How the Halo effect has brought some spectacular vision to a range of companies
Joanne Stuart of Catalyst Inc looks back over eight years of investments by Halo, the Northern Ireland business angel network, as plans are being developed for the organisation's next evolution
From cows, through digital search, baby products and even films, Halo angels have seen a huge variety of companies over the last eight years. Now, with nearly £30m invested and some big changes coming to Northern Ireland’s angel network, what difference has Halo made?
The answer is that for some of the companies who received funding and of course for the angels who backed them, the Halo effect has been pretty spectacular.
In this article we take a quick guided tour of the six counties of Northern Ireland to get a taste of some of the interesting companies who received funding via Halo.
Halo itself kicked off at what was then the Northern Ireland Science Park, now Catalyst Inc, with around 15 business angels. Since 2009 this has grown to over 200 angels and funds, with over one-third based outside Northern Ireland.
The basic idea of an angel network is to arrange for experienced people with money, the ‘angels’, to be introduced to companies with great potential. These investments can bring about an economic boost to the area, as the companies grow more quickly. This economic development argument is the reason that Invest NI has provided significant funding into the administration of Halo.
Angels bring more than ‘just money’. Their connections, experience and strategic advice often turn out to have the biggest effect. Of course not all pitches result in investment.
Halo typically pitched 50 companies each year to achieve 10-12 investments which is a typical figure for networks nationally.
Our tasting tour starts in Belfast with Shnuggle who recently appeared on Dragon’s Den with their innovative baby products. Long before this however, they won Halo backing, gaining a group of experienced angels. Since then turnover has grown 10 times over and they plan to become a £10m company by 2021.
“The entire process of seeking investment through the Halo angel network has transformed the company,” co-founder Sinead Murphy explained.
“We were a start-up company on a small scale. Looking for investment forced us to focus on our growth strategy for the future and on delivering results, not just for us but for our new Investors.
“Through the Halo process, we secured investment from four individuals and an institutional investor.
“Having access to their expertise as well as their contacts also helped to open other doors,” Sinead added.
Exporting to over 20 countries, Shnuggle’s products are now in John Lewis and Mothercare.
Not all companies are start-ups. Our next stop is Derry where BubbleBum already had sales of over £500,000 across over 20 countries when they pitched at Halo.
Their colourful inflatable booster seats are now a common sight, not least of all at airport vending machines.
The significant investment, which followed the Halo pitch, accelerated the company. With revenues of $4m, their products are available globally, including Wal-Mart, Target, Toys R US and Amazon. Founder Grainne Kelly is proud to have created 12 jobs in her native city.
It is great to see the success of the companies, but the investing angels need to make some money too. If they don’t, then new investments are going to dry up pretty quickly. However the gestation period for angel investments is long — reports suggest six years on average.
So Halo has done well to have three successful exits so far.
The first was FarmWizard whose innovative digital management system was sold to a Duke of Westminster company. Sophia Search found an acquirer and market partner in Boxfish which has transformed the prospects for their intelligent search technology. Halo money also helped PathXL along the way to be ultimately acquired by Philips Medical and become a major development centre based at Catalyst Inc.
Returning to our round-Ulster tour, Portaferry is the base for Just Live a Little whose export-based food company has created four jobs directly and the same again in suppliers. Their granola-based products are now stocked in Waitrose and Tesco, key targets from their pitch to a Halo audience at an event in Stormont. The result is exports to 12 countries and a 600% increase in sales. You can find their products as far away as Dubai, Taiwan and China!
As an organisation, Halo has also had its success. In 2011 it was awarded the British Business Angel Association ‘Best Angel Network’ in the UK. It has pioneered the use of video, long before the advent of crowdfunding made this popular. And its highly innovative ‘Halo Brief’ technology delivers 90-second elevator pitches in a very time-efficient and secure way.
Continuing on our tour, Portadown is the location of company MyCarNeedsA.com. Since their initial funding, over 750,000 car owners have booked £1.5m-worth of MOT, servicing and repair jobs across the UK through their site and more recently their new smartphone app.
