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Par Equity Partner Andrew Noble discusses partnering with the Regional Angels Programme to support scale-ups and shares one particular success story from the firm’s portfolio

Andrew NobleThe Regional Angels Programme was announced in 2018 with the aim of addressing the regional imbalances in the availability of angel funding. To date the programme has partnered with three companies – Dow Schofield Watts Angels, Par Equity and Startup Funding Club. In April, Par Equity was allocated £15 million of funding for scale-ups by British Business Investments. We caught up with Par Equity Partner Andrew Noble to find out more.

Founded in 2008/9, Par Equity is an early stage venture capital firm focused on pre-series A. A generalist technology investor, the firm looks for cutting edge technologies that are disruptive across industries and are eminently scalable, both nationally and internationally, with a degree of defensibility built into the product or business model. Explaining more about their approach Andrew says:

“The most distinctive feature of Par is that we operate a hybrid investment model. We combine the scale of our EIS Fund with the expertise, contacts and resources of an angel network. This was an intentional part of our original thesis when we founded Par in 2008, recognising that angel returns had, in the most part, outperformed VC returns over the last 25 years.”

There are a number of reasons why that is, and has been for some time, the case. Expanding further Andrew comments:

“Firstly, angels don’t usually suffer from deployment pressure and they are happy to wait until they see the right opportunities. Secondly, they typically only invest in things that they understand, i.e. the investment opportunity is in their sector or technology domain. And thirdly, angels will often roll up their sleeves and get stuck in to help the company, with an element of altruism, rather than having any kind of misaligned commercial agenda.

In summary, we’ve tried to marry up the very best parts of angel investing with the professionalism and rigor of a VC manager and, so far, the returns we’ve been generating for our investors are proving this original investment thesis .”

Today, Par Equity has a scalable EIS Fund that is supported with the expertise and knowledge of its Par Investor Network, a collection of 200 active investors. Par works with its angels across all four stages of the investment lifecycle – deal origination, due diligence, portfolio management and exit management – adding the right people at the right time.

“Critically, as part of our investment criteria, we are unlikely to invest in a particular opportunity unless members of our network, with the relevant and specific expertise, are investing their own cold hard cash in that company alongside our EIS Fund and on identical terms.”

Last month British Business Investments and Par Equity announced a £75 million investment programme to support ambitious entrepreneurs in the regions. Discussing the announcement Andrew enthuses:

“We are able to support the very best opportunities in the north of the UK in a more meaningful way, which means more jobs, greater innovation and increasing workforce productivity.”

“It’s fantastic to have that support from BBI. What needs to be made clear here though, is that although it’s a £75 million investment programme, only £15 million comes from BBI. Our EIS Fund and our investor network will lead the programme with £60m of funding over the next 3 to 5 years. In effect, it means that for all new and follow-on investments we make, there is an additional 25% of firepower available to the company”.

The funding increases the number of companies Par forecasts it will back, as well as providing immediate opportunities to Par Equity’s existing portfolio. It helps to ensure companies are well-capitalised and it gives them the extra runway and resources to hit their key value enhancing milestones. The funding is especially timely given the impact of the COVID-19 pandemic.

“We are able to support the very best opportunities in the north of the UK in a more meaningful way, which means more jobs, greater innovation and increasing workforce productivity.”

The current climate has thrown up more opportunities than threats for Par Equity’s portfolio. Andrew shares:

“We have an enormous amount of disruption right now with COVID-19. That throws up opportunities and threats. In this current environment being a technology investor, it somewhat means that you cut through a lot of noise. There are some sectors that will do very, very well, for example tele-health, gaming services and pockets of e-commerce, and there are others that will have to fundamentally pivot. The good news is that young start-ups are nimble. They can tweak their offering much faster and in a much more customer centric way than some of the larger incumbents. I think that creates enormous opportunity.”

Andrew is keen to note that Par Equity’s portfolio company Current Health, which is based in Edinburgh, has been able to turn the pandemic into a success story, demonstrating how technology can be a force for good. The company produces remote patient monitoring devices, i.e., wearable technology which tracks a number of biomarkers.

“Using its artificial intelligence, Current Health triangulates a patient’s vital signs, enabling the physician to monitor the patient remotely and make early interventions should the patient’s health deteriorate in any way. As one might expect, as a result of the corona virus crisis, the company is experiencing a surge in demand and expedited sales cycles . They’ve also just announced a partnership with the prestigious Mayo Clinic in the US to develop early corona virus symptom warning technology. AI typically requires high quality and sizeable training data, so the partnership with the Mayo Clinic has a good chance of developing an accurate solution.”

Find out more about Par Equity by visiting https://www.parequity.com.

Want to learn more about angel investing? Enrol in our course The Effective Angel Investor at http://bizangels.thinkific.com.

UKBAA

By UKBAA14 May 2020