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Envestors and Hapag-Lloyd Strategic Collaboration

We are delighted to announce the strategic collaboration between Envestors and Hapag-Lloyd Cruises, a subsidiary of the TUI Group and operator of ‘the world’s best cruise ship’ – EUROPA 2, as rated by the Berlitz Cruise Guide. This collaboration seeks to further enhance Envestors’ exposure internationally and additionally provides the opportunity for our private investor members to access exclusive rates and benefits with another trusted luxury brand.

Six months ago, I would have described myself as a cruise-sceptic. Hapag-Lloyd completely changed that. A short trip from Hamburg to Norway on one of the company’s ships has converted me — if I could, I’d take an HL cruise every year.

I was blown away by the whole experience — the understated luxury of the ship, the Michelin-star-quality food, the efficiency, the high level of service. It was like staying in an exclusive boutique hotel, with a small group of like-minded people. The itineraries are interesting, the excursions genuinely captivating.

It was refreshingly low-key, too — no gaudy dress codes for dinner — with most passengers in my age group (40s and 50s) and many entrepreneurs.

That entrepreneurial link runs through Hapag-Lloyd itself and makes it feel like the perfect partner for Envestors.

For more information please feel free to contact Aishling McLoughlin, UK & Ireland Sales & Marketing Manager, Hapag Lloyd Cruises aishling.mcloughlin@hl-cruises.com T: +44 7852 488471.

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Envestors Meets McLaren

May saw a group of F1 and motorcar enthusiasts invited from within The Platinum Club from Envestors experience a fabulous day at the McLaren Technology Centre in Woking, courtesy of McLaren and in particular George Farquhar, VIP and Affinity Relations Manager.

The group were treated to an in-depth telling of the impressive history of McLaren and had the chance to sit in the 570 GT (pictured) before being stunned by the new 720 S, launched in March earlier this year, and then were given a guided tour with anecdotes of the many museum cars from its history that McLaren have on show. From the first car that Bruce McLaren built and raced in, aged 15, to a limited edition Super Series P1 and many examples of the evolution of F1, there’s almost a car for every year, right up to very recent years. The story is one of impressive innovation, swift progression and disruption to the market, and McLaren emerges as a truly iconic and fiercely British brand, one which we at Envestors are honoured to share in.

The tour ended with a view from the gallery of the McLaren Production Centre, where the cars are built in a spotless and mainly manually driven, spectacularly organised production line. The lack of automation was notable and somehow added to the feeling that we were spying on the future.

Following a delicious lunch in the Ayrton Senna suite, our guests departed suitably impressed and, in many cases, convinced that a British-made McLaren must take up a place in their automotive collection. But which model? Mine’s a 720 S Spider please!

If you would like to know more about McLaren and are interested in test driving one of their models, or taking part in one of their exclusive driving experiences, please get in touch with Jessica.wilson@envestors.co.uk and she will connect you with George at McLaren.

Sound bites from investors’ feedback:

“As a motor racing fan I found it very interesting and most enjoyable”

George was “excellent and most welcoming”

“Just to say how very much I enjoyed the visit to McLaren Automotive Tuesday and to thank you for arranging it and inviting me”

“The success that the group have had in building up the Automotive brand in such a short space of time is incredible and whilst I own several  Ferraris amongst others, the tour has got me increasingly interested in acquiring a Mclaren at some point in the future”

“Please keep me posted on any events in the future as I would very much like to get closer to the brand which is increasingly compelling and thank you again for a really interesting day.”

“Thanks for organising an amazing day – George was the perfect ambassador, very informative, and was able to give a real sense of what McLaren is about.”

“The greatest of thanks for organising this great tour and lunch yesterday. It was fascinating and a true one off event. You could tell that George doesn’t do this sort of thing every day. To put so much passion and enthusiasm in for us was a real treat.”

Portfolio Company Ancon Victorious in China-UK Innovation Competition

MailChimp header%2F footer (1)International contest victory highlights investment, market potentials for company’s nanotechnology development.

A team from Ancon Technologies won the prestigious China – UK Entrepreneur Innovation Competition in Chengdu on May 12, opening a partnership of collaboration between the Kent-based nanotechnology company and the world’s fastest-growing economy. The China-UK Innovation and Entrepreneurship Competition in China brought together in Chengdu nearly 450 experts to judge 3,000 projects, with 70,000 participants, covering 36 nations. It was created to promote innovative collaboration between the two countries and encourage youth exchange programs.

