Regional Angels Programme and supporting founders through the COVID-19 pandemic: Dow Schofield Watts Director David Smith shares his experiences so far
We’ve been shining the spotlight on the three partners of the Regional Angels Programme over the past few weeks by speaking with Par Equity and Startup Funding Club. For our latest UKBAA Blog feature we caught up with David Smith, Director at Dow Schofield Watts to discuss the £10 million commitment from British Business Investments, find out more about what they do and to talk about how they’re supporting their portfolio through the COVID-19 pandemic.
Dow Schofield Watts (DSW) is a financial services group that is involved mainly in mergers and acquisitions advisory work for the SME market. Established in 2002, the firm has offices in the Northwest, Yorkshire, Scotland and London. Around a decade ago, DSW added a private equity investment operation and in 2018 they set-up Dow Schofield Watts Angels (DSW Angels). Explaining how DSW Angels works, David shares:
“Our money comes from private clients of the firm who have sold their businesses through us and like working with us. DSW Angels operates on more of an institutional than a syndicated or an ad-hoc basis, but we don’t run a fund for them. We refer back to them and they make their own decisions about whether to come in. They get to meet the entrepreneurs and they get to get involved sometimes as well. We made our first investment a couple of years ago. Since then we’ve made five investments.”
Discussing the advantages of working with angels, David enthuses:
“The advantage of working with angels as opposed to running a discretionary management fund is that we get input from the angels. We tend to find the most active ones sit on our Investment Committee. We’ve got some really brilliant people and some very high-profile people there. Those are the ones who are most likely, at any point in time, to roll their sleeves up and say, ‘I can help out here’. They’ve been remarkably helpful both in terms of sales referrals and leads, technical support and ideas – referrals to people who can help out on anything from security to new platform ideas – or in one case, just rolling up their sleeves and really helping out and redesigning the whole marketing strategy. It’s the added value from the angels that we find helpful.”
DSW Angels is focused on the regions and doesn’t invest in London. It is sector agnostic but the bulk of their investments go into tech-enabled businesses. Last September British Business Investments committed £10 million to DSW Angels as part of the Regional Angels Programme and DSW Angels has now completed its first investment under programme.
“The advantage of working with angels as opposed to running a discretionary management fund is that we get input from the angels.”
“We completed One Utility Bill as our first transaction with them. That total round was £1.7 million, which we would not have been able to deliver without the Regional Angels Programme. We invest as individuals, we do about 20% from the team at DSW, as well as our external angels. The other monies that took it to £1.7 million came from Northstar and some other incumbent investors in that business. We wouldn’t have had the firepower to deliver that level of funding. It would have been either no deal or a much smaller and disappointing deal.”
With the COVID-19 pandemic affecting businesses all over the country, DSW Angels has had to adapt what they do in order to support investors and founders. Detailing what they’ve been doing, David reveals:
“We’re having constant management meetings. Initially we were in touch all the time and then we reduced it to a few days, then every week. We’re down to fortnightly formal calls at the moment, although they do get in touch in between. We’re helping them with funding, grants, CBILs loans, Bounce Back Loans, Future Fund – trying to interpret that – and through a bit of lobbying through Jenny (Tooth) about how the funds could be better delivered. We’re also helping them navigate furlough schemes and trying to redesign strategies.”
While the pandemic has affected businesses differently depending on their personal situations, sector and a number of other key factors, David says that the impact on DSW Angels’ portfolio has been mixed.
“It varies from company to company. We’ve got an e-commerce platform which has been very successful. They’ve been remodelling their platform to allow restaurants to do home deliveries and that’s been selling very well. Our online retailer was knocked backwards really badly but oddly enough because people can’t get to the shops they’ve been doing better than expected. Things that are delivered in real world where people have to get together, have been really knocked for six so those companies are trying to reinvent themselves.”
Looking at the current landscape, David is optimistic about what he’s seeing emerging. Since DSW Angels launched, David says there’s been gradual developments of the earlier stage funding environment.
“We launched DSW Angels because the funding environment was so bad. It was basically the Northern Powerhouse Investment Fund and not much more. We’re starting to see a few new entrants and people who have been around for a while, such as Praetura, starting to offer more money and increase the size of the teams. I’ve noticed a general increase in the number of people I bump into who are individually, or through ourselves or the syndicates, actually operating as angels.”
Find out more about DSW Angels at https://dsw-angels.com.