The A-Z of Angel Investing
As part of the UKBAA initiative to encourage more women into angel investing, in May 2021 we hosted a webinar in which Jenny Tooth OBE, CEO of UKBAA presented her A-Z of Angel Investing to an audience of more than 40 people.
Supported by DBA sponsors, Ellis Jones, Investec Wealth & Investment and Saffery Champness, the 2-hour webinar was received very well indeed. Here we share with you videos and some transcript of the main presentation by Jenny and the Q & A session.
Who are UKBAA?
The UK Business Angels Association (UKBAA) is the trade body for Angel Investing and operating right across the UK; operating since 2012. Jenny has been the CEO since 2012. UKBAA have an interesting ecosystem, working with about 84 Angel groups of which DBA is one of them, and they work with well over 15,000 Angels across the country through those groups, and they also have quite a lot of individual members.
- UKBAA are very much there to connect people
- UKBAA connect Angels with good deal flow and runs an extensive programme of events
- UKBAA work very closely with government and are the voice of the Angel community. As CEO, Jenny spends a lot of time working with government and key agencies - British Business Bank, Innovate UK and many other key agencies that are really part of our world and help make an important environment for Angel investing.
What is a Business Angel?
There is a lot of confusion around what is and what isn’t a Business Angel. The most important part is that it is somebody who is using their own money, it’s not about putting your money into a fund, it is about making your own decisions about your money. This is generally and hopefully, alongside others, others who know and who are experienced. But it is very much about making your own decision.
It’s about using your spare capacity and not necessarily at retirement, it can be money that you're setting aside along the way. Lots of women and men invest alongside their day jobs; it's increasingly common not to wait until retirement.
If you are interested to become a member of Dorset Business Angels, you can read more about investor membership here.
Here are some excerpts of the presentation Jenny Tooth made at the event, please do go ahead and watch the video (38 minutes long), it's informative, fast-paced and delivered passionately by Jenny...
"I think we’d all agree it's absolutely fun, you can't do it without enjoying it and it's exciting because you never know what's going to happen and it's also incredibly social. It’s something I'll say a lot more about, always do it with others, never do it on your own; it's a very social and fun thing."
"There's an element that you do it because you're passionate about helping entrepreneurs, often helping the economy, very often helping your local economy and your local region and you can see that opportunity to make a difference. That is really why we do it, and if we're lucky it works and we make me make some money. But actually, there's a level of luck and a level of experience that helps."
"The government recognised over 25 years ago that it was important what private investors do. They needed to back those individuals and they need to help them offset their risks and offset the sacrifices they are making with their money (in terms of what alternatives they might be doing with that money)."
"The government brought in a tax break called the Enterprise Investment Scheme (EIS). Over time this has developed into mainly a 30% tax relief which you get through your own income tax when you put that in your tax claims. You also can defer Capital Gains Tax and you can also defer Inheritance Tax. You can actually keep Capital Gains Tax rolling over as you make more and more investments. In 2011/2012 straight after the financial crisis when David Cameron was Prime Minister he recognised the need for more of a tax break to make sure that we really could help start-ups, very early-stage businesses. He brought in the Seed Enterprise Investment Scheme (SEIS) which gives you 50% tax relief, you can only invest £150,000 of your money in that kind of support while with the EIS you can invest up to a million a year."
"What haven't women been getting involved? It’s seen as risky; women are not risk-averse women are risk-aware. Those are two very different concepts. Of most women that we surveyed, 90% of them had been given no advice and support by their advisers about how to engage with Angel investing. It would seem too risky for them, they were encouraged to invest in assets, and not even told sufficiently even about the tax breaks to help them make that decision. There's a lot more work to do with the advisory community. It's often thought by women you have to be super-wealthy and actually, you don't. You will find that most people are putting modest amounts in because we're working in syndicates and that allows us to spread our bets and put in small amounts of money. It’s not about being super-rich, that could almost get in the way. It’s about having some spare money and a lot of experience, that's very important."
"Women have lacked knowledge about Angel investing, we’ve not had enough opportunity to give these kinds of educational events, and knowledge sharing. Because there are not that many women [angels investors] out there, there's not a big network of knowledge sharing around Angel investing. This is something to bear in mind for those of you who do know about Angel investing, talk to other women about it, encourage women to know about it. This isn't something that they shouldn't know about, but often they don't have access to that and have often lacked access to female-friendly environments in which to invest."
"Always invest as part of a group/syndicate it's nice to have some advisors around you, but you need experienced Angels sharing that experience and knowledge as well. Follow someone you trust and respect because when you first start investing it's very difficult to know what's what."
- you need to get connected, don't do it on your own
- join a group, join a syndicate, get to know other investors, draw on other's experience
- go networking, find out who your fellow investors are
- go to pitching events, get a feel for what they do, listen to the questions being asked
- embark on some learning, for example via the UKBAA e-learning course, make use of workshops and webinars on offer
"There is increasingly more and more knowledge out there that you can take advantage of, and of course Dorset Business Angels."
Being part of a membership organisation such as DBA has the advantage of discussing investment opportunities with experienced investor members. The UKBAA website is a tremendous source of information for those interested in taking their first steps into angel investing.
Potential investors should be aware that investment in new and growing businesses carries high risks as well as the possibility of high rewards. It is highly speculative and potential investors should be aware that (a) they could lose the total value of their investment and (b) no established market exists for the trading of shares in private companies, making it difficult to sell your shares. Before investing in a project about which information is given, potential investors are strongly advised to take advice from a person authorised by the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 who specialises in advising on investments of this kind. Dorset Business Angels Network Limited cannot advise on the merits or risks of investments.
Presentations may contain certain information which are forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward looking statements. These risks, uncertainties or assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward looking statements contained in this presentation and documents regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. You should not place undue reliance on forward looking statements, which apply only as of the date of this presentation.
The Q & A Session
Here members of the audience posed questions to Jenny and the panel.
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