Angel investor profile: Braveheart
Geoffrey Thompson, Braveheart co-founder, talks to GB about the British investment market and the environment for angels today
Geoffrey Thompson is chief executive and co-founder of Braveheart Ventures Ltd, an investment management group founded in 1997. The company is one of Britain’s largest investment firms, offering a range of services including enterprise investment scheme (EIS) portfolios, fund management, investment facilitation and management services. Braveheart has completed over 100 deals during its 14-year history, and its directly-held portfolio embraces 27 different businesses.
After Braveheart’s recent stock market placing, Thompson spoke to us about its new project to stimulate angel investment in the north east, and the overall state of the British investment market.
You’ve been asked to replicate the work of the Viking Fund, which has been hugely successful in Yorkshire, in the north east…
Yes. Viking [a subsidiary of Braveheart] created the Yorkshire Association of Business Angels (YABA), which has now been around for a long time. It’s a not-for-profit organisation that co-ordinates the work of business angels in Yorkshire. Viking used to put money into a fledgling business, and invite YABA to do the same. We’ve been asked to do something similar by North East Access to Finance. Andrew Burton (MD of Viking) is delivering the contract in the north east, looking to get a dozen or two dozen high net worth individuals involved. We’re using the YABA back office for the north east. There are various [angel] groups in the north east already, and North East Access to Finance wants us to co-ordinate them, and give the whole thing a bit of oomph.
Will you be rolling out similar initiatives in other parts of the UK?
We have an investors’ franchise in the north west, called Investors North West, and we are talking to a number of other people about doing similar things. Business angel organisations have had some help from the Regional Development Agencies (RDAs) historically, and that’s drying up now [that the RDAs have been replaced by Local Enterprise Partnerships]. Braveheart and Viking are happy to step up to the gap left by the RDAs, but it’s all about showing the business angels how they can operate profitably.
Is it a struggle to run an angel syndicate profitably?
One man running a business angels syndicate could be spending £100,000 a year on overheads, and has to make £2m a year to break even. That’s probably eight deals, which is quite a lot of work. He has to find the opportunities, structure them, and find investors to make £2m of investment. The new English Co-investment Fund will help because there’s money there to match angels’ investments, so the guy may only have to make £1m a year. But it’s still tough.
What are your tips for running a successful syndicate?
To run a successful angel syndicate, you have to have the right kind of people behind you and present the right kind of package to your investors. Angels like to come in and make, say, five investments, of which two may go wrong straightaway. If they lose a shedload of money in the first five transactions they will leave very quickly.
What sort of success rate can angels expect at the moment?
The success rate for investee companies completely depends on which stage of the market you’re at. If you’re at the lower-end, you might well expect 50% of your investments not to make it, but it’s totally down to the individual case.
Are there many companies offering the sort of service Braveheart provides?
There aren’t many companies doing what Braveheart is doing. We provide a full investment management service for our small businesses, we also provide a business angels DIY service via Envestors, and a fully managed fund via Viking, so there are plenty of options.
What would you say to a high net worth individual who’d rather strike out on their own than join a syndicate, or get help from a company like Braveheart?
Angels think they like to do things on their own, but if you’re on your own you get all the rubbish deals people have said no to already, you have to spend money on your accountants and money on your lawyers. If you partner with others, you’ve got some experience and guiding lights to help you. It’s actually quite hard to find an angel who wants to do everything themselves.
One guy I spoke to recently said there was a real buzz around cleantech and biotech within the angel community at present. Do you share this view?
Cleantech is a good route at the moment, biotech is not. It eats money. Ultimately, it depends on the angel – some like traditional industries, some prefer the zippy industries of tomorrow.
Is there much appetite for becoming an angel at the moment? What sort of things are angels expecting from the businesses they invest in?
People are still pretty cautious about becoming angels, because of the economic cycle. Tax breaks help a lot, but we need to up the ante a bit, by talking to people like you, going to events etc. Angels vary so much, ranging from the guy prepared to lend £100,000 for 5%, to the guys who want a physical desk.
Given the controversy around bank lending, how important a role do angels have right now?
Angels have a more important role to play than ever at the moment. The government can say to the banks whatever it likes, but the banks will do what they want to do. There’s a real opportunity now for angels to get to the stage where they provide more later-stage funding.