Angel Investing in the North during COVID-19 webinar Part 2: how businesses are being supported to access help from the Government and the opportunities that are presenting themselves due to the pandemic

A-Z of Investing in the North

Yesterday we published part 1 of our recent webinar, held in partnership with NorthInvest, Innovation Super Network and the BIC. Featuring NorthInvest’s Jordan Dargue, GC Angels’ Jess Jackson, DSW’s David Smith, Angel Groups’ Martin Avison and Minerva’s Alex Toft, the webinar looked at how are the regions faring and which sectors have been hit the hardest since the COVID-19 pandemic.

Following on from those topics, the panellists shared what they’ve been doing to help support businesses access help from the Government. At GC Angels, Jess highlighted how they’ve been inundated with businesses needing help.

“The wider business that I’m part of, GC Business Finance, they are an accredited CBILS lender and as you can imagine those guys were absolutely hammered with inquiries a number of weeks ago. Subsequent to that, it’s been like swimming through treacle trying to get some of these out there. I don’t think that’s been as successful nationally as I think there was a hope that it would be.”

Bounce Back Loans are something that GC Angels are only just starting to investigate for their businesses but Jess believes the scheme is more appropriate for a larger number of businesses moving forward. She also said that she believes the Future Fund isn’t geared towards younger businesses due to its criteria around match funding. In terms of what more could be done, Jess suggested:

“What I see is crucial to getting us through this, is collaboration and co-investment between people who are able to do so. We have to work together as an ecosystem and ensure that good businesses get the funding that they really deserve to get and can resume what they do. There’s lots of positive things going on. I think there needs to be a specific look at first rounds of funding because that is so crucial to the rest of the pipeline and the whole market really. That’s what I would like to see happen next.”

NorthInvest is advising its businesses against taking on any kind of loans, which would result in an increase of debt. Jordan explained:

“What I see is crucial to getting us through this, is collaboration and co-investment between people who are able to do so. We have to work together as an ecosystem and ensure that good businesses get the funding that they really deserve.”

“We wouldn’t necessarily encourage them to take any debt on. In fact, we’d want them to keep as far away as possible at that stage so I think it can be a little bit confusing for some entrepreneurs in terms of how much is out there, what it is and what it actually does. With the Future Fund, there’s a lot to be cleared up in terms of what that fund actually looks like and how it works. There’s probably not many businesses from our portfolio of companies that we would be pointing to that. I think Innovate UK has been fantastic. They have really pushed out some initiatives to support new companies to apply to Innovate UK, but also, I’m aware that there is going to be some other grants coming out, which will actually support companies who’ve already gone through the Innovate UK typical process, which I think is going to be fantastic for those companies as well.”

For Alex at Minerva, Bounce Back Loans have proven to be very accessible and helpful. Sharing his experience, he said:

“The Bounce Back Loans are coming through quite quickly. It’s a very simple process – two pages, very light touch due diligence. People have complained about some of the positions that banks have been taking and how they’ve been using the British Business Bank as an excuse not to grant loans. There’s still a lot of work to be done but more importantly, money is flowing. We were somewhat comforted by that fact. Midlands Engine Investment Fund continues to flow so there are lots of deals happening there. We do need a simpler process and an equity scheme. We always argue some of the terms need to be relaxed and less onerous.”

David from DSW agreed with Alex about Bounce Back Loans and stated that they had secured CBILs for some of their private equity and more developed angel companies. Like the other panellists, he expressed doubt over the Future Fund in terms of it helping his portfolio businesses.

“We’re assuming that other than the £50k Bounce Back Loan, our portfolio is not going to get any support from the government. If we can get support, great but currently our forecasts are predicated on the basis of no other support than the Bounce Back Loan.”

Adding another voice of support to the concerns raised about the Future Fund, Angel Group’s Martin said, “What it’s done, not intentionally, is it’s created an unnecessary tension.”

While opinions were mixed on the help announced by the Government, Jess was keen to highlight that there are opportunities coming out of the pandemic too. Alongside creating movement in the talent space enabling people to apply for jobs they may not have been able to previously, Jess believes embracing online to continue business will carry through post-pandemic.

“Being able to drop into a pitch event for an hour is way preferential than an entire afternoon where you have to travel there, talk to people, listen to the pitches and then linger around afterwards. That flexibility to hop into things and it not drain on your time, could open up angel invest into a new cohort of people who perhaps weren’t looking at it for the time being. I’m thinking, younger investors perhaps who are still in full time work or women investors as well, especially with the flexibility side of things, are suddenly able to access things that maybe previously were quite difficult to do. I’m taking that away as a positive.”

Alex echoed Jess’ sentiments stating that he would struggle to go back to the ‘old way’ of working. Discussing feedback from his community and the possibilities for co-investing he shared:

“They love the interaction. They love the different groups and different voices from all over the place that we’re getting. We are adding investors and we’re getting investment from a greater catchment area so that is quite a big challenge, but we’re co-investors anyway. We have a mixture of VC and family offices that co-invest. If anything, it’s proving to be a big positive in terms of investment and the flow of money. We’ve still got a long way to go. We want to break this hold that the southeast has on the market and we keep trying. We’ve got lots of initiatives. Where do you go after this because people like it too much.”

“Being able to drop into a pitch event for an hour is way preferential than an entire afternoon where you have to travel there, talk to people, listen to the pitches and then linger around afterwards.”

David was less convinced that the ‘new normal’ was going to become permanent and he believes some of what we’re seeing now is acceleration of existing trends.

“We’ll probably go back to the way things were because they were like that for a reason. I think we’ll see particular industries change a bit. Online will be pushed up and accelerated. high street retail will be pushed back a little bit faster than it would be anyway. I think these are acceleration of trends. Online is taking a big leap forward and I think that’s good. The basic economics of making tax assisted investments into early stage companies that’s not changed. It’s an attractive asset class. It’s an attractive activity for individuals and there’s money to be made, and there’s joy to be had. I think we’ll get back to business as usual.”

Something that hasn’t gone unnoticed is that since moving events online, it’s resulted in a more diverse audience. Jordan explained:

“The level of logistics around having the events virtual does mean that you can tap into a more diverse network, whether that’s women or whether that’s oh different types of levels of investment. We found that our pitch events that we’ve been doing virtually have had a great volume of people. It’s been an extremely diverse number of people, all after different types of deals, all investing at different levels. We’ve pretty much made a bit of a conscious decision that works for us at NorthInvest, and particularly with our partners Innovation Super Network. We’re working together to bring deals forward and to make the investment happen.”

Martin sees a future where in-person pitch events will run alongside online ones. He said:

“”Huge upsides and downsides. I own seven angel investment groups so logistically, it’s a dream. My life has become so much easier over the last few weeks. I get emails in now daily from my angel investors and family groups that invest through us and they’re saying completely different things. Some want to network with other people in the room and want those relationships and then we’ve got others who love the convenience of just dipping in (online). We’ve had some huge numbers come on to our online pitching sessions. We get about eight to 10 new members join a month, on average and over the last couple of months there’ve been more women than men. We’ll continue to service both. The physical does work, but the online means we can distribute quicker, or we can work with our other groups and we can bring in our investment partners.”

Read Part 1 of Angel Investing in the North during COVID-19 webinar.


By UKBAA19 May 2020