SECURING FUNDING – OUR APPLICATION PROCESS
Step 1 - Self Assessment
Before submitting your business plan for our consideration, you should first determine whether angel funding, and specifically angel funding from our group, is right for your company. We strongly encourage you to read the entire “For Entrepreneurs” section of this website prior to deciding whether or not to apply for funding from Cambridge Angels.
Step 2 - Application
If, having thoroughly browsed our website, you would like to officially apply for funding, you should complete our online application form.
Your initial application should include a brief overview of the business, telling us in no more than one page about:
- Your technology, any IP, and why it’s better than the competition
- Traction so far / planned route to market and your business model
- Funding until now, how much you’re raising and at what valuation
- Whether you envisage further funding rounds being necessary in the future
You can include links to a business plan or any other documents with the application if you wish.
We will then decide if your company should be invited for an initial screening presentation at one of our regular “informal pitching sessions”. Please note that we will only invite you to one of these sessions if we believe you have a realistic chance of securing funding from our Members, therefore a significant proportion of applications will be turned down without Cambridge Angels ever meeting you in person.
Step 3 – Informal Pitching Session
If, after reviewing your application, we believe that your idea could be an attractive investment opportunity for some of our Members, you will be invited to deliver a 10-minute “informal pitch” to a sub-group of our membership here in Cambridge. No presentation aids (e.g. PowerPoint slides) are allowed at these informal pitching sessions, as each company only has a 30 minute slot in total, of which we reserve 15 minutes for Q+A and a further 5 minutes for feedback at the end.
Even if we don't invest, we try to provide feedback that is valuable to you and your business. Occasionally we advise an entrepreneur not to proceed with their idea at all, or suggest that they radically alter one or more aspects of their current approach.
In order to proceed to the next stage in our process (a formal presentation at one of our dinners), you will need to secure a Sponsor that is already a Member of Cambridge Angels. As you can imagine, all of our Members see hundreds of new investment opportunities each year, so they are very selective about which companies they Sponsor. More often than not, even if your business seems like a fantastic opportunity to one of the Members that attends the informal pitching session, they will still want to spend a few months mentoring your company before agreeing to be your official Sponsor at a Cambridge Angels dinner event.
Step 4 – Formal Dinner Presentation
If your company is successful in gaining a Sponsor from within our current membership, your Sponsor may choose to request permission from our Chairman for you to formally pitch for investment at one of our regular Dinner Meetings. These meetings take place in private, and the precise location rotates between about a dozen different Cambridge Colleges.
Usually two companies are selected to present at each Dinner Meeting, with each company being allocated a 30 minute slot, which should be split equally between your pitch and a Q+A session. At the end of the second company’s slot, there is normally about 10 minutes left before dinner is announced; during this time any of our Members who are considering investing in your business may approach you to ask some more detailed questions about your plans for your business.
When dinner is announced, we bid farewell to both companies, at which point our Members then retire to a private room. A thorough discussion of each investment opportunity (i.e. presenting company) takes place over dinner, during which your Sponsor will ‘defend’ your pitch on your behalf. By doing so, they are effectively guaranteeing that they will invest in your company alongside any other Members that choose to participate – hence why our selection process at the informal pitching stage is so rigorous.
You may therefore be interested to learn that about 50% of the companies that have presented at one of our dinner meetings over the past six years have received funding from our membership.
Step 5 - Due Diligence
Like most Angel groups, the amount of time that we invest in due diligence is directly correlated to the amount being invested. However, even where the investment amount is at the higher end of our funding range, we do not undertake due diligence that could be compared to that undertaken by a VC.
This is because our Members invest their own money, and therefore choose to rely on their instinct, experience and the opinions of other Members, rather than relying on an expensive and time-consuming due diligence process designed to verify the statements made in your business plan, presentation, and financial projections.
However, as many of our Members primarily invest in people, they are likely to want to hear more about your team’s background and track record. If you play an active role in facilitating this process, it will help to expedite a final investment decision from our Members.
Step 6 - Term Sheet Negotiation
After successful completion of the due diligence process, interested Members will present you with a Term Sheet that defines the structure of the investment deal - including the amount / type of equity, as well as rights relating to our representation on your board of directors, amongst other things.
Whilst Cambridge Angels have invested in a wide range of companies in recent years, it is worth noting that many of our deals have been structured to qualify under the Enterprise Investment Scheme (EIS). To qualify for EIS, the Terms must meet certain criteria laid down by the UK Government – if you would like to learn more about EIS then please click here.
Step 7 – Execution
When all parties are satisfied with the terms and language contained in the Term Sheet, the deal can be executed. Both sides may wish to instruct legal counsel to assist in the final negotiation and drafting of Shareholder Agreements, etc, and if for any reason the deal does not close then our Members’ legal costs will be borne by us. However, please note that it is much more common for the deal to close relatively smoothly at which point our Members’ legal costs will be passed on to you (subject to the cap in fees agreed during Step 6).
Step 8 – Beyond Funding
Closing the deal is only the beginning of your involvement with Cambridge Angels. Our track record speaks for itself, but the main reason we have been so successful to date is because of the active involvement of our Lead Angel (i.e. your Sponsor) in mentoring your business in the long-term. They are able to proactively leverage not only their own network of contacts, but also the contacts of every other Member of our group – as well as helping to arrange discussions with other investors for “follow-on funding” should your business plan require this.