One angel investment deal targeted a Belgium-based company in January

There have been 11 angel investments worth an aggregate EUR 43 million targeting companies based in Western Europe announced in January 2019, according to Zephyr, the M&A database published by Bureau van Dijk. While value in the opening weeks of 2019 represents the lowest recorded result since August 2016 (EUR 34 million) there are still seven more days to go until the end of the month, suggesting there is time for a small number of sizeable angel investments to be made which could help boost value for the month under review. However, it does look unlikely that both volume and value will reach the 83 deals worth an aggregate EUR 251 million recorded in January 2017. While value in January 2019 is disappointing when compared to December and January of 2017, the figure represents 8 per cent of angel investment globally as 50 deals worth an EUR 573 million have been announced worldwide over the last three weeks.
Angel investment activity targeting Western Europe is off to a slow start following a record-breaking year in 2018, as each month recorded value of more than EUR 100 million, totalling EUR 2,758 million for the entire 12-month period (2017: EUR 1,942 million). However, December did represent a decline of 49 per cent on November as EUR 193 million-worth of deals were announced, compared to EUR 381 million a month earlier. That being said, Q4 2018 ended higher than Q3 with 146 deals worth EUR 762 million, up by value from 152 deals worth EUR 697 million quarter-on-quarter.
On a global scale, the value of angel investment improved when compared to December, despite there still being seven days until the end of the month, as 50 deals worth a combined EUR 573 million were recorded in January 2019, compared to 98 deals worth EUR 569 million in December. The increase in value against the decline in volume suggests angels favoured single deals with higher individual valuations over prolific dealmaking in the year-to-date. Like angel investment in Western Europe, despite there being seven days to go until the end of January, global investment in 2019 looks unlikely to exceed January 2018, when 214 deals worth EUR 1,336 million were announced. The largest of these deals signed off in January 2019 was worth EUR 159 million and involved Bakkt Holdings, a US-based cryptocurrency and digital assets provider, receiving cash from the Boston Consulting Group, Horizons Ventures, Galaxy Digital Entertainment and angel investor Angel Howard. The second-largest deal globally involves Sachin Bansal injecting EUR 87 million into Indian online mobile taxi booking platform ANI Technologies. The highest-placed Western European was eighth globally as SCA Investments, a UK-based online food boxes delivery service, received EUR 20 million from “Lean In 15” cookbook writer and lifestyle and fitness coach Joe Wicks, as well as Hargreave Hale, MMC Ventures and Angel CoFund, among others.
For Western European targets of angel investors in January 2019, this deal represented the largest by far and away as the second-biggest deal was worth just over a quarter of this amount, at EUR 6 million, as angel investors, Felix Capital Partners, Cassius Capital and Cherry Ventures Management injected capital into UK-based Menwell.
One deal stood out in the month under review as it was the only one to target a Belgium-based group. This deal involved five individual angels making a EUR 1 million investment in online live or distance learning software-as-a-service provider Wooclap. This deal is one of 98 announced angel investments to target Belgian companies since the start of 2006. The largest of these was worth EUR 65 million and took the form of a series B funding round by iTeos Therapeutics, involving business angels, MPM Capital and Curative Ventures, among others.
In conclusion, January 2019 has started slowly, compared to a record-breaking year in 2018; however, is too early to see what this means for the remaining 11 months of 2019. Only time will tell if investment levels will increase in 2019; as angel investment has improved over the last two consecutive years, 2019 could ultimately surpass 2018.
© Zephyr

Alex Sleigh, Investment Director at Newable shares his thoughts on trends from last year, what to expect for 2019 and how the upcoming year will impact businesses at the heart of the economy.

EBAN Member Newable Private Investing (NPI), part of Newable, connects innovating, fast growing technology companies to equity finance. NPI arranged 16 deals in 2018, investing £3.5m alongside £14m of co-investment.

A review of 2018

The 2018 global venture capital market was characterised by the rise of the “supergiant venture round” (companies raising rounds of +£75m) such as the $3BN investment into WeWork or the $250m investment into Revolut.
This trend has trickled down to the early stage investment market with average investment round sizes being higher than ever before (albeit compared to 2017 less rounds taking place). For example, in 2018 the average round size that NPI participated in was circa £1m versus £600k in 2017.

Impact on businesses

Companies that raise funding tend to be properly capitalised and better placed to ride out any macro uncertainties. We think this is a positive development as it means that fast growth businesses have more of a “cash runway”. Entrepreneurs can therefore spend more time building their business and less time trying to arrange additional slugs of funding from investors.
Funding rounds are more than ever, typically syndicated with groups of investors co-investing alongside each other. In 2018, NPI co-invested alongside a number of VCs and corporates such as Oliver Wyman and Octopus Investments. This is very good news for emerging companies. A diverse set of investors is a strong signal that the business has potential. It means that entrepreneurs can tap into a range of expertise and contacts. And, of course, the co-investors represent a ready source of additional investment down the road.

Challenges faced by businesses

There are a number of  challenges the companies we support face . Access to talent is one, as it is more competitive than ever to source the right talent especially in the digital/software space. Entrepreneurs have to adopt an agile and flexible approach to recruitment. For example, the use of option packages may be a way to woo talent.
GDPR has meant that the “spray and pray” approach to marketing to prospective customers is no longer viable. Companies need to adopt more innovative and targeted approaches to marketing driven by technology and metrics. Cognism and Cyance are good examples of the new wave of marketing technology businesses.
Access to funding is still an issue for many businesses, the UK has a significant funding gap at the pre Series A stage. Newable is aiming to address this by providing funding to companies that have the potential to raise a Series A round shortly thereafter.

Opportunities

Alongside equity funding, there are plenty of opportunities for deep technology companies to tap into Innovate UK grant funding. Other agencies such as the European Space Agency (ESA) can also provide such funding. Working alongside our grant funding partner PNO, NPI helped companies to win +£4m of grants.
The November 2017 budget refined the rules for EIS qualifying investments. The intention was to focus early stage investment into what are called Knowledge Intensive Companies (KICs). The result has been a significant reduction in “asset backed” EIS investment schemes.  Investors and their intermediaries now have a much better understanding that EIS investing is not about “capital preservation”. We will see a number of high quality EIS Funds getting significantly more attention in 2019. HMRC’s current consultation on a new EIS approved fund structure has the potential to make a big positive impact on the early stage market.
On a personal note, I am excited to see a number of our portfolio companies start to really mature. In particular, look out for Astrid & Miyu (e-commerce), Blu Wireless Technologies (semi-conductors), City Pantry (catering) and Rezatec (earth observation).

Europe boasts a strong space sector. This is largely the legacy of successful space programmes, particularly those on satellite navigation and Earth observation, mostly built on public support. However, the space sector is undergoing unprecedented transformation and development on a global scale. Major technology advancements, a new entrepreneurial spirit and a renewed policy focus have put the space sector under the spotlight on the global innovation stage.

Such rapid and constant transformation calls for new approaches to funding and supporting space ventures. The global space economy grew by 6.7 % on average per year between 2005 and 2017, almost twice the 3.5 % average yearly growth of the global economy. One particular contribution to this growth has been the “NewSpace” phenomenon: a series of technological and business model innovations that have led to a significant reduction in costs and resulted in the provision of new products and services that have broadened the existing customer base.

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