Dear Reader

Despite wobbles caused by Northern Rock in recent weeks, business appears to be booming in the angel world. So, it is all the more disappointing that the recent publication of the EIS statistics have shown a 40% decline in the volumes of companies being backed under the scheme and also the amount being raised. Several of you responded to last month’s article on the Small Firms Loan Guarantee Scheme and its collapse and I am sure that none of us are surprised that the changes to the scheme are potentially heralding its demise in its current form. With the news about EIS we must now ask the question whether the free market is simply walking away from government schemes to support enterprise? Does this mean we do not need these Schemes or does it mean that the Government is simply offering us the wrong thing? Read our article on EIS and send us your thoughts.

Having been out and about in the market a lot this month, we are seeing some interesting developments occurring. We were in Prague last week for the launch of their first angel network – the Angel Investor Association. It was great. You would not have known that this was the inaugural meeting of angels in The Czech Republic – in fact we could have been at one of the most established network meetings in the UK. Why? Well - the quality of angels and investment opportunities was excellent. Back in the UK, London Business Angels celebrated its 25th Anniversary with a charity dinner (see news story) – it’s great to see our community turning its attention to supporting charities as well as entrepreneurs. This month we also saw the great excitement of the first angel network being invested in by a VC, with Octopus Asset Management taking a majority stake in Katalyst Ventures! Maybe an end to the “disconnect” between angels and VC is finally in sight. Elsewhere everyone is waiting on tenterhooks for the announcement of the winners of the second ECF round – which will create a further three funds focused on the £0.5m to £2m equity funding space.

This month as well as the usual features and news stories we have included two important Wing Tips on areas that you may think you know about, but might not. One is from MWB Business Exchange our serviced offices Preferred Partner who has explained in detail about the costs of running an office and why using a serviced office might bring value that you did not anticipate. The other is from Intramezzo our interim manager Preferred Partner which explains why there has been a surge in demand for Interim Managers in the venture space in recent months. Click here to read about “The Office Space Conundrum” and here to read about “What investors know about Interim Managers”. Lastly check out our interview with Alan Hartwell, Advice President Technology Solutions and Partners, Oracle UK, Ireland and Israel. Many of you have already engaged with Oracle and if you have not done so already you should do so quickly – the offering that Oracle has established is very special and the team really wants to engage with you, so just email Alan colleague david.rajan@oracle.com to tell them how you could work together.

We hope very much to see you at one of our events over the next four weeks. Come to Triumphant in Technology on 24th October starting at 4pm at Oracle’s HQ in Reading This occasion will give you exclusive access to visionary thought leaders and a chance to network with other like-minded individuals. Please read the details of the event and let us know you want to come by emailing modwenna@angelnews.co.uk.

Would you like to join a focus group of our readers who will help to position AngelNews for 2008? We really value your input and we have a number of plans we would like to pass by you. If you are interested please email: modwenna@angelnews.co.uk.

Best

Modwenna

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For more information on these stories look in the rest of the AngelNewsletter Online

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The most obvious reason is the excitement, the ongoing development and the very high-profile commercial implications. There is also the possibility of high returns on investment (think Lloyd Webber, Cameron MacKintosh and Alan Parker). Lastly there is the issue of creating something artistically valuable and permanent.

2. What are the risks attached to investing in film or theatre?

There are enormous financial risks attached to investing in films. Costs are paid long before revenue is seen and management of film production is notoriously difficult. Even if the film is good, it may still flop in the cinema. However, if it works the rewards are great and in many tax jurisdictions there are good tax breaks for investors to help mitigate the risk.

3. What are the tax breaks?

In May 2007, HM Revenue and Customs released guidance on new rules for the taxation of film production, in particular the new enhanced tax relief for the production of British cinema films which was introduced by Finance Act 2006. For more information on what qualifies in the UK click here: http://www.hmrc.gov.uk/films/guidance/overview.pdf

4. Can I appear in the production I back?

Sometimes. Usually it will be considered on a case by case basis.

5. What other perks do I get from investing in film and theatre?

Typically you might expect to get to visit the set during filming, attend the premiere and launch parties, meet the stars and have the kudos of talking about something everyone has heard of.

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Maybe you are a technology company seeking further understanding of your market? Perhaps your business does not lead on technology, but you will need serious IT systems to dominate your market or achieve efficiencies to optimise profits? Or do you need to get an insight into the future of technology because you are an investor?

Whoever you are and whatever your motives, we invite you to join us at Triumphant in Technology on 24th October 2007, where your questions will be answered.

We have brought together four people to speak to you about this crucial issue.

