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Excessive company valuations

One of the first discussions concluded that there was now more angel money in the UK market. There are also more propositions ready, willing and able to take that investment. This general trend was seen by most as positive although with a couple of qualifications. Although there are seen to be a greater number of deals on offer, the number of quality offerings is considered to be largely the same.

This, together with the increased pool of funding, causes some concerns that some companies are achieving unrealistic valuations. While this may sound great for founder teams, an overvaluation at a seed round may make it more difficult to attract series A money. In those later rounds the new investors (whether they are angels or VC) may find it impossible to agree a valuation that meets the expectations if those early investors.

Talk of a "valuation bubble" would have been hard to imagine 24 months ago.

Exits

There is also a general optimism about exit opportunities although most angels are still finding those opportunities hard to come by. Angels by their very nature may be eternal optimists but a number if them are now taking serious steps to educate and train management teams on the subject of exits, almost immediately following investment.

Syndication, co-investment and collaboration

Another trend has been the almost universal adoption of deal syndication across investors and other collaborative techniques. Indeed the UKBAA is to launch its own platform to help foster such syndication.

Crowdfunding

Some discussion on crowd funding highlighted the need for funding platforms to be incentivised to ensure the quality if their investment offerings but the general sentiment was that crowd funding is able to co-exist alongside the more conventional sources of capital.

Angel CoFund Extends Its Reach

Finally, for readers in Scotland, the big news of the day was that the very well regarded Angel Co-investment Fund, which has similarities to the long established Scottish Co-investment Fund but was previously restricted to England, is now open for business in Scotland.

Prognosis

The intention of the conference was to take the pulse of the angel community and based on the core messages, all vital signs are good. However, as anyone that has ever been on a personal fitness regime would confirm, you can't "put it in the bank" and to stay fit, you need to keep working at it and the same is probably true of the early stage investment community.

While the UKBAA findings are based on strong empirical data, it’s impossible to measure the entire spectrum of deals being done. Do these trends ring true of your experiences? I'd be interested to hear your thoughts in the comments below.

Kenny

kenny.mumford@mbmcommercial.co.uk

0131 226 8205

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