“The victory in the China-UK Innovation and Entrepreneurship Competition in Chengdu is a great achievement for Ancon Technologies, providing a boost to a growing company as it continues to develop its ground-breaking environmental monitoring and chemical detection technology,” said Dr Robert Muir, Ancon Technologies Chief Executive Officer. “The competition results demonstrate that Ancon Technologies’ Nanotechnology Molecular Tagging is an innovative technology that can garner interest from investors and consumers alike.” Ancon Technologies is developing Nanotechnology Molecular Tagging, a pioneering technology that can power a portable desktop micro-laboratory. The technology has applications across a wide range of industries, including disease screening and explosives and radiation detection. The projects in the contest in Chengdu were evaluated over a number of standards, including the level of innovation, market potential, feasibility, market need and stage of development. The innovation and entrepreneurship competition covered a range of areas, including biomedical equipment development, advanced manufacturing, agriculture and food safety, and environmental protection technology. The projects were judged by senior experts from the professional field, industry investment experts and specialists with investment agencies. Ancon Technologies is headquartered in Canterbury, Kent and has a satellite office in the U.S. in Minneapolis, Minnesota.

MailChimp header%2F footerWe are delighted to announce that portfolio company Ebury has delivered a 5x ROI secondary exit opportunity for Envestors private investors. Having introduced £1.85m of investment from Envestors’ members in 2013, Ebury has now progressed to become a leading European fin-tech business, having facilitated more than £1.5bn of currency and lending solutions to over 10,000 international growth businesses. Ebury recently received a further £85m of investment from institutional investors, providing the secondary exit opportunity to our introduced members.
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The Voice Of An Angel – Do Macro Events and Uncertainty Influence the Activities for Business Angels? 4 Experts Share Their View

Jenny Tooth – CEO, UK Business Angels Association

A number of factors have transformed the landscape since the financial crisis. We have a new wall of capital, investors with a lot more enthusiasm, and a new wave of start-ups. Fintech is booming, furthering the development of new interfaces. This makes for an exciting market.There has been an influx of like-minded people forming syndicates of different types. Angels more closely interface with VCs and PE, and there is a wider range of venture money flowing in from multiple sources.It’s also become a more visible market. People are happy to say they are looking for funding; investors are more explicit about where they want to commit capital.

It’s also become a more visible market. People are happy to say they are looking for funding; investors are more explicit about where they want to commit capital.

There is so much choice, with potential deals coming to you via various channels, from LinkedIn to syndicates to crowdfunding platforms, there is a danger of becoming inundated. With all that noise, how do you find quality deals? Curated deal-flow becomes more important than ever.

One downside, possibly, is inexperience – in accelerators and equity crowdfunders, this can sometimes result in extremely high valuations.

One of the big issues for angels is in finding flexible entrepreneurs who understand the value of the capital they want to access. We need clear ground rules and a framework for founders and investors – we’re developing an e-learning programme to tackle this.

Another big challenge is how we build scale-up capital for the longer term. We’re very conscious that angels can be involved in a deal for a long time – and that 60 percent of their deals will fail. It takes 10 to 12 years to build a great company, but further up the line, there is a lack of scale-up, patient capital.

Regional discrepancies also need addressing. Investment is largely centred around London and the south-east, with a bit in Scotland. But it’s less accessible in other parts of the UK, so we’re looking at ways of stimulating more risk-capital visibility in order to build a more effective ecosystem around the country.

The other big issue we want to tackle is diversity – or the lack of it. Women make up around 14 percent of the visible investment community. Our aim is to reach at least 30 percent. There are existing networks, but we need more awareness, role models and education.

Divyang Mistry – An entrepreneur and PWC alumnus, Mistry began looking at angel investment about eight years ago.

Initially, I was a bit unfocused, but I soon determined that the best fit for me were scalable, B2B businesses – I’m not as comfortable with B2C.

I also wanted to be more hands-on. I still see angel investing as a niche thing – the vast majority wouldn’t necessarily know about it. But in the last four or five years, returns on other forms of investment have been so poor, people are looking to diversify.

There are loads more entrepreneurs coming through, though I see crowdfunding as a mixed blessing: you need to work harder, be very dynamic and capture investors’ imagination. You have to spin it, and there is a danger the financial sense of the business may not add up.

It also meets a need for people who want more control over their money.