David Rajan, Oracle David is Director of Emerging Business at Oracle. He is ideally placed to tell how to make technology a cornerstone to accelerating your growth, whether it is using scalable and flexible infrastructure, improving your returns on investment, easier and better integration using Service Orientated Architecture, using the partnership model to access customers and/or being technologically multi-lingual from day one.		Andy Moseby, Kemp Little Andy is a corporate partner in Kemp Little, the UK's leading technology law firm. Andy acts for large acquisitive companies on their M&A strategy and SMEs executing their exit strategies. He will be highlighting the legal challenges faced by growing businesses in securing and exploiting their technology assets.
Find out just what he has to say.		Understand how to protect and maximise the value of your technology.
Anthony Newgrosh, Vantis plc Anthony is an Associate Partner in the Corporate Tax department at Vantis plc. He will be explaining how to leverage R&D tax credits to finance your technology investment.		Gary Small, Carpmaels & Ransford Gary is a Partner at Carpmaels & Ransford. He will be giving us a vision of technology in the future based on his expert knowledge of what today’s patent applications are telling us.
Hear from someone who knows how to get cash for your business off the taxman.		This is your chance to see what the future may bring.

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Back in October 1982 Helmut Kohl had just been appointed Chancellor of Germany, Sony launched its first consumer compact disc player and the Mary Rose, flagship of Henry VIII, was raised.

In terms of UK venture and angel activity we found these deals in the old Venture Capital Report magazine for October 1982.

Did you back any of them or do you know someone who did? Perhaps you know what happened to them for some other reason. If so, please let us know – we would love to find out (email replies to modwenna@angelnews.co.uk ).

Note: these were the days when there was still a 75% unearned income surcharge!

Next month – video service for estate agents, electronic controls for energy conservation, computer controlled humanoid robot, hologram production and much more…

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An entrepreneur is a man who is (nearly) always ready, willing, and able to lay down his investors for his business.

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I would say that William Hill would probably give the same odds on an entertainment executive finding investors as that of the likelihood of a ferret making friends with furry-tailed fellows on Watership Down.

Why?

Probably because the investor feels his investment's life expectancy would be similar to that of the rabbit's.... and with their untimely demise being similarly fearsome.

But it need not be like that. Many projects within the entertainment industry can be exhilarating, stimulating and rewarding, both financially and emotionally, for many, many consecutive years. Furthermore - and unlike most investment portfolios - involvement in entertainment is more likely to fascinate, interest and possibly involve the entire family and not, as is usually the case, just 'dad' who disappears before breakfast every day.

So how would it be possible for the entertainment executive to "throw a six" and get his project rolling? Well, we did it this way!

We invited 24 individuals, all of whom have a penchant for the entertainment industry, to invest a sum each that equates to less than the average price of a designer handbag in Bond Street in a project that has worldwide potential in television, musical theatre, secondary schools, amateur theatre production and the new world of the DVD download..... and all with a shelf life of at least thirty years!

That was back in 1973, when I co-wrote, with Simon May (the composer of 'EastEnders', 'Howards Way', 'Animal Park' etc TV themes), a musical called 'Smike' , starring Beryl Reid, that was shown twice on BBC2 TV (at Christmas and again in April'73 as 'Show Of The Week') and once on BBC1 TV (the following Christmas).

Since then there have been over 18,000 performances of the musical in theatres and schools throughout the world, there have been two hit records from it ('Well Find Our Day' & 'Don't Let Life Get You Down') and 'Smike' has, to date, grossed over £2,000,000 in revenue.

I do not need to explain how technology has exploded and developed in recent years. As a result, we are able to produce filmed and recorded works - often with far better results - for a fraction of the costs of thirty years ago. By taking ownership of this technology we have been able to push forward with a project for the 21st century and are now intending to film on video another musical, 'Florence', based on part of the life of Florence Nightingale.

We would be very happy to explain to AngelNews readers what it takes to make money out of film investing - by filming something that is timeless rather than something which just hits a temporary fashion. If you would like to find out more, please contact me on: 01985 840011 or email: elanar@btconnect.com.

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We know you all want to meet each other, get more out of us and our Preferred Partners and generally make AngelNews work for you. So we have decided to up the ante on the number of events we would like to invite you to. Here is a list of them. We do hope you will be able to make it to one soon.

It has been an interesting couple of weeks for us at AngelNews. We have been at a whole load of events where we have been connecting extensively with entrepreneurs and it is clear that emotions are running high at the moment. Maybe it is the Northern Rock credit crunch which is unsettling people but the dynamics of the angel/VC relationship with potential investees is changing.