Managing director Scott Hamilton said: “My vision for the business was to help car owners find trustworthy garages to carry out MOT, servicing and repairs at a price and location that suits them. I also wanted to demonstrate that franchised dealers weren’t as expensive as car buyers believed and also give independent garages a level playing field to compete on.
“Technology is playing an ever greater role in delivering visibility and efficiency into the customer journey and relationship with the dealer or workshop.
“Our research shows that 39% of car owners don’t choose a garage based on price and that the work we pass on is split 50:50 between franchised dealers and independents.
“We pitched twice at Halo, each time successfully, and in conjunction with other sources this has enabled us to build a really exciting business.”
Who would have believed that customers in the US would send mail from India to Lisnaskea to be printed and processed for the UK postal market? Yet this service, provided by Hybrid Mail Solutions, means mailings are cheaper, faster, greener and more secure, removing the hassle of printing letters and stuffing envelopes.
Revenue to date is over £2m, with annual growth a mouth-watering 85%, and three jobs created so far.
The final destination is Mid Ulster where we find Farmvet Systems in Magherafelt.
George Brownlee was one of two veterinary surgeons who were finding it increasingly difficult to meet the growing demands of farm clients, as George explained: “Farmvet is one of those ideas borne from frustration with the inefficiency in the profession I was working in and in my every-day work.... It was time someone did something about it.
“It was time for vets to be better equipped to serve the needs of modern farm clients.”
This was the genesis of Farmvet which now has 10 staff, over 1,000 vets signed up and significant sales.
This type of story is typical — a good idea, borne out of experience, just needing the right help — both financial and experience — in order to create a great business.
The last eight years have been very successful for Halo and for Northern Ireland. However, nothing remains constant. Catalyst Inc, which has delivered Halo from the start, will cease its involvement at the end of this month. Part of a bigger reorganisation this will ultimately see Halo become an integral part of an all-island angel network.
The Halo team of Alan Watts and Paul Clancy have become well known figures in entrepreneurial funding here.
After Halo, they will remain at Catalyst Inc where they will be concentrating on matching funding sources for the high quality and ambitious companies graduating from the Connect Springboard programme.
Before handing over the Halo mantel, we challenged them to put their reputations on the line and name firstly, the Halo companies who are the ones to watch and secondly, those which came to Halo but didn’t take money — the ones that got away.
Halo director Alan Watts tips Locate a Locum, an online platform that matchmakes locum pharmacists with pharmacies who need pharmacists for cover, as one to watch.
As for the one that got away, he names Plotbox as a great company which didn’t take Halo money despite pitching to Halo Angels and at Pitch at the Palace in St James Palace. Plotbox, who use drones to map graves, are planning to reach 60 staff, building on their success in the USA.
Halo manager Paul Clancy rather fancies Sensum with Brainwave Bank as one he would have liked to have in the Halo stable. Sensum measure human responses to adverts which allows fine tuning and considerable savings for advertisers.
The technology used by Brainwave Bank helps track progressive deterioration of the brain to fine-tune treatments. They pitched at Halo but chose to take their funding from other sources. Paul cites the quality of the management team as one of his reasons for tipping them.
That’s the end both of this Taste of Ulster tour and of Catalyst Inc’s involvement in Halo.
Looking back over his Halo period, Alan Watts sums it up with reference to the network’s investment in Terry George’s award-winning short film, The Shore.
“When we started with Halo we had no idea of the variety of companies we would see, what great people we would meet and, to be honest, how much fun we would have in delivering such an important service,” he said.
“I never would have believed for example that my name would be on the credits of two films, at least one of which won an Oscar — all down to angel investment.
“As well as creating jobs and wealth, some Halo companies also help society. Komodo, led by Ged McBreen, transform what can be a nightmare for some kids into maths that is a pleasure to learn. This opens up doors into science, technology, engineering and — well — being an entrepreneur!
“The nature of angel investing is that there are more failures than successes. So, sadly, we’ve seen some great ideas which simply never made it.
“But the most important thing for me is seeing the companies and their angel investors working together and making a real success from great Northern Ireland ideas.”