08/07/2011

The Secret Source Of Great UK Deal Flow REVEALED

By Modwenna Rees-Mogg, Managing Director, AngelNews

For smart angels finding a reliable source of great deal flow is always the biggest challenge. So when one of my favourite angels started singing the praises of one of the UK networks, it warranted further investigation. The network winning plaudits is Halo in Belfast, run by entrepreneur turned angel network manager, Alan Watts, our fellow escapee from Istanbul during the Ash Cloud last spring. (see Beating the Volcano-AngelNews style)

New and certainly not just Irish!

Halo is a relatively new angel network, focused on angel investment into companies based in Northern Ireland. Many of its angels, including a goodly number of women, are based in the region, but an increasing number of angels and VCs from mainland UK and elsewhere are cottoning onto the network as more and more people talk about the quality of the deals it has on offer and the superlative service it is offering its investors.

You can find out more about Halo and about great Irish technology on Twitter, Facebook and LinkedIn thanks to the fact that Halo’s manager, Alan Watts and his fellow directors at Northern Ireland Science Park are savvy about the excitement that can be generated around young tech businesses through the exploitation of social media. They understand the power of content and how to exploit it, hence the regular output of news that appears on their website.

We have the nerd gene

Why do angels particularly like Halo? Partly it’s because Alan and his team are highly selective about the deals they show.“It’s not that tough to find great opportunities to showcase,” Alan told me“because there is little competition over here for funding and Northern Ireland definitely has the “nerd gene”; we are always inventing new types of tech. It was the Irish who invented ejector seats, did the maths behind MRI scanning and worked on the first vertical aircraft, to name just a few.”

“We are also exceptionally good at engineering,” he told me.“This year we have been celebrating the centenary of the building of the Titanic, which was a masterpiece of shipbuilding at the time, having adopted many huge steps forward. If only we had not handed it over to someone else to sail!”

“Here in Northern Ireland, we are now applying our nerd gene to clean tech, software, telecoms and particularly digital media. I guess the latter trend has grown because we also have a strong arts culture whether it is film or music, so inevitably we have been finding ways to exploit our strengths in this area online as well as in a live environment. For a long time there has been a link with the big media outfits in the US, who subcontract post production work to experts in Northern Ireland. This is personified in the direct cable which was laid under the Atlantic to connect us with the Hollywood studios and the East Coast so we can work whilst they sleep. One of the most powerful groups supporting this sector is the Irish Technology Leaders Group (ITLG) which comprises a load of ex Irish tech guys in California, including Craig Barratt, the former chairman of Intel. Irish companies that want to cross the Pond will automatically find friends who will help them get up and running over there.”

1.7 million people with entrepreneurship and tenacity in their DNA

Alan spoke of the tenacity of the Irish — a determination to see things through to the end — which means that entrepreneurs don’t want to give up. And because they are heavily supported by organisations such as Northern Ireland Science Park, it is easier for them to get through the early difficult stages. With higher average public spending than elsewhere in the UK, there is also more money to invest in Research and Development (R&D). And the sense of camaraderie that grows from being part of a geographically ring fenced population of just 1.7m means that entrepreneurialism is generally celebrated by many rather than just a few. With everyone knowing what is going on, it is also easier for companies to draw in the support they need to develop through seed and start-up and onto development stages. “We’ve got a great dealflow”, Alan says,“but ones that are little known in the rest of the UK”.

Using EIS to work for the investors

The Halo network is just a couple of years old, but it is leapfrogging many older networks. It raised its first Enterprise Investment Scheme (EIS) fund early on, which gave 14 angels the experience of investing together. The fund was Her Majesty's Revenue and Customs (HMRC) approved, which improved the timing of the investors’ tax rebates. Members have already invested £3m in companies that have presented. By providing additional financial leverage, Halo has already discovered that its EIS co-investment fund strategy can make all the difference between a rapid and fully funded close or not. The second EIS fund is almost funded and will co-invest with the Halo angels in the latest crop of fundraising. If it ends up investing in businesses like those which have already been funded, e.g. Banjax, a web 2.0 application developer, and Sophia Search, a document search and text analytics business, it will end up with an interesting sector bias in the hottest sectors of this cycle.

YouTube for angels

What I have particularly noticed is Halo’s private “YouTube” of investor presentations. Halo films all investment pitches that are made at its network meetings, as well as the interesting speakers who frequently appear. Within 24 hours the pitches are put up on the website showing the presenter and their Powerpoint synchronised side by side. Halo members can then log into the website whenever they wish to see the videos, whether they attended the meetings or not. The website is particularly useful for the increasing number of Halo members not based in Ireland who can experience the pitches “as live” even if they cannot get to a meeting. They can also easily get involved in the discussions prior to and during the formation of the investor syndicate. That’s what makes the site particularly cool.

Halo has added full social network functionality to the site. Not only can members select videos by sector, stage, date, but they can also leave comments, discuss deals, vote on favourites and more. Everything is fully tagged to make searching easier. There is an impressive group of videos on companies that have already been funded, providing a useful back catalogue for reference. It’s this type of attention to detail that gives Halo a clear competitive advantage over its peers. And it works — of the top 20 most viewed videos, 9 of the companies have been funded.

Halo is already supported by an impressive group of sponsors including Arthur Cox an international law firm with offices in Ireland, the US and London and KPMG. You can see why. It is a network that quality organisations want to be associated with.

With a hi tech support system in place, you might imagine that it is going to be expensive to become a Halo angel, but Alan Watts is particularly acute to the issue that you have to prove yourself and offer great value to your customers before you ramp up the fees. So he has priced local membership at £200 and external membership i.e. for those based outside Nothern Ireland at a mere £100 per annum. That’s a bargain in my book.

Where internet search can mingle comfortably with chocolate and ice cream!

The northern Irish are a jolly bunch and not just tech nerds. Halo members have funded films and recently considered backing an all-girl band. And ice cream and chocolate businesses have also appeared on the stage in the past, which sound pretty good to me! Other Halo angels wanting an unusually focused bit of exposure to food retail also recently invested £0.5m in Task Maestro, a business which sorts out hygiene related issues at the likes of McDonalds.


Halo’s next meeting is on Tuesday 13th September at Northern Ireland Science Park. You can book your place by contacting Alan Watts on email: alan.watts@nisp.co.uk or by phone on +44 (0) 28 9073 7814.

Be assured you will end up in a room full of like minded investors, including a number of VCs, all of whom know that they cannot afford to miss what Halo will have on offer. And if you cannot wait until then, why not ask Alan to sign you up as a guest member — then you can access their website and find yourself an interesting deal right now. After all what is a Ton or two, if it means you might see the next Intel or Google before the other angels you know on the mainland can get to it?