Helping start-ups spread wings
From Belfast to Dublin and New York to Singapore, a cross-border network is linking early-stage 'angel' investors with the enterprising business stars of tomorrow, as Adrian Weckler finds out
Syndicates of angel investors in Ireland and overseas have placed €100m in tech start-ups with backing from the Halo Business Angel Network. Halo - a cross-border initiative by Enterprise Ireland, Invest Northern Ireland and InterTradeIreland - has been connecting potential investors with promising but cash-poor start-ups since 2007.
Halo's all-island director John Phelan said reaching the €100m "milestone" reflected how the number and volume of angel investments had roughly doubled in recent years - and keeps on growing.
This accelerating growth "reflects the energetic start-up culture across our cities and regions", he said, "and shows that the business angel community is very active too. It is a buoyant, exciting community and can be a very rewarding experience".
He said that Halo's recruitment of 'angels' - those willing to invest €50,000 to €250,000 per start-up - had resulted in the formation of 15 regional networks and syndicates, including three in London, New York and Singapore. The investors in these groups typically hear pitches from 150 firms annually, of which around a third win investment.
Individual angels - so-called because they invest in unproven ventures not yet able to win bank loans or venture capital - on average invest in four to five start-ups a year, according to Halo data.
"We know what our angels look for in an investee company. It's our job to ensure we find those companies and give them the advice that will help them secure critical investment," Mr Phelan said.
"By securing angel investment, those businesses are then more likely to leverage additional funding from other sources. That is very powerful."
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Over the past 12 years, he said, the €100m in Halo-driven angel investment has helped to leverage another €170m in follow-on investment.
Last year, Halo-backed angels put €9.3m into 44 start-ups. Securing that finance in turn helped the fledgling firms leverage €27.5m more from public and private sources, including funds managed by Enterprise Ireland.
"Building a strong funding ecosystem at each stage of the funding journey for start-ups is of critical importance to the success of Enterprise Ireland client companies," said Kevin Sherry, EI's executive director of global business development.
Among the most recent beneficiaries of Halo-promoted angel finance are We Are Paradoxx, a Belfast hair care brand that has just completed its first major fundraising round.
Some £580,000 (€676,000) of the £1.5m total came from Halo's Ulster-based network coordinated by Clarendon Fund Managers. It focuses on investments in the IT, ICT and medtech sectors up to £500,000, in return for minority shareholdings.
Halo's angels only invest in specific emerging technologies, including agri-tech and innovations in food production.
Retail, real estate, restaurants and tourism are among the excluded sectors.
According to its criteria guide to entrepreneurs, Halo says its syndicates seek start-ups that have launched to market and are generating sales. They also consider medtech and life sciences firms, as well as university spin-outs that have commercially viable products yet to reach the market.
Those ruled out for consideration are firms still formulating their product idea, those that want funding to build a prototype, or are at MVP stage, short for 'minimum viable product', and where the business concept has reached only its initial stage of development.
Entrepreneurs who make the initial cut are provided with one-to-one coaching from a Halo adviser in preparing their investment sales pitch.
The Halo programme has grown increasingly international, with syndicates formed in 2015 in New York, 2016 in Singapore and 2018 in London - all of them led by prominent business figures from the Irish diaspora.
They typically get involved only once angels within Ireland make the first commitment.
The Digital Irish Angels group in Manhattan was founded by angel investors David Beatty, Feargall Kenny and Shane Naughton.
Singapore's syndicate was forged by Galen Murphy, the UCD-educated director of investment services for Crossbridge Capital in Asia.
The London syndicate invested almost €700,000 into five companies within its first nine months.