She has been running Angel News the industry’s leading source of independent news and comment since 2003 and is, among other things, author of Dragons or Angels? An unofficial Guide to Dragon’s Den and Business Investment (2008) and Crowd Funding: How to Raise Money and Make Money in the Crowd (2013).
Angel investment is difficult to get right, many people come into angel investing with great enthusiasm, only to pull back a few years later when they realise how hard it is.
From blog to international events
“Angel investment is difficult to get right,” says Modwenna. “Many people come into angel investing with great enthusiasm, only to pull back a few years later when they realise how hard it is. Angels plays a really important role in the economy and I’d like to see more help, and advice made available to support them so they can enjoy it for a lifetime.”
Angel News began life as a passive news web site and blog. “I’d had a busy job in corporate finance in the city. Then, when my children were small, I found I wanted to do something that would allow me the flexibility to spend more time with them. I had noticed a lack of information sharing in the angel investment world, so I started Angel News, as a hobby,” explains Modwenna.
It was the first time that news and opinions had been offered to angel investors independently, outside of the deal networks. The site proved so popular with investors that it built a readership of thousands within a couple of years, enabling Modwenna to commercialise it in 2008 with a sponsorship model that subsequently took her into the business of live events and conferencing.
Moving the conversation on
“The angel world is much noisier than it was when I started out. Dragon’s Den really made a difference in terms of general awareness, and there has certainly been innovation such as the launch of co-investment models, more formal syndicate based groups and the Seed EIS Scheme. However, in some ways it feels like angel investing is a world that hasn’t changed as much as people might think, “ she observes. “There is opportunity to do things differently, in ways that are more helpful and interesting for everyone involved.”
For example, her first event series, Pitching for Management, gave young fast-growth businesses access to top-level executives looking for new career challenges. The emphasis was on people and talent, rather than investment, encouraging businesses to be more open about their ability to meet the challenges they faced, and where they needed help. “The traditional investor pitch process tends to encourage entrepreneurs to puff themselves up. We were looking to create a model based on ‘ask for help, get it (and money)’ rather than ‘ask for money, get help’. This changes the starting point and in my view improves the ongoing relationship.”
“Interestingly after a pause in Pitching for Management in 2014 because of market conditions, we relaunched it in 2018 as The Pluralists Opportunities Club and demand has never been higher from entrepreneurs, who now really see the point of it.” says Modwenna.
In an effort to broaden the conversation across sectors of the industry, Modwenna also set up the VCT & EIS Investor Forum in 2010. This annual conference brings together private investors, wealth managers, independent financial advisors and fund managers from across the venture capital trust (VCT) and enterprise investment scheme (EIS) sectors. The Forum is an experiential event with plenty of opportunity for investors and advisors to chat with entrepreneurs and play with the innovative technologies that their investments are backing. “Investors have an affinity with the businesses they invest in. We want to tap into their energy by offering something more celebratory than just a traditional conference format,” says Modwenna.
Early on, she saw the potential of crowd funding to change the market, expanding the remit of Angel News to include the crowd funding platforms and publishing her book on the subject in 2013. She set up the ratings agency business Crowd Rating, designed to help crowd investors to pick the best deal, which is currently in the process of being sold.
A strong supporter of the green economy, Modwenna is particularly interested in businesses that turn cost into profit. By way of an example she mentioned a business that is taking slurry from a recycling plant, which the operator previously had to pay to have removed, and turning it into fertilizer pellets which are sold at a premium price. The neat part of it is that the energy used in the creation of the pellets is sourced from the methane generated in the recycling process.
On angel investing she says: “When my friends ask me for advice I tell them to think of angel investing as a 15-year commitment. Write off the investments you make the day you make them and hold back money for future rounds. Understand that dilution can be devastating.”
Now, as throughout her career, Modwenna is focussed is on helping the angel investment market to evolve and to thrive. “For markets to grow and be strong, they need access to good professional advice,” she says. “Every other financial services market is served by regulated advisors who are able to help investors make the best decisions they can, while angel investors are left to get on with it on their own. Other than tax breaks, there is no support and no reliable advice they can call on. From the investors’ perspective it doesn’t make sense that they are still on their own when it comes to making investment decisions. It is time to rethink angel investing and the person or organisation grabbing this opportunity will create a very successful business.”