I am always involved – it’s the best way to add value. Many new businesses lack the expertise of an FD, so it’s a win, as I have a background in finance.

In the end, it’s a selfish thing, but there’s an element of altruism: when I get involved in a business or I want to influence the investment, to see it succeed.

Founders are very driven people, so you can’t be too prescriptive or you’ll clash. But Envestors will make them aware of any gaps in what they are offering, and that’s where it adds value.

I’m not a fan of political meddling in business, and overall, I don’t see macro-economic issues influencing entrepreneurs unduly – you’re usually so small you’re head-down, concentrating.

On the investment side, there is a big gap for businesses that fall between angels and VCs, so we need to close that, perhaps pooling funds more so that they grow themselves. It’s important to talk to other investors about the issues they’re having so that you can stay informed.

Martin Rai – A chartered accountant with a background as director of both multinationals and start-ups, Rai was the FD-founder of Powwownow and is currently FD and advisor to three small companies.

I invest in three private companies with around £1m turnover each, where I’m also a director. I then have four or five angel investments, so I’m quite at home in the sector. But I wouldn’t call myself a guru.

Years ago I thought that high-tech was everything, but I’ve since discovered there are other industries that are interesting. At the moment, my investments are varied: a manufacturing company, a fishing accessories business and a tech company among them. I’ve come to realise that product matters, but primarily, it’s about the people. You can get swept away by enthusiasm for a sector or product, but if the people aren’t right, it doesn’t matter how brilliant a business looks. What I look for are people with vitality and vision, who will stick with something. It may sound obvious, but unfortunately, it’s not always what you find in new businesses. So that’s where I do my due diligence. You have to dig deeper, look at the drive of the individuals involved and really probe whether their hearts are in it. When I started out, angel investment wasn’t as established as it is now, but I’d never invest without meeting the people involved.

It took me six years to make my first two investments. Past performance is an indication of what they’ve done, but it doesn’t always follow that a second-time founder will be a success: maybe they were just lucky with their first idea. I’ve seen that happen before.

Often, there is one individual who keeps it all together – a problem-solver who binds everyone together and keeps them on track. But there’s no specific formula that you can apply to determine an investment’s success from the outset. Sometimes it’s easier to tell if something is not going to work, if there are obvious flaws in the management team.

The difference is so great between a team that is firing on all cylinders and one that is in disarray.

I think potential investors should be perfectly frank about any issues they foresee being a problem. There’s no reason why you shouldn’t raise questions that may help that company, whether you invest in it or not. Because the worst thing for a growing business is a problem that’s left to fester.

Tony Goodwin – Chairman and CEO of Antal International, a management and recruitment specialist, and an experienced angel investor.

My early investments eight years ago were very diversified. But I found I didn’t know enough about the key performance indicators.

I now gravitate to business services and to technology that I understand. About 75 percent of my investments tend to focus around sectors I know well, then the remainder are less specialised, just for fun and interest.

I like simple, straightforward businesses. I know there are fabulous algorithmic innovations out there, but unless the result is blindingly simple, I steer away.

We’re seeing a lot of great ideas emerging, but some have no idea about how to build a business. Everyone’s an entrepreneur today. I’m all for that. But a lot are ill-equipped, ill-prepared chancers. More and more are being rebuffed. They must be more prepared. You quickly identify what will work when you see hundreds. That said, you’re not going to get it right every time.

As for potential growth areas, edtech looks promising. I’m investing in what could be a ground-breaking educational platform, something that seeks to raise standards across the board and take the postcode lottery out of schooling.

I’m also more globally-minded because of Antal’s international reach – as an internationalist, it’s an investment criterion. I believe now is the time to invest in Russia, and Asia Pacific. International business expansion opportunities have never been better.

Geopolitics will always play a part, but as an entrepreneur, you look for your own niches and opportunities. And if everyone is flying this way, you should be flying the other way.

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Playing with Money – Scott Haughton on How to Raise Equity Investment

Hosted by Elizabeth Ü with Xero Gravity

The following extract is from the Xero Gravity Podcast

It took 18 years of corporate life for Scott Haughton to make the leap to entrepreneurship. Like most successes stories, the road to where he is today was unconventional. Inspired by an entrepreneur at a conference, Haughton realized it was time to pursue his own venture. Not knowing what that venture would be, he eventually set his sights on luxury indoor play facilities.

