GAS portfolio impact report - 2021 year end

An Introduction from GAS Founder & President Nick Lyth

Now that the Green Angel Syndicate has established an enviable track record we need to start telling our story in a clear and coherent way as we prepare to move to the next level. Everything we have achieved as a syndicate to date is thanks to the incredible support and active participation of our individual Members.

We are proud to present this, the first annual GAS Impact Report covering the period to the end of 2021, as a testament to their commitment to the fight against climate change.

 

Our vision

Welcome to GAS, the largest network of specialist investors fighting climate change in the UK. This means that both Green Angel Syndicate and our associated EIS/SEIS Climate Change Fund invest exclusively in early stage companies whose pioneering innovations help reduce carbon and other GHG emissions; or remove carbon concentrations from the atmosphere. Here at GAS, we want the companies we invest in to succeed. Not just for the good of our investors, but for the good of the planet. We are driven by the urgent need to transition to a more sustainable way of life. 

Why it matters

Climate change is threatening human, animal and plant life on a daily basis. Melting ice, raging wildfires, extreme flooding, droughts and hurricanes are causing the destruction of livelihoods, mass migration and the extinction of entire species. As temperatures continue to rise, so will the frequency and intensity of these disasters. 

Every sector in the global economy is still reliant on fossil fuels and requires systemic, integrated change in order to stop emitting carbon. Changing the processes that rely on hydrocarbons will involve many small, practical but vital innovations. We need the means to continue to provide what our global community needs, but to do so without the continued growth of carbon concentrations in our atmosphere.

“The issue of getting carbon management right or wrong now will determine whether human life on the planet is sustainable or unsustainable. There is nothing more important for us today.”  Nick Lyth, Founder & President, GAS

Investing in Grassroots Innovation

There are only two ways of addressing the acceleration of climate change. The first is through policy and regulation to stimulate and incentivise a transition to net zero carbon emissions. The second is through radical grassroots innovation to introduce the technology, machinery and process required for the practical changes throughout the global economy that will slow down, arrest and then reverse global warming. This is why we invest in entrepreneurs with the passion, ability and know-how to foster this transformation. 

We have identified six primary, though not exclusive, sectors for early stage investment in the UK: 

  • Buildings 
  • Energy 
  • Environment 
  • Food & Agriculture
  • Transport
  • Waste & Recycling

GAS Membership Growth

Source: Green Angel Syndicate

We are growing strongly:

  • GAS has grown from small beginnings in August 2017 to become one of the fastest growing angel syndicates in the UK with 325 Members
  • 96 new Members joined during 2021, an increase of 41% year-on-year
  • Compound Annual Growth Rate: 77%

Investment Snapshots

Deal Flow Management

Source: Green Angel Syndicate

We have increasingly effective deal flow management:

  • Applications to GAS for funding have surged in recent years and are on track to exceed more than 20 per week in 2022
  • The success rate (DD to Completion) has improved steadily in recent years

Portfolio Growth

Source: Green Angel Syndicate

We are continuously adding to the Portfolio:

  • From August 2017 to end of December 2021 GAS Members invested in a total of 27 companies.
  • 4 new additions were made in 2021 with a further 3 close to completion at year end

Member Investments

Source: Green Angel Syndicate

We have highly active investors:

  • Individual GAS Members have participated in 55 investment rounds investing a total of £14.4 million (not including indirect investment via the Climate Change Fund)
  • In 2021 the first portfolio company achieved a successful exit

Source: Green Angel Syndicate

We have an appetite for investment at all stages:

  • GAS Members have made initial investments in 16 companies at the Pre-Seed or Seed stage and 11 at Series A and beyond

Investment by Sector

Source: Green Angel Syndicate

We have an appetite for investment in all target sectors:

  • Energy and Environment have attracted the most investment but all target sectors are represented 

Investment by Business Type

Source: Green Angel Syndicate

We have an appetite for a mix of businesses:

  • GAS Members have invested approximately equal amounts in companies providing services and companies manufacturing products

GAS Co-Investment Activity

When making investments GAS normally finds itself investing alongside other investor groups, but GAS also deploys capital from other sources to boost the investment being made by its Members, thereby de-risking their investments.

