Continuing our series of blogs exploring ways to inject capital into your business, I explore how the Angel CoFund helps to leverage funding for SMEs.
Source of funding and summary of the program
The Angel CoFund makes equity investments of between £100,000 and £1 million in smaller businesses in the UK. It invests alongside syndicates of business angels to support businesses with strong growth potential.
The Angel CoFund was established, and is funded, by the British Business Bank, the Government’s development bank. Since its inception in November 2011, the Angel CoFund has enabled smaller businesses to secure c.£280m in investment.
Eligibility
The Angel CoFund invests alongside angel syndicates. The fund will invest between £100K and £1M in equity or quasi-equity, such as venture loans or convertible loan notes. The fund will provide up to 49% of the funding requirement for the round, with the remaining amount to be sourced from private investors.
Investee companies must also fall within the European Commission SME definition, having no more than 250 employees, turnover not exceeding € 50M and balance sheet assets not exceeding € 43M.
Investee businesses can be from within any industrial sector and, whilst most investees tend to be early stage high growth companies (commonly in the tech sector), SMEs at any stage of their lifecycle are eligible providing they have the required level of investment from the angel syndicate.
Any restrictions or limitations on access to or use of the funding secured
The Angel CoFund is a relatively flexible investment vehicle and will look to mirror the terms agreed with the angel syndicate where possible.
While the Fund does not have the same requirements that apply to the EIS investments, it is common to see the lead angel syndicate look to structure the investment round to qualify for EIS treatment.
What is the process for applying for the funding?
As a co-investor, the Angel CoFund will only invest alongside an angel syndicate. Typically, the angel syndicate will lead the investment round and will liaise with Angel CoFund to secure their matched funding.
We previously assisted Monterosa, a provider of fan interaction technology to broadcasters, brands and sports organisations globally, secure investment from the Angel CoFund as part of an investment round led by the 24 Haymarket angel syndicate.
If you are looking to secure funding for your business, please contact me directly or another member of our Tech Funding Team.
