In my last post, "Where money meets Insurtech. How our startups are being funded", I explained how on 20 March we’d turned the tables at the Instech London events and invited some professional investors to make their pitch to our 200 strong audience in the Steelyard, almost half from the startup or innovation world. I provided some background context to the options for raising early stage funds and introduced our nine investors. Over the next couple of weeks there will be a chance to hear what the investors had to say, and how they fit into the overall investment scene.
Angels Den is one of the larger and more established business angel networks, 10 years old and very accessible to the new or part-time investor. For those exploring the idea of angel investing but unsure what it involves, Angels Den provides a gentle introduction to this world. It has an informal club format, with free seminars and direct access to entrepreneurs and other investors at its regular events in London, with an engaging and patient team. The Speedfunding Club is particularly useful for new entrepreneurs and investors, providing short but intense rounds of pitches to potential investors that help hone the story and test out the proposition.
A new focus on Insurtech
Chris Wheatcroft, a one-time entrepreneur himself, was the first of the invited professional investment companies to talk at Instech London on 20 March. Chris runs three separate parts of the business: the Tech Club, Fintech Club and the Professional Investor’s Club. Angels Den breaks FinTech itself into four specific verticals and Chris ran his first Insurtech specific club in November.
Angels Den runs 2-3 events every month. The typical format is for four companies to present a 10 minute pitch with 10 minutes Q&A, followed by 10 minutes discussion amongst the investors without the entrepreneurs in the room. This last 10 minutes discussion amongst the investors often gives a fascinating insight into how other investors think and is a very valuable part of the assessment process. These sessions are even more effective when the lead investors are on hand to share their own experiences of the company and reasons for investing.
Alongside the pitching events, Angels Den often provides free seminars for its members covering topics such as performing due diligence, determining valuations and mentoring startups. These events provide a chance to meet other potential investors and share ideas over a drink.
Chris emphasised the need for a good lead investor and his observations are true for almost every early stage investment. Finding the right lead investor can take time for an entrepreneur but is critical for a startup. Assessing the credibility of the lead investor should also be a key part of the due diligence process by potential investors. The lead needs to have a meaningful sized investment in the company and be investing in the current round at the same valuation as other angel investors. They must be credible from a market or investment perspective and they will bring extra value if they are already well-regarded in the industry. They can’t be related to the management of the company. The best lead investors will be willing to speak to other investors about their rational for investing and what they like about the business.
Fund raising for seven Insurtech Companies
Insurance, said Chris, is an interesting vertical for Angels Den just now. Digital Risks was the first Insurtech company to raise funding through Angels Den, achieving £150,000 in March 2016. Angels Den presented four more companies at its first pure Insurtech Speedfunding event in November 2016 with four companies pitching (Digital Fineprint, HNS Data, Risk Solved and Quantifyle). (Erik Abrahamsson and the Digital Fineprint team are old friends of Instech London and they will be presenting on 24 April at our Social Media note). Buzzmove and Kasko have also raised funding through Angels Den and funding for Rightindem is open just now.
Angels Den uses its online platform to support the investment process, providing business plans and shared documentation to registered members. According to Chris individual angel investments average about £25,000. Some investors prefer to build up a large portfolio and investments in an individual company may be as low as £5,000. Chris and his colleagues get the best deal flow from entrepreneurs they have already funded and other investors within the network including Sam Evans from EOS Venture Partners, who was talking later that evening at the Steelyard.
Chris wrapped up by reminding anyone involved in fund raising that despite the different demands on their time, not being responsive to investors is a serious red flag.
Worth a look...
Angels Den is still finding its way into the Insurtech world and provides fairly limited exposure to Insurtech companies just now, but whether you’re an investor, entrepreneur or just curious I’d recommend getting to know them better. Consider attending one of their events to get a feel for what the coal face of angel investing looks like, for both the investor and those raising funds. If you don’t know your pre-money from your post-money, or wonder how a company with no revenue could be valued at close to $30m, the educational seminars provide some great insights and help you get to grips with the language of investing.
The video of Chris’ talk on the night can be accessed on the Instech London YouTube channel and he is always happy to hear directly from anyone interested in learning more.