has been conduit for £21 million of investment in companies across the region creating over three hundred jobs in these investee companies over the past 10 years

YABA and the Professional Community

Questions?

Next Forum – York 15 November