GAS Climate Change Fund (CCF) 

  • The first round of the CCF was launched in November 2020 
  • As of 31 December 2021, the CCF had raised £1.8 million in the first two rounds closed 2021 and the third round which had not yet closed
  • The CCF has attracted more than 90 investors
  • Most of the money (74%) raised in Round 1 came from Members
  • 32% of the money pledged in Round 3 is from returning investor.

Source: Green Angel Syndicate

£5m from British Business Investments 

In 2021 GAS secured a £5 million commitment from British Business Investments (a commercial subsidiary of British Business Bank) through their Regional Angels Programme for capital to be deployed alongside each Green Angel Syndicate investment.

The objective of British Business Investment’s Regional Angel Programme is to support innovation in the regions away from London and the South East.

Our agreement with British Business Investments became operational in November and by year end the first investment had been made and three others were moving to completion.

Deployment of CCF Funds

By the end of 2021 £771k had been deployed in a total of 7 portfolio companies:

  • 67% of Round 1 funds
  • 33% of Round 2 funds

Round 1 funds are on track to be fully deployed in Q1 2022 and the Round 2 funds are expected to be fully deployed by the end of June 2022.

Diversity in the Growing CCF Portfolio

As the CCF invests alongside GAS Members the CCF portfolio is well diversified, both across sectors and company life cycle entry points.

Source: Green Angel Syndicate

Our Portfolio Successes

Support for Portfolio Companies

We have a multi-faceted approach:

  • GAS places strong emphasis on supporting the companies it invests in to maximise their chances of success 
  • The strategy is predicated on making the extensive pool of skills and knowledge that is available in the syndicate accessible to the portfolio companies by encouraging the deep and on-going involvement of Members with the companies they invest in
  • Members interested to invest are invited to participate directly in the ad hoc team that undertakes the due diligence (DD) on deals
  • One of the Members – usually with relevant knowledge of the sector – is invited to manage the DD as Deal Lead 
  • During the DD process a 100 Day Plan is prepared for implementation immediately following the closing 
  • If GAS is granted the right to appoint a Non-Executive Director or Observer to the Board the Deal Lead is invited to take up the position offered 
  • GAS’ Board representatives (known as the GAS Reps) play an important role in providing support to the companies, bringing their own skills and experience into the Boardroom and/or accessing Members’ skills and expertise as and when required by the company.

We have a growing cadre of Members representing GAS in portfolio company boardrooms:

    • In the early years, many of the GAS Reps were members of the GAS management team, but increasingly it is Members taking on the role. 

Source: Green Angel Syndicate

Portfolio Value

Source: Green Angel Syndicate

We have achieved steady portfolio value growth:

  • A portfolio growing in value is key to continuing to attract investors
  • GAS Members have participated in 29 follow-on rounds opened by 18 of the portfolio companies  
  • To date no GAS portfolio companies have failed and 16 of the 27 portfolio companies have raised capital in follow-on rounds at a significant valuation uplift
  • Only two companies are valued today at less than book value; one has been successfully re-capitalised and the other will be raising capital in 2022

GAS benchmarks its portfolio performance against data for more than 35,000 other fast-growing companies ranging from seed stage start-ups to growing scale-ups and beyond.

Source: Green Angel Syndicate. Source of non-GAS data: Beauhurst (2011 – 2021).

Our portfolio performance is well above average: 

  • 3x more GAS portfolio companies than average have achieved value uplift
  • No GAS portfolio companies have failed to date compared to 10-20% of those surveyed

Portfolio CO2e Emission Impact

Source: Green Angel Syndicate.

Our impact is accelerating:

  • GAS tracks the impact in terms of the quantities of CO2 and other greenhouse gas emissions that have been prevented or removed from the atmosphere thanks to the activity of its portfolio companies
  • We estimate that 57,000 tonnes of CO2e emissions had been avoided by end of December 2021
  • Equivalent to taking 27,000 cars off the road for a year. 

Source: Green Angel Syndicate.

CO2e emissions being mitigated in all sectors where emissions occur:

  • Unsurprisingly, most of the savings have been made by companies active in the Energy and Transport sectors, being the most energy-intensive.

