Thursday, 29 September 2011

AerialCell Receives Funding

Chrysalis VCT have invested in the telecoms infrastructure services company AerialCell. The funding is to provide development capital to drive business growth in the installation, decommissioning, optimisation and maintenance of telecoms antenna and transmission equipment.

Chris Jennings, the Investment Manager for Chrysalis VCT in the South West said “we are very excited about this opportunity to work with such a great team at AerialCell and to invest in a sector with such bright prospects”.

AerialCell were advised by Alan Cottle at Pegasus Funding Resources for investment readiness, financial modelling services and throughout the process, and Simon Merrall at Withy King for legal services. Alan Cottle,Pegasus Funding Resources said:- “We are very pleased with the result of this project. From the point that we introduced our client to Chrysalis we have enjoyed the relative ease at which all the parties took the client through the process to a successful conclusion.”

Simon Merrall said “there was a high degree of motivation on all sides to get this deal over the line. This meant a sensible and pragmatic approach was adopted by the parties, which makes a real difference when trying to keep to a tight timetable.”

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Tuesday, 27 September 2011

Are Angels alive and well in the UK?

The answer is a resounding yes and they have become even more important with the Banks dragging their feet when it comes to lending to SMEs. I thought it might be interesting to share the following general statistics with you, concerning Angel Investment in the UK.
Last year Colin Mason (University of Strathclyde) and Richard Harrison (Queens University Belfast) completed their 102 page report on the state of the UK Angel Market. The report was compiled from 20 of the 24 Angel Networks that belong to the British Business Angels Association.
These are just a few of the findings:
·         The average mean investment was £192,634
·         233 business received Angel funding
·         The average number of investors in each business was 2.5
·         The mean investment per investor was £77,053
·         Total UK investment was £63.8m
·         There are 5,500 registered Angels
·         Only 10% of all business plans ever get shown to investors
·         58% of deals were funded by a single investor
·         30% of deals had less than 3 investors
·         8% of deals were for more than £500k

In another survey carried out by YFM companies that had successfully raised Angel funding gave their top tips on raising equity finance:

·         Bring in expert advice, not using advisors was a false economy
·         Consider equity as your first port of call, this will make it easier to attract Bank finance
·         Do not put all your financial eggs in one basket. The more channels of finance you have in your business the better
·         Talk to a number of funders to ensure you get the best fit for your company and always chose a proactive investor with an adventurous spirit
·         Raise more than you need. Think of raising finance as a way of building your company for tomorrow, not as a way of fixing today’s problems. Always mention upfront if you will need follow up funding.
·         Think about investors as not only providing money, chose the ones that can help you with strategy, contacts and new markets. Banks are only interested past performance and projections
·         Ensure that potential exit opportunities are flagged up and looked at as they arise and not in three years time
·         Always remember that raising finance takes longer than you think and will also be more costly than you planned
Angels are alive and well in the UK and come in many shapes and sizes. Remember Angels are interested in investing in companies at any stage of their growth and there is even one network that specialises in turnaround situations. An Angel investment does not always have to be an equity investment, many also like to provide debt funding as well or even a mixture of equity and debt.
When the Banks turn you down think about looking for an Angel.
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Monday, 26 September 2011

Good News for Angel Investors

The European authorities have now given the go-ahead to George Osborne’s changes to the Enterprise Investment Scheme that he set out in the March Budget.
This means that the income tax relief that is available will increase to 30% from 20% and will be backdated to April of this year. The annual limits on such investments in fast growing companies will also be doubled to £1m from April 2012.
It is expected that this increase will deliver up to £100m a year of income and capital gains tax relief.
The Enterprise Investment Scheme is aimed at investors who invest in fast growing companies and in 2008/9 it provided 1800+ companies and raised over £500m.
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Monday, 19 September 2011

I Hate Invoice Discounting & Factoring!

This was a cry that I used to hear frequently from managing directors of SMEs. When I asked them why, it became clear that some were speaking from past experience and others just repeating what they had been told.
Why has one of the best and most useful forms of funding got such a bad reputation in some quarters? The answers date back from a few years ago and certainly pre-recession.  In those days the providers could pick and chose who they would do business with and were inflexible with their terms and companies were growing so fast that they needed this type of finance to avoid over-trading and were not particular about whom they obtained it from.
The providers would:
·         Insist on the client putting their complete debtor ledger through the facility, even those invoices where payment was made promptly
·         Demand a full personal guarantee from all of the directors
·         Impose a 3 year agreement with a 6 months cancellation clause added on the end
·         Make factoring clients give up the control of their own debt collection
·         Not disclose all the hidden charges that greatly increase the costs
The recession, however, has changed the market place dramatically. The tide is turning away from the big Banks and towards smaller independent providers.
These independents are much more flexible with their terms and conditions and the financial products that they offer.
Some of the biggest changes include:
·         Specialist providers that concentrate on single industries, so that their knowledge and understanding of that sector’s challenges, makes transacting business with them much simpler. These specialist sectors now include:
§  Construction
§  IT
§  Contractual debt
§  Care Homes
§  Pharmacists
§  Auto body shops
·         Selective Invoice Discounting and Factoring. Many companies do not need to undertake full debtor ledger facilities. They would like to have a provider that will just take a few invoices at certain times of the year, such as when the VAT, or corporation tax is due, or when a large order stretches their cash flow to the limit. There are now four providers that offer this selective service. There is a one off set up fee and then the client can decide when and how often they wish to make use of it.
§  Linking selective invoice discounting to trade finance is another interesting new development. Normally the provider would want to link the trade finance to a full ledger Invoice Discounting facility, which makes it very expensive. Now there is now a provider that will link the trade finance on a single shipment of goods, to only those invoices that are related to that shipment.
·         Personal guarantees are still required but now they can be limited to just 10 to 15% of the facility limit.
·         The introduction of new factoring products such as CHOCCS and Agency factoring where the client still collects their own debts.
·         Standard agreements are now offered of only 12 months with a 3 months cancellation clause. Some providers will offer even shorter contracts or 6 months get out clauses.

So the moral of the story is that the Invoice Discounting and Factoring World has changed with the times and that the independent suppliers are much more flexible than the Banks, so shop around and do not take the first offer that is made to you. The providers now need your business so negotiate, negotiate, and negotiate and you will get a deal that suits you and not one that just suits the provider.

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