Investment Criteria
While the dynamics of each investment will vary, Cambridge Angels typically evaluate early-stage investment opportunities according to the following broad criteria.
Management Team
We look for teams with great entrepreneurial potential as shown by your prior business, academic or entrepreneurial ventures. We also look at your team’s passion for and commitment to the new business idea, and your ability to inspire confidence among future stakeholders, including employees, potential customers, and investors. As we will be working together as partners, your team’s credibility is essential. In addition, your team must be open to and comfortable with receiving input provided by angel investors. Our members have broad investment interests but as a group, Cambridge Angels reviews opportunities in UK registered and operated businesses.
Market Opportunity
We invest in solutions that address major problems for significantly large target markets (i.e. a market size of £100m+). Our members have a preference for B2B markets. Your company must demonstrate a strategy to claim significant market share or revenue. There are plenty of great business ideas - but not all businesses will generate returns that justify angel investor funding.
Use of Proceeds
Funds must be used to accelerate your company’s achievement of key milestones that increase the company’s value. We often fund activities that include research and product development, building a sales and marketing infrastructure and hiring key executives. Our investment range is usually between £150k and £1.5m.
Growth Potential
We look for companies that can grow quickly and manage the scale necessary to succeed. Your company must demonstrate a plan to generate significant profits beyond the initial product idea. Do you have a strategy to achieve multiple sources of revenue?
Competitive Advantage
Your company must have some proprietary features that distinguish you from potential competitors or provide barriers to entry that prevent other companies from capturing your customers with a similar offering. Attributes that convey competitive advantage include intellectual property protection, key know-how, and scarce human resources (i.e. knowledge and skills).
Strategic Fit
The Members of Cambridge Angels have significant executive experience in a variety of fields. One of the benefits of working with angel investors is the active coaching and contact network that such investors can provide. As such, there must be a fit between our Members and your team and idea.
Technology
We prefer to invest in first-of-a-kind new ideas, rather than incremental enhancements to common products and services. Our members have a preference for science and engineering-based or IP-rich technology, as well as the convergence between technology and healthcare. Is this a nice-to-have, or a need-to-have product or service? However, we approach highly complex, esoteric technologies with caution. The concept behind the technology must be proven and verifiable. Further, we avoid science projects that don’t demonstrate a clear path to commercialisation.
Exit Strategy
Our Members typically seek returns of at least ten times their initial investment, within seven years. This level of return on investment is essential due to the high risk and likelihood of failure among early stage ventures. Thus, a clearly articulated exit strategy - how angel investors will gain such returns - is essential. For example, do you plan to sell the company to an established corporation in your industry? Or will your exit be through subsequent rounds of financing - venture capital or the public markets? Angel investors are not just interested in the strategy you select, but more importantly in the how - the operational strategy that shows specific steps you will take to achieve the exit.