Portfolio Impact

We have a strong focus on the natural environment. Recognising the critical importance of the natural capital sector in the fight against climate change, GAS is an active participant in this underdeveloped but increasingly important sector with investments in four important companies so far:

 

NatureMetrics make biodiversity surveys possible at unprecedented scale and are transforming the biodiversity monitoring landscape, supplying tools for collecting DNA samples from project sites which are then analysed in the company’s labs using cutting-edge DNA technologies.

 

NatureSpace’ District Licensing Scheme brings licensing and planning together in a streamlined approach to speed up development delivery while enabling the implementation of a long-term, landscape level conservation strategy for Great Crested Newts.

 

Scottish Bee Company produces and bottles award-winning honey which is harvested from environments that are being protected for the benefit of bees and other pollinators.

 

Oceanium produces all-natural products from sustainably-sourced seaweed, utilising innovative refinery technology to extract maximum value from the whole plant, producing high purity bioactives for nutrition and cosmeceuticals, plant-based food ingredients and innovative materials.

For a full list of our 30 portfolio companies, visit our website here.

United Nations Sustainable Development Goals Attainment

GAS investments achieving 14 UN Sustainable Development Goals.

All GAS portfolio companies are enabling the transition to clean energy, the mitigation of climate change and the achievement of sustainable and profitable growth, in keeping with the syndicate’s primary objectives.

For details on our performance against these goals and further detail on how GAS investments are achieving 14 UN Sustainable Development Goals, view the full report.

Diversity and Inclusion

We actively seek stakeholders from all sectors of society.

GAS seeks to recruit Members, employees and investee companies from all sectors of society because we’re all impacted by climate change and because, through different perspectives and insights, we can identify a wider range of opportunities for successful business development.

Studies have shown that companies that actively espouse and strive for D&I achieve greater commercial success than those that don’t.

According to McKinsey: 

“Between 2008 and 2010, companies with more diverse top teams were also top financial performers”

Is there a payoff from top-team diversity? (April 2012)

According to Credit Suisse:

“Large-cap companies with at least one woman on the board have outperformed their peer group with no women on the board by 26% over the last six years”.

                                                                                  Press Release (July 2012)

We are actively pursuing our goals.

GAS is:

  • A signatory of the Talent Tech Charter, a non-profit organisation leading a movement to address inequality in the UK tech sector and drive inclusion and diversity
  • A Disability Confident employer supporting the UK Government’s scheme which encourages employers to think differently about disability and to take action to improve how they recruit, retain and develop disabled people
  • A member of the UKBAA which was a founding signatory of the Investing in Women code

D&I Activity Undertaken by GAS during 2021:

  • Regular training to ensure the GAS Board and management team have an understanding of the challenges of D&I
  • Continuing demonstration of its commitment to diversity when recruiting new members of staff

Forming partnerships with other organisations committed to D&I, including AIS (Andy Ayim’s angel investing school), HERmesa (a women-led angel syndicate) and Cornerstone (another Angel Syndicate committed to diversity).

So far so good, but there is always more to do

  • GAS continually monitors the progress it is making to include D&I in everything we do

We are proud of what we have achieved so far, particularly with respect to gender diversity:

  • On the Board of GAS itself 3 out of 7 directors are women (43%)
  • 10 out of 20 members in the GAS management team are women (50%)
  • 75 out of 325 GAS Members are female (23%)
  • 8 out of 27 of GAS’ portfolio companies have female founders (30%).

Summing Up

We’ve had another very successful year:

  • Membership growing
  • Deal flow growing
  • Portfolio growing in multiple sectors, across all business types and stages
  • Co-investments growing
  • GAS Reps cadre growing
  • Portfolio value growing 
  • Volumes of CO2e emissions mitigated growing in all target sectors
  • Diversity & Inclusion growing

With our members’ and investors’ strong support, the growth will continue … 

Thank You to all our members, investors, and partners for your continued support.

View the full report here.

*Risk disclaimer: Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Even when diversified within a fund, investing in early stage companies carries a higher risk than investing in more established companies. Investment in EIS and SEIS funds should be considered as part of a diversified portfolio. For professional investors only.

Nick Lyth is Founder and President of Green Angel Syndicate, one of the largest active angel syndicates in the UK and the only one specialising in the fight against Climate Change. For regular updates follow Green Angel Syndicate on LinkedIn and Twitter.

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