What does an angel investor do? Here is the angel investor investment process, the journey, from due diligence to success. Beginning with doing the deal with entrepreneurs to ideally giving a good return on the investment on exit. But you probably realise there can be many outcomes: company failure, further funding injections and radical changes to the original plan – to mention just three possible situations the entrepreneur and investor can face. To learn about the angel investor experience, a great way to do this is watching and listening to people who have done this, angels and businesses. Videos here are taken from our Dorset Business Angels Investors’ Conference. Plus case studies from Dorset Business Angels investors.
Beginning of the Journey
Peter Cowley – ‘Best Angel Investor in the World 2017’ ‘What I wished I’d known a decade ago!’ Enjoy his video here. Some key points in the video include, invest in people first not the plan. People with “high growth ambitions”. Peter invests in at least 2 people, 3 works not 4. A UK Company. Local enough for you to travel to. Have your own board or a trusted Non Exec Director.
Processes for the Journey
Learn How Successful Angel Investing Can Be Rewarding & Stimulating
The Processes – Don McQueen. Don explains how to look for opportunities, audit them before investing, documentation, working with businesses and the ongoing relationships – video
Case Study on a Failed Investment – Don McQueen
In September 2016, the Dorset Business Angels attention was grabbed by one of the pitch evening event presentations. The company, The MacGuffin Project, was an ‘Escape Room’ entertainment venue in central Bournemouth, Dorset. Due to open in early 2017, five DBA members thought this to be a good investment opportunity. An experienced investor, this was Don’s second investment through DBA. Following the pitch, 5 DBA members were interested in investing £30K each. Delays in opening the venue occurred and significant extra costs were needed – most of which should have been predicted with a more experienced management team. In December 2017 the company was put into liquidation. More on this, and lessons learnt – see here.
Case Study on a Successful Investment
Wizzle is a web service and smartphone application enabling consumers to easily create accurate and transparent vehicle appraisals with a view to selling their cars direct to interested dealers, at the best price possible. Don McQueen led a DBA investment team. In all the total investment from the DBA team was £550k. By Autumn 2018 the business has just reached a profit level. The company is well behind its original revenue plan, but it has learnt a lot about what works and what does not. More on this case study here.
How to Avoid Getting it Wrong as an Investor – Justin Levine
Avoid seeing your cash vaporize. Minimise the downside. Invest, do not speculate. How do we find the right investment? Justin shares data on what % of angel investments end up in what situation for example 50% go out of business, 20% sale to a larger company. Are there ways of minimising risk, or getting money out before a liquidation event? Enjoy his video.
Exit Lessons for Investors Case Study from RocketRoute co-founder – Kurt Lyall
A co-founder, seven years invested in my company. An aviation company finding the fastest way to fly through the air with his company. He started with small aircraft we moved up to business jets. As a founder you don’t have luxury of 25 investments, you have a portfolio of one investment, one your company. Watch and listen to his story here.
So, what does an angel investor do? The angel investor investment process, the journey, from due diligence to success varies in almost every case. As is shown above beginning with doing the deal with entrepreneurs to ideally giving a good return on the investment on exit. Exit, meaning the investor, hopefully makes a profitable, sometimes very good return. It should be noted, that the term “patient capital” is a very appropriate term, recently coined. Because angel investors, seldom make a “quick buck” and recognise they are involved for usually a number of years. With investments, there can be many outcomes: company failure, further funding injections – “funding rounds” – and radical changes to the original plan – to mention just three possible situations. If you want to find out more, about the angel investor experience, there are more articles on business funding and finance on our articles page, or just visit the Dorset Business Angels website, you can book to attend a pitch event.
Peter Eales BA Hons Chartered Marketer FCIM FIDM
Founder Director Dorset Business Angels
MD o i solutions limited