What is the Opportunity

In short, this is a deal flow and de-risking investment opportunity for our key investment partners based around a Government-funded competition.

 

Innovate UK are the UK Government’s innovation agency distributing millions of pounds in grant funding every year through competitions, to support research and development (R&D) activity in the UK. One of their forthcoming competition entitled ‘Regional Angel Investment Accelerator Pilot’ offers the chance for two regions in the UK to win up to £1 million each of grant funding. 

 

Successful bidders will ring-fence the grant fund and distribute it as grants to suitable, innovative SMEs in the region, enabling them to complete R&D projects of between £40,000-£300,000.  As the project funding is ‘a grant’, no money will need to be paid back to Innovate UK and all the Intellectual Property is retained by the company. 

 

For each regional R&D grant to be funded, it must be matchedby a private equity investment from seed and Angel investors at the same time. This is therefore an outstanding opportunity for early stage investors and Angels to invest into highly innovative tech firms in return for equity, whilst the company also receives significant and separate investment from Innovate UK without further dilution of equity allowing them to further build their product and market share capability. 

 

The aim of the pilot is to help further stimulate Angel investment in the designated region, and with this in mind, at least 50% of the private equity deal must be completed through Angel Investment from within or outside of the region, with the remaining funds coming from other investment sources including seed funds and accelerators. 

 

In order to ensure Wales is able to take advantage of this excellent opportunity, we are leading a highly competitive consortium project bid, utilising our unrivalled experience in this region, in bridging the gap between R&D grants and private capital funding. We believe we are in an excellent position to capitalise upon this opportunity for Wales, and would like to invite you to join the core consortium 

What could this mean for you

This approach is to see if you’d like to be part of the project and work with us to look at quality deal flow as a result, over the two years of the programmes lifespan. There is no commitment on your part to complete any investment deals. However, we believe the project will provide fertile ground for quality deal flow and help to further de-risk your investments.

 

We are not asking for private capital funds to be committed to this project either now in the bidding phase, or if successful once the project is up and running. 

 

As well as providing deal flow to you from this project, when you are making an investment into an innovative tech firm in the region from your own deal flow channels, we will work with you and the company to help them create and secure grant funding for an innovation R&D project. This will effectively doublethe investment going into the company without further equity dilution. 

 

Furthermore, where appropriate, we will also provide you with co-investors from our agreed pool of early stage and Angel investors from across the region and UK-wide.  

 

We would be delighted if you were able to agree to be a partner so that we can include you in the consortium bid, if we are successful.

What will Innovation Point do

Innovation Point’s role in the project will be centred on leading the bid as the ‘Angel Investment Partner’ (AIP), pulling the consortium of investors and supporting partners together, shaping the project and writing the competition bid. 

 

From experience, we know that building a strong relationship Innovate UK is critical to a successful competition outcome, and so we have already started the process for this project.  The competition contact at Innovate UK – the Regional Angel Investment Pilot lead – has worked with us in the past running joint stakeholder roundtables together focused on improving the private equity market for disruptive tech firms, and we’ve been asked to provide ‘deal flow’ to investor pitch days that Innovate UK ran with their network of Angels and VCs.  We are now maximising our opportunities through this existing relationship to increase our understanding of what Innovate UK are looking for in a successful bid, and promote that one of the two UK pilot programmes should be awarded to this region. 

 

If successful, we will then partner with Innovate UK to oversee the ring-fenced grant fund and work with our investment partners to ensure the money is distributed into innovative projects and quality deal flow is provided. 

Why partner with Innovation Point

  • Innovation Point live and breath this type of project. We already have a team in place who have recently completed a similar Innovate UK funded competition we won earlier this year.

 

  • We have the market knowledge and insight in this area, often approached by the media as ‘experts’ on investment and innovation.

