Bright future for the Regional Development Agency
The network connects private investors, or Business Angels, with companies looking for investment.
We were set up by the South West RDA (Regional Development Agency) the government body that channels some EU and central Government funding into the region, drawing on the experience of the old Devon and Cornwall Angel Network.
The aim was, and still is, to fill a gap – deals in the £25,000 to £750,000 range which are too small to be considered by the majority of venture capital organisations.
Angel investing is a high-risk business. As David Rose of the New York Angels – and a veteran of the sector – has put it: "Of every 10 deals you make, five crash, two return even money, and two give you two to three times your money. It takes that last one company, a mega-hit, to get the high return most angel investors are looking for."
It is early days – we hope our organisation has a bright future – but so far, the South West Angel and Investor Network (Swain) is doing better than this rule of thumb. Our failure rate is about one-in-five.
We still receive some funding from the RDA. The funding and our status as a not-for-profit organisation allow us to take a broad view and suggest other possible avenues to companies for whom angel investment might not be suitable.
As might be expected, the recession appears to have slowed us down a bit – we managed 21 deals in 2007-08, our peak year, and 13 in the financial year to April.
The good news is that the flow of deals is picking up again – four were completed between May and August.
Partly because of the structure of the financial sector in the South West, we do not think the double dip recession that some forecasters are predicting, or another banking crisis, will hold us up. This is traditionally a busy time of year in the world of finance and we continue to be encouraged by the many interesting new companies and ideas that we are coming across in the South West and beyond.
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