Welcome to Beer & Partners Funding Site

October 09

We aim to keep you informed of developments both within and outside Beer & Partners, providing a useful insight into Venture Capital throughout the UK and on any opportunities or events that could benefit you.

This issue includes:
-    Our upcoming investment fair
-    An acquirer looking for media content businesses
-    An investor looking to buy stakes from existing investors
-    Article - A crisis in venture capital?
-    Guide - How to secure funding

If anything you see here is of interest, do please let us know.

London Investment Fair 3rd November 2009
We are actively seeking companies who wish to raise between £100k and £2m finance for their businesses. Our London Investment Fair is being held on 3rd November and typically attracts over 130 investors on the day. As a result of the previous edition of the fair in May, we have already raised funding of over £500k and negotiation are ongoing for an additional £1.3m.
Our angels are looking to invest into private companies that can show:  

A clear and rational business plan demonstrating significant growth;  
A management team that has the ability to create profits, particularly through capital growth for investors;
An exit strategy, perhaps through a public offer, trade sale or buy back;  
A realistic valuation for incoming funds.          
If you are interested in finding out more or know someone who wishes to raise finance for their company visit our website or contact Rod Beer on 08701 633 033 or email beer@beerandpartners.com

Acquisitions sought
We have a contact who runs a large media content business that is seeking acquisitions of established and profitable companies in the following sectors:

Media content production companies with radio/online/video/short video/podcast production capabilities (NOT TV production companies).
Software companies who have protected software and developers which enable the provision of content to radio/online/video/podcasts.
New media/social media companies creating or developing social media content or advertising streams or internet marketing evaluation software.
If you are aware of any companies that may fit the bill and the owners may consider a full sale (not a partial sale) please let us know.

Investment wanted
A private investor has approached us interested in seeing investment propositions including the stakes of other investors who want to realise their investment in a company with potential in advance of the planned exit. If any of your existing investors are looking for an early exit please let us know.

A crisis in venture capital?
The economic climate over the last year has affected many companies with bank facilities being withdrawn and difficult trading conditions. However, as all recessions do it is an opportunity for slicker companies to grow at the expense of longer established companies who are slow to adapt or have a cost structure which is unsustainable in a downturn.

Though some players have achieved excellent results, overall returns from VC investing, as reported by the British Venture Capital Fund (BVCA), are poor. As an asset class, venture has returned 0.6 per cent per annum in the five years to 2008. If you go back ten years, and include the ‘dot-com’ boom, that figure is negative.

According to research from Business XL, venture investment in the UK has shrunk from almost £2 billion in 2006 to an estimated £750 million this year. As the recession hits firms’ existing portfolio companies, they have to reserve more of their cash to support those investments, letting new opportunities pass by the wayside. VCs, VCT, EIS and SIPP funds are all suffering from a loss of new investment and we believe that we are seeing the beginning of a trend away from investing through these entities and towards direct investment. Interest in becoming a business angel investor is growing.

At Beer & Partners, we have had new investors joining our register at the rate of one per day since the beginning of this year and now count over 1,600 private and 300 smaller institutions on our database all interested in investing in early stage companies through to pre-IPO stages.

Unlike VCs, business angels are not under pressure to invest in a certain time scale dictated by tax considerations or making return on capital. They can afford to wait until the right deal comes along and leverage their investment with their knowledge, know-how and contact database helping the entrepreneur build the company up. There is no quick and easy exit so they tend to invest longer term than VC’s and be supportive if kept aware of problems and issues.

Established VCs and funds are currently approaching us to provide second round funding as they believe (as we do) that we have better access to capital for small businesses at present than themselves. Our success rate over the last year has not faltered and we successfully raised funding for our clients at a level approximately 4 or 5 times better than the industry average. This rate is maintained by a rigorous selection of companies looking for funding and we have only taken on less that 4% of those approaching us as clients.

We are sometimes perceived as expensive, but a recent review of total charges by our competitors revealed that extra charges levied for events, investment readiness programs and the like make us very competitive once you look past the headline fee.  We offer a free Guide to securing funding which can be downloaded from our website here and contains near the end a section on questions a fund seeker should ask an angel network before proceeding. These questions should be posed to us as well as our competitors to ensure that you contract with a business angel network that will have a realistic chance of successfully raising the required funding and what the hidden costs are. We prefer clients who are as committed to raising funding as we are and are prepared to undertake the strenuous demands that this entails.

It typically takes three months to conclude an investment and this period is extending a little at the moment due to market conditions. If your company is in need of funding, don’t leave it too late to start.