Business Angels in Ireland

Sources of Funding

by Piush Vaish

According to 2016 Global Entrepreneurship Index, Ireland is ranked 12th in the top 20 global hot spots for start-ups with a score of 65.6 (CNBC, 2015). Business angels play an important role for start-ups in providing an invaluable source of capital .This blogs discusses business angels in Ireland and HBAN (Halo Business Angels Network).

Business Angels or ‘informal private investors ‘are high net worth individuals who invest on their own or as part of a syndicate capital in companies. Angels work in syndicates so risk can be spread.Their investment decision is based on their experience in a particular sector. Apart from money they also help the company with their skills, experience and contacts. In return of their capital and effort they receive equity stake and expect exiting their investment in 3-5 years(McGowan-Smyth, 2012). The average initial investment ranges between €50,000 and €250,000 individually, or up to €500,000 as part of a syndicate (partnerships with other Business Angels)(Ireland, 2015).   They do not like to invest in just an idea. Therefore, entrepreneur normally engages with an angel just before the last stage of technical development or at early market entry. Angels typically invest in deals earlier than venture capitalist and are always a minority investment (usually 10 –40%)(Etula, 2015).

According to a survey of 158 UK based angel investors in 2008, 56% of investments failed to return capital, .However, 9% generated more than 10 times the capital invested(Services, 2012).

The angels’ investment are undertaken on an individual basis and thus information is private.Thus it is difficult to evaluate activity and performance of angel investment within our population of study.

A fraction of the total start-up market in Ireland is represented by angel groups and networks. The data collected from such market indicates that in 2009 Ireland had a small angel network compared to other countries with ranking of 16th out of 26th countries).  However, in 2010 OECD identified 7 syndicates/networks at various levels of start-up development. In terms of deals per angel / group, Ireland ranked 3rd of all the countries examined. Hence, Ireland compares well relative to other small countries. However the data on amount invested comparatively is not available (forfas, 2013).

Enterprise Ireland supports the Halo Business Angels Partnership(HBAN) programme. It is responsible for the development of business angel syndicates on the island of Ireland.in 2014, business angel investors € 9.4 million in 49 companies(HBAN, 2015).

According to HBAN, a company should meet the following criteria to raise funding:
•    Product that is about to be commercialised.
•    Pre-revenue is weighed up with some early market traction preferably.
•    Management team with relevant experience.
•    Recognisable market opportunity.
•    Internationally scalable business model.

To engage with the HBAN syndicates and network, companies must submit an application at http://www.hban.org/Entrepreneurs/How-can-HBAN-Help.153.html .

 

References

CNBC. 2015. The top 20 global hot spots for start-ups [Online]. CNBC. Available: http://snip.ly/Ve4j#http://www.cnbc.com/2015/11/12/the-top-20-global-hot-spots-for-start-ups.html?slide=10 [Accessed 13/11 2015].

ETULA, S. 2015. SWEAT,NETWORKS AND EQUITY [Online]. FiBAN – Finnish Business Angels Network. Available: http://etula.fi/pdfs/guide_to_finding_an_angel_investment.pdf [Accessed 13/11 2015].

FORFAS. 2013. A REVIEW OF THE EQUITY INVESTMENT LANDSCAPE IN IRELAND  [Online]. hban. Available: http://www.hban.org/_fileupload/310113-Review_of_the_Equity_Investment_Landscape_in_Ireland-Publication(1).pdf [Accessed 13/11 2015].

HBAN. 2015. Home Page [Online]. HBAN. Available: http://www.hban.org/ [Accessed 13/11 2015].

INTERTRADEIRELAND. 2012. Business Angel Finance [Online]. intertradeireland. Available: http://www.intertradeireland.com/equity/business-angel-finance-and-networks/ [Accessed 12/11 2015].

IRELAND, E. 2015. Business Angels (BES, Angel Networks) [Online]. Enterprise Ireland. Available: http://www.enterprise-ireland.com/en/Invest-in-Emerging-Companies/Source-of-Private-Capital/Business-Angels-BES,-Angel-Networks-.html [Accessed 13/11 2015].

MCGOWAN-SMYTH, B. 2012. Raising Business Angel Investment Insights for Entrepreneurs [Online]. intertradeireland. Available: http://www.intertradeireland.com/media/intertradeirelandcom/BusinessAngelGuideforEntrepreneurs2012.pdf [Accessed 12/11 2015].

SERVICES, C. F. S. A. E. 2012. Evaluation of EU Member States’ Business Angel Markets and Policies Final report [Online]. Centre for Strategy and Evaluation Services. Available: http://www.hban.org/_fileupload/ba-rep_en(2).pdf [Accessed 13/11 2015].

 

Previous
Startup funding institutions in Ireland (Part 1)
Next
Funding Crunch For Irish Startups

Leave a comment

Your email address will not be published. Required fields are marked *