Business angel investing by two successful angel entrepreneurs Peter Cowley and Don McQueen

Peter Cowley Don Conference
Peter Cowley Don McQueen

The angel network chairmen and successful angel investors shared tips on what to do for successful angel investing at our investing conference. You can see videos of their presentations below. Peter Cowley, ‘Best Angel Investor in the World 2017’ is also chair of the board of the Cambridge Business Angels and the Investment Director of the Marshall of Cambridge, Martlet Corporate Angel division. More on Peter here. Don McQueen, hosting the event, is Chair of Dorset Business Angels, Corporate leader and chairman. He has a track record leading and building profitable technology companies. Expertise in corporate strategy, M&A, acquisition integration and turnarounds. More on Don here.

Peter Cowley, ‘Best Angel Investor in the World 2017’

Peter Cowley, grabbed the attention of the audience with his talk entitled, ‘What I wished I’d known a decade ago!’

Video of Peter’s presentation here.

Summary of Peter’s presentation here:

THE TEAM

  • Peter believes who you invest in is more important than the anything.
  • The team need, “High growth ambitions”.
  • An outstanding founding team, at least two people (3 also works, but not 4).
  • Peter requires a team with a UK legal structure.
  • They need to be local for ease of travelling.
  • There must be a board representative – Peter needs to trust the Investor Non Exec Director.
  • The company need to understand, and can justify the ratio: “Customer Lifetime Value” over “Cost of Customer Acquisition”.

THE PRODUCT

  • Evidence of a large market. Globally at least $/£100m, although not all businesses need to have global ambitions. Note that Peter doesn’t need to see a billion+ market – angels can get an excellent return, even if the investee’s revenues are less than £5M on exit.
  • A level of defensibility, whether it is speed to market, know-how or a patent application.
  • Invest in markets you understand, Peter Cowley for example invests in software, electronics, RF comms; and sectors: B2B and B2B2C, never B2C.

THE FINANCES

  • Early stage income, probably pre-revenue and pre-grant income, although evidence of valid (even if a one off trial) customer sales traction will help.
  • Valuation – Pre-money valuation, mostly under £1m and with an upper limit of £2m (unless exceptional).
  • Valuations have being upwards, due to the over-supply of early stage money (particularly in London) and NOT because exits are at a larger multiple nor more frequent.
  • A minimum 10X valuation increase within 5 to 10 years, so if you are asking for, say, a £1m post-investment valuation, what does your company look like? And who will buy it for £10+m in a few years’ time?
  • Syndicated. Peter never invests alone. Although he can connect and/or build a syndicate, if he likes your proposition. Angels (although very rarely those who invest through online platforms) want and expect to add value with connections, advice, governance and future funding.
  • Peter does not invest in deals that either have been, or are, on any equity crowd-funding sites except Syndicate Room, where he is involved.

Don McQueen Chairman Dorset Business Angels
on Angel Investing

Video of Don’s presentation here.

Summary of Don’s presentation here:

Selecting Presentation Pitches – what appeals to investors?

  • Valuation and amount needed.
  • Stage of business – pre or post revenues
  • Market they are addressing
  • What’s the problem the business is solving?
  • Is there any IP?
  • Is the team able to implement the plan?
  • Do I know this industry / market?
  • Can angels add value post deal?

Follow-Up after the Event & Due Diligence

  • Meeting with the team on their site
  • NDA and detailed business plans
  • Negotiating valuation
  • Agreeing investment team and amount to invest
  • Due diligence
  • Investment legal documents
  • Completion.

Investment and Beyond

  • Investor meetings, if not legal directors.
  • Mentoring of management team
  • EIS and SEIS certificates, getting your cash back
  • Reviewing reports
  • Help with raising further funding / exit
  • Give as much or as little of you time.
  • Build a private investment portfolio
  • Have fun and hopefully make money.

Key Lessons Learnt

  • Start small, learn before first investment
  • Focus on the markets and technologies you understand
  • Ask as many questions as you can
  • If you are unsure, don’t
  • Negotiate hard on valuation, if you can
  • If things go wrong – cut your losses
  • Only help the business as much as you feel comfortable with.

More Videos from Conference Speakers

I hope you enjoyed business angel investing by two successful angel entrepreneurs Peter Cowley and Don McQueen. The angel network chairmen and successful angel investors shared tips on what to do for successful angel investing. These videos of their presentations were just some of the videos recorded on the day. You can see all the presentations on the Dorset Business Angels Conference website page. And if you would like to attend a pitch event find out more here. 

Peter Eales BA Hons Chartered Marketer FCIM FIDM
Founder Director Dorset Business Angels
MD o i solutions limited

Posted in Blog.