Haughton spent the next 18 months raising capital. This meant ticking boxes, and learning everything he could about startups. He quickly became a children’s soft play expert. However, the central London commercial property market was not on his side. Scott had raised an impressive amount of finance during this time. However, due to delays securing a location, the offers lapsed. Scott had to return all of his money to investors. Although this may sound like a familiar story of failure, it wasn’t that at all. Like all good entrepreneurs, Haughton was on the fringe of discovering his true calling. As one door closes, another door opens.

The frustrated entrepreneur

Haughton says he’d always been a “frustrated entrepreneur.” He was never quite sure what his venture would look like. Sure enough, after leaving Glaxosmithkline, Scott spotted a gap in the market and the cogs started to turn.

“My children were very small at the time and we were spending a lot of times at these indoor play facilities that were paradises for children, but a complete nightmare for parents. Parents were just cringing on plastic chairs with plastic cups of coffee.” Haughton says.

“I came up with the idea of combining a paradise for kids with a bit more luxury and quality for the parents. Looking at the people who would attend these places you had partners of law firms, bankers, city traders. These were affluent men and women, yet the offerings were very poor.”

There was a gaping hole just waiting to be filled and Haughton was going to be the man to do it. The idea later proved the easy part. Things became more difficult. Haughton’s inexperience with the finer points of entrepreneurship started to arise.

“I knew nothing about starting a business. I’d always had everything in the corporate world provided for me. I was also doing it on my own which was hard. My advice to anybody starting a business, try find a partner with complementary skills.”

He committed to putting everything he had into it. He negotiated a redundancy package that served as a comfort blanket. This gave him a deadline by when he needed to have everything up and running.

“I know I was very fortunate to have that, but time was running out. It was a 12-18 month comfort blanket. You can’t afford to make a mistake, but you have to take the leap of faith.”

Raising capital 101

Haughton admits he knew nothing about raising finance when he first went out in search of investors. Subsequently, he learned very quickly the major dos and don’ts when trying to attract equity.

“I needed to raise a minimum of £750,000, and in the early 2000s the first port of call was the bank. It seems so strange in 2017 to talk about banks lending, but I was one of the very few who secured an unsecured loan from the bank of over £150,000. I was willing to put in £150,000 of my own money to get skin in the game, but it was money we couldn’t afford to lose.”

“It’s an onerous process and there’s a lot of bureaucracy. I found myself with £150,000 of my own money, £150,000 of the bank’s money, and was looking for £450,000 of equity investment. I knew nothing about business angel investors or the venture capital space so I had to become an expert pretty quickly.”

At this point, Haughton touches on something many entrepreneurs overlook. The importance of finding the right investors when you’re going to be giving up a part of your business to them.

“I needed to cross the equity bridge. When people invest, it’s no longer your baby. Venture capitalists (VCs) aren’t risking anything personally, but a private individual, they’re risking every pound they put up.”

“You have to put in enough money that shows there’s enough pain invested for you that you couldn’t just walk away and let it fail. You have to prove you’ll do everything you possibly can do to make it a success. You can’t afford to lose your life savings.”

“In the end I raised £750,000 based on a business plan, a piece of paper. I was left with 30%, but the VC was willing to put in a ratchet clause that enabled me to claw back equity according to milestone achievements,” Haughton says of the deal they had negotiated.

Let the hard work begin

It’s at this point that Haughton assumed things would get easier. He’d raised the capital, and that was the hard part, right?

Apparently not.

“I thought raising capital was the biggest thing to be achieved. I thought it was on a roll from there.”

“My business was all about finding affluent areas around London, so I needed to find 8,000 square feet of property with high ceilings and parking nearby. It was at this point I realized I wasn’t a covenant and was really going to struggle. As a landlord, would you rather rent to a startup or a massive pizza chain?”

“I thought to secure commercial premises you just scoured the estate agent market then put in an offer, but it doesn’t work like that. You need to appoint an agent to act on your behalf and market you to all the commercial agents.”

“Luckily when I needed property I had the money to show people. If you don’t have the money they’re not going to take your phone call, but I was still up against the lack of a track record and other leisure chains.”

With several parties involved Haughton says finding a property everyone agreed on was proving impossible. It was no longer about just his personal deadline, but one of his investors too.

“My VC was under pressure to get their money out the door. Their offer of funding had a six-month window and sadly I wasn’t able to secure it within that. I had to return the money.”

“I was frustrated. I’d thought raising the money would be hardest part, but with hindsight, finding the property was always going to be the hardest thing.”

