What is a corporate angel fund?
It is a fund sponsored by a corporation but which coinvests in deals as if it was a human angel, although we use a limited company structure, so do not get enterprise investment scheme relief.
The typical angel commitment is between £25,000 ($40,000) and £100,000, so a round can be anywhere from £100,000 to £8m in total. The latter figure is the outlier seen in Martlet’s recent investment in machine-tomachine provider Neul, when we co-invested alongside venture capital firms DFJ Esprit and IQ Capital Partners as well as the Cambridge Angels network.
Why did Marshall set up Martlet?
As a fourth-generation family-owned business, Marshall has historically made four angel-style investments through friends and contacts.
These deals included Abcam, a medical services business that floated in the UK in 2005, and which has delivered a more than 50-times return for Marshall’s initial investment. This success was one of the reasons Marshall decided to set up a corporate angel fund.
In addition, Michael Marshall, who is shortly to step down as group chief executive in a succession to his son, Robert, and the company are very supportive of the local community in Cambridge, UK – whether entrepreneurs, charities or education. This idea of providing support to UK entrepreneurs, and hopefully making money, is the basis of much angel investing.
In Martlet’s case it also helps promote the Marshall brand. Marshall is a 100-year-old private, industrialsector business with 4,500 employees and a near £1bn turnover from automotive retail, aerospace, specialist land vehicles and Cambridge airport, but relatively poorly known outside these markets.
What deals have you done?
Aside from Neul, Martlet has invested in Psychology Online and recently Pasmarine. We have four more deals where we have promised investment subject to due diligence and legals. We have another six or seven deals getting close.
How are you finding the connectivity between different types of investors?
There is more evidence of increasing numbers of angel deals working with venture capital firms (VCs) and corporations.
Angels are sometimes mistrustful of VCs restructuring management, as angels like to build a relationship with and nurture the founders. There is also a preference among angels to have a limited numbers of rounds, which affects the types of deals they consider, where VCs may overdilute initial investors.
But, so far, the angels and angel groups have been very keen on Martlet and other corporate angels that can offer potential synergies beyond cash, such as being a named shareholder and possibly an early adopter and introducer.
How can corporate angels and corporate venturers help each other?
We both need good-quality deals – we can both offer synergy that is stronger than standard angels and VCs. Angels discover earlier-stage companies, where we can select, invest and nurture with more agility, at a higher-risk stage. We can then pass those deals on to corporate venturers, if appropriate.
There is more synergy between corporate angels and venturers than in the wider angel and VC community.
Peter Cowley is a Cambridge-based mentor and angel investor. He has a Cambridge University degree in engineering and computing science, lived in Bavaria for five years and owns technology and construction businesses. He has been investing personally in high-growth start-ups for many years and is a board member of the Cambridge Angels. He has run the Computing Laboratory Ring mentoring scheme for eight years and is chairman of the ideaSpace Enterprise Accelerator supporters. He has been treasurer and chairman of several charities in the advice, healthcare and education sectors. Cowley was a speaker at the Venture Connectivity Club, a network set up in the UK to bring the different parts of the private investment community together.