 

  • We have experience in building strong collaborative partnerships.  For example, we were key in setting up the partnership project involving Welsh Government and Cardiff University on the National Software Academy and similarly with the National Cyber Academy at the University of South Wales.  We have also set up a 5G expert panel for a collaborative partnership project for Welsh Government.

 

  • Over the past two years, Innovation Point has supported over 150 application from Wales into Innovate UK, helping innovative companies here secure over XM for R&D projects. We therefore have track record in winning competitions with Innovate UK.

 

  • In 2017, Innovation Point pulled together a UK-wide winning consortium bid, for a £1.5m early stage disruptive tech accelerator competition from Innovate UK, bringing the first ever equity backed Accelerator to Wales. 

 

  • We have a strong network of partners and collaborators through our wide range of existing business projects, through our work organising “Digital Festival’ a tech & innovation conference and exhibition attracting over 2,000 delegates annually and because of our monthly networking events on the first Tuesday of each month – Digital Tuesday.

 

  • As well as our in-house team having unrivalled experience, our Board of Directors are also leading industry figures in Accelerator and growth programmes.  Our Chairman, Professor Simon Gibson CBE set up the Alacrity Foundation, our CEO David Warrender is chairman of the Airbus Endeavr programme, Paul Matthews, a Board member and Chief Executive of Monmouthshire County Council has recently set up a MedTech Hub in the region and another of our Board members, Simon Powell is an investor within InspireWales.

 

  • We have also supported numerous companies achieving private equity deals and other R&D focused grant funds, so we have the skills to work with companies to create innovative projects, and we are experienced at writing and submitting successful competition bids.

Why call it

'Western Powerhouse Growth Project'

The main focus for this Innovate UK competition is to increase the capacity of Angel investment within designated regions outside of London, whilst raising the number of innovative R&D projects at the same time. As such, Innovate UK have designated two zones in the UK eligible to enter this competition, with up to £1 million being put into one winning bid in each zone. 

 

Zone A:West Midlands England, Wales, South West England

Zone B:North West England, North East England, Yorkshire and Humberside, and East Midlands England

 

Although the competition brief doesn’t explicitly state that a bid should include more than one region in its designated zone, we are aware that bids will be considered more favourably if they cover more than one region, which would therefore increase the chance of success. 

 

With this in mind, we are shaping this project to increase the close working relationship between Wales and the South West of England, also known as the UK Government’s ‘Western Powerhouse’ strategy: an economic zone able to rival the ‘Northern Powerhouse’ or ‘Midlands Engine’.  Since the West Midlands sits within the ‘Midlands Engine’ economic strategy, we are not planning to partner with them as part of this bid. 

 

This means that if successful, the ‘Western Powerhouse Growth Project’ will seek to distribute up to £1 million in grant funds to R&D projects across both Wales and the South West of England. Not only do we believe this will increase the chance of a winning bid, but help to create a higher flow of quality to deals to investors, increasing Angel investment capacity and co-investment prospects, whilst providing substantial business development and partnership opportunities for companies both sides of the Severn Estuary Bridge, from the South West England coast up to Anglesey

Proposed Principal Partner Agreement

The ‘Western Powerhouse Growth Programme’ will:

  • Raise awareness of investing in early stage disruptive technology companies across Wales & the South West England region

  • Promote to SMEs that that investors are looking for investments in the region

  • Support innovation in SMEs across the regions

  • Increase the capacity of regional angel investor networks to invest in innovative SMEs

  • Identify innovative SMEs that the AIPs angel investors expect to invest in

  • Fund those SMEs to enable them to carry out R&D projects and grow using both grant and equity funding

  • Support R&D projects assessed as suitable by Innovate UK, with costs of between £40,000 and £300,000, and up to 50% of the eligible project costs funded by the Innovate UK grant.

  • Increase the economic connectivity between the South West of England and Wales, supporting the UK Government’s ‘Western Powerhouse” strategy 

  • Take advantage of other programmes providing synergies and added-value such as the Cardiff Capital Region City