“Angel-investing” – the provision of private equity finance by private individuals – is essential to small businesses the world round. In the UK it is the principal source of equity raises in the £1-2m sector. In the US virtually every MegaTech company one has heard of started with Angel financing. Thus this is an essential topic to know about not just for Angels but also for entrepreneurs who, the better they understand the Angels world, the better able they will be to raise finance from them.
Richard’s experience is unique in terms of having continuously been involved in unquoted investment for half a century starting with 3i (as it became) in the early 70s when it was nigh-on the only provider of equity finance to small businesses in the UK through the waves of introduction of Venture Capital, Private Equity, dot com boom and tech boom. Indeed the “Angel” word itself did not exist in this context until the late 70s.
Richard’s book is aimed at the Business Angel who wishes to professionalise his investing.
Many Angels may just have one or two investments. This is fine but of course is of the nature of a couple of bets, a couple of gambles which may or may not pay off. Given the statistics of investing in such a risky early-stage sector if one wishes to invest significant funds or a significant percentage of ones portfolio then one needs to approach the activity in a more professional manner. It is how to do this that Richard lays out clearly and instructively as benefits someone who started with engineering training up to and including a PhD. Which is not to say the book is dull – far from it, some 43 Case Studies flesh out the Realpolitik, the thrills and the spills that are inevitable in investing in this way.
The book has four sections:
a) Angel Investing – an overview
b) Investment Opportunities and Terms – diving into the VC witchcraft which can cast spells on the unwary (Richard was a former Chair of the BVCA and so knows that world from all sides)
c) Managing Investments – the practicalities and choices involved in being an Angel investor in a Company
d) The Exit – the only bit where you get money back
One of the failures of the modern world is not to learn from experience, not to listen to elders and the temptation of dipping into blogs and essentially eating sugar cubes and canapes instead of dinner. Canapes, if not sugar cubes, have their place. However if you aim either to become more systematic and profitable at investing (Richard’s personal returns he quotes have been a stellar 5x pre-tax and 10x post-tax over the past 15yrs) or to raise funds from Angels who can add value well beyond their ability to simply write a cheque then this book is a must-read.
You can hear me talking to Richard about his book and Angeling on the London Fintech Podcast and you can buy the book at Amazon.co.uk.