‘The problem is not finding investors to put money into companies as the financing is out there. The difficulty is finding good quality projects for funding,’ comments Weaver.
Beer & Partners specialises in providing funding between the range of £25,000 to £2.5 million for growing businesses. ‘We are a precursor to VC funding, not an alternative. A venture capitalist won’t talk to a business for less than £3 million,’ claims Weaver.
Operating in the UK and Northern Ireland, Beer & Partners, can be compared to a dating agency for businesses. It vets and registers companies and then, if deemed viable, a database is trawled to match a company up with a suitable investor, who is also registered.
When pitching for funding, Weaver says business owners tend to over value the company initially and rarely have an exit route in mind. ‘In many instances, businesses will be quite raw,’ he says.
Weaver maintains that the average success rate of a business funded by angels is ten per cent, whereas Beer & Partners has a 40 per cent success rate. Of course, this can be translated to a 60 per cent failure rate.
There are a number of factors, Weaver argues, which contribute to the high failure rate of angel financing. Again, he states that overvaluing is a problem, calling it ‘a legacy of the dotcom boom’. In addition to this, he talks about ‘eleventh hour blowouts’, such as when a deal suddenly falls through because a friend or family member has come in at the last minute to provide backing.
Weaver states that the market for angel investing is growing, noting that the network raised £15 million during 2006, compared to £12 million in 2005.