For a start investors are basically full of cash and the early stage market is not going to be impeded from doing deals by problems in the mortgage market. So they are sitting pretty. Our ad hoc survey of investors and angel network managers is that activity levels to the end of the year are going to be as strong as if not stronger than ever. So if you are thinking about fundraising head for the market now! Angel networks are working hard to build up the quality of their investor bases – meetings are throbbing with interested individuals looking for a great opportunity. It does not look as if there will be a significant downturn for the next few months.

So investors are optimistic and looking to spend, but the mood of entrepreneurs seems to be telling us a different story.

Hanging out with some of the top flight entrepreneurs is a great experience. They are calm, quietly confident (justifiably so) and closing healthy rounds which will give them a long runway should the markets close in 2008. When you are this good you do not have a problem. The challenge for many investors is getting to these people as smart money is already in negotiations with them. In fact they are the people being approached rather than going out looking for backers. The big corporates are also actively courting them and if commercial deals can be struck, the risk profile will improve accordingly. Angels and VCs should pay attention and think hard about their tactics in this new environment.

Then we come to the other entrepreneurs, the ones who are imperfect – maybe the team is wrong or incomplete, maybe they are in a funny location, God forbid they are established with turnover and even profits, but are not in a hot sector, or they are not well connected. If David Cameron was thinking about enterprise these would be his hoodies, we have decided to call them Freddies.

Coming up against these people they are coming across as either desperate, aggressive or exceptionally defensive or just plain resigned to their fate, which rather overpowers any signs of entrepreneurship and makes them appear of undeserving of investor support.

From an investor perspective, why bother with the Freddies? You are not in a hurry to part with your cash and you might find Mr Top Flight around the corner.

So should anyone be hugging the Freddy? Should we be pulling off their hoods and trying to see beyond the obvious or leave them to find their own way?

I take a pretty sanguine view of business opportunities. If Lakshmi Mittal can make billions by turning the steel industry on its head, I reckon pretty much any industry at whatever stage can be turned over by entrepreneurs who know what they are doing. The trick is in the planning and the team that do it.

How many businesses you have backed still have the same team in place five years later? In my experience most have changed significantly and very often the bright guy with the original idea is not the MD or salesman any more. So why are we so sceptical of the entrepreneur who fluffs the pitch? Perhaps we should instead think why did that person – so apparently unsuitable – come forward in the first place – and why are they bothering at all? Maybe they do have something, but they are not actually the people to do it and need to find a management team to help them deliver. Maybe they need the concept re-packaging or just for a few key people in the market to get up and start to play with it.

This is not the job for investors. But it may be that it is a job for someone else. “Just send them to BusinessLink” I hear you cry. But that is too easy. I admit here and now that I don’t have a solution for Freddy, but perhaps one of you out there does?

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Making money out of film and theatre investing can be a high risk gamble – almost like going to the casino.
However, there are investors who make a considerable amount of money out of such investments and have a lot of fun along the way. Way back in the 1980s the original investors in Andrew Lloyd Webber’s Cats musical reportedly made £20,000 a year between 1981 and 1993 – off the back of a £10,000 original investment.

Probably any investment with a major producer such as Lloyd Webber will be a safer bet than the average. Overall investors our of 10 investments tend to lose all their money on three productions, make money on four and break-even on three. But if you are going to make money the returns can come quickly. The investors in Equus – the recent London theatre production with Daniel Radcliffe as the star make their money back in eight weeks.

When it came to the Sound of Music production which came off the back of the television talent show, the investors made their money back in the same sort of time frame and will be entitled to 40% of the profits thereafter – but in the case of this investment the investors had ensured that their rights were established.

The good news about this sort of investing is that you can often invest as little as a few hundred pounds and sometimes less than £10,000, so it is open to many people.

But always check the small print and make sure you enjoy the free tickets and parties along the way.

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Location: South of England

AngelNews is looking for an experienced manager to help us expand our business.

The ideal candidate will have considerable senior experience in media and publishing business development, including production and sales and marketing.

We are relaxed if they wish to work from home and if they want to work part-time, but we would want them to join in wholeheartedly with our corporate philosophy of supporting each other in our happy team.

If you would like to become part of the AngelNews team, please email: modwenna@angelnews.co.uk with a CV and a 100 word explanation of why you would like join us and what you can offer.

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For the full stories please click on the story and login at www.AngelNews.co.uk

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Modwenna Rees-Mogg
Editor: AngelNews
Email: modwenna@AngelNews.co.uk

AngelNews
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Tel: +44 (0) 1275 333 443

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