19th June 2006
TEChINVEST'S 'CREATIVE' APPROACH TO BUSINESS FINANCE WINS NATIONAL ACCLAIM
It's been another excellent year for TEChINVEST, the Northwest Regional Development Agency's (NWDA) own equivalent of 'Dragons' Den', with recognition of its achievements from the British Business Angels Association at its 2006 Conference.
Shortlisted under almost every category - including Business Angel of the Year Award for the second consecutive year - TEChINVEST scooped the award for Most Creative Deal of the Year. The deal in question was £1 million raised to support North West bio-technology start-up Plant Impact and sourced from a combination of venture funds and business angels.
Originally formed in 2003 with backing from the founders and a business angel, Plant Impact's first contact with TEChINVEST was in 2004 when RisingStars Growth Fund (RSGF) also invested £50,000 as initial seed capital. RSGF is a fund specifically set up by the NWDA with private sector investors to assist seed and early stage companies with the potential for rapid growth. Formed in March 2002, by 2004 RSGF was the third most active venture capital investor in the UK.
RSGF followed its initial investment in Plant Impact alongside business angels. In late 2005, a working capital requirement of £1m was identified to fund the business through to 2007/8 with proposals for an AIM flotation during 2006.
Working together, TEChINVEST advisers, fund managers and private investors ensured the £1m was raised, using a highly creative deal which was structured as a discounted convertible loan secured against intellectual property. This not only provided a flexible structure, by providing the conversion price to the future IPO value, it also removed the requirement for a valuation of the company at that early stage.
Commenting on the deal structure, TEChINVEST founder/manager Vivienne Upcott-Gill said: "The use of £50,000 units made this deal particularly attractive to new 'angels' and more experienced investors with a broad portfolio. In addition, the sliding scale redemption premium on the loan and the conversion value incentivises the company to achieve the proposed AIM listing, while both are potential exit routes for investors when they wish to cash in on their investments. TEChINVEST investors were quick to join the deal, in which six angels invested £400,000 alongside three venture funds.
"The North West is particularly fortunate in the range of business finance options available to it through the Agency, and this is a clear demonstration of TEChINVEST's role as a route to business angel finance as well as to regional funds.
"We hope that this deal structure may provide a model to other technology companies looking for funding to finance rapid growth. We are delighted that both the Northwest's strong record of innovative financing and one of our fast growing innovative companies have been recognised with this award."
TEChINVEST is one of the UK's longest running and most successful business angel networks. Since it was set up in 1993, it has helped to raise more than £19 million in direct funding and unlocked a further £38m from traditional sources of finance. No fewer than 550 North West companies have benefited from the service's expert advice, guidance and introductions to appropriate sources of seed, risk, loan and equity funding. For further information, visit our website www.techinvest.org.
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Press contact: Deborah Garritty at Bell Pottinger North (01625 506444)