Revolving doors

Just like that, the business Haughton had poured every piece of himself into for 18 months was falling away. This was all because three people couldn’t agree on a property. But what appears to be an ending in fact wasn’t that at all, as Haughton was about to learn.

“I’d been introduced to someone who’d sold his business and was doing loose consultancy advising individuals on raising finance. He’d introduced me to one of my VCs so we’d built a good relationship. When my offer was elapsing he suggested the pair of us probably knew more about raising finance than the majority of people out there I’d come across, so we decided to share our learnings with other aspiring entrepreneurs.”

Haughton had acquired knowledge that is absolute gold in the entrepreneurial space. Most entrepreneurs only need to raise capital three or four times in their lifetime. The majority are poorly equipped to hold their own at a table of people who invest in businesses like theirs for a living. It was a massive opportunity, one Haughton felt his learnings could be of real use in. Haughton Put two and two together and shortly after this, Envestors was established.

“We started Envestors in 2004, with the aim of helping early stage businesses help entrepreneurs navigate the path to securing elusive private investment from individuals and early stage VCs. At the time we were new kids on the block, which resonated quite well with the entrepreneurial ecosystem in London at the time.”

So how do Envestors bridge the intermediary gap between entrepreneurs and investors? As it stands, the business model is primarily one of consultancy.

“We’re looking to advise other early stage businesses how to become investor-ready. We charge an advisory fee and a success fee.”

“Envestors has massively changed over the years. We started with just a handful of investors, but we’ve now built up our own investor network to high net worth, ultra-high net worth, family offices, and early stage VCs. We also have a staff of about 26 and receive roughly 100 business inquiries each month.”

Playing cupid

Not just a consultancy, Envestors are also there to play matchmaker between the businesses and their investors.

“We look to engage with about three or four companies each month. We’re quite picky about who we invite. We have a good track record of finding quality companies and rejecting ones that won’t be successful.”

If a business’ application is successful, Envestors will prepare a fully regulated investment pack. It all sounds fairly straightforward in theory, but the Envestors team also jump through all of the hoops Haughton once grappled with on behalf of the entrepreneur and their business.

“The majority of our investors are looking for businesses that generate 10 times their investment over a five to seven year time period. They know they need a portfolio of five to ten companies to invest in, so they certainly aren’t putting all their eggs in one basket. They’re also aware that at least three or four will fail.”

“From an investor’s point of view, they can claw back their tax on here in the UK on the ones that fail. Their biggest challenges are the ones in the middle that are like zombies, they’re alive, but only just.”

And the business model isn’t just about entrepreneurs putting their all in. Wannabe investors are also thoroughly vetted before being allowed access to the Envestors private network.

“All our investors have to register with us formally. They then have to comply with the strict Financial Conduct Authority regulations which we do through the platform we built ourselves.”

“We have to be able to provide comfort to our client companies that all our investors are fully registered. Our clients can be assured we’ve vetted our investors, and that we try match them as best possible with our client companies.”

 

Must-knows

Now with a solid decade in the game Haughton has seen it all, and has a couple of key tips for entrepreneurs looking to raise capital.

Nail the exit plan

Think an exit plan is for the last page of your business plan? Think again, Haughton says. “Investors walk into the room backwards, so the first page of your business plan should be the exit opportunity. They wanna know how they’ll get their money out of this investment. They’re not looking to be greedy, which is why they don’t want over 50% of a business, but there absolutely needs to be an exit opportunity that’s spelled out and that everyone’s bought into at the very beginning, if there isn’t most investors will walk away. It’s not a stock market.”

Know how to sell

“They need to know how to sell their investment proposition. We now see a lot of technical companies who’re stars in their fields, but don’t know how to crisply pitch their business to investors. Private individuals who’re wealthy and have made their money don’t need to invest more money, they can quite comfortably sit in their arm chairs. You need to get them out of their arm chairs and off their remote control. They typically have short attention spans, so within 5-8 minutes you need to nail your proposition. It often comes down to whether or not this will be an exciting acquisition for a large corporate.”

Envestors are putting entrepreneurs on the table in a very unique and effective way. They’ve since helped their clients raise more than £100,000,000 in capital. It’s a fast-growing game to be at the forefront of. Not to mention their global presence in London, Dubai, the Channel Islands and Monaco. Moving into 2017, Envestors have got their sights set on China, Canada and Russia also. They look set to continue reaping the benefits of their in-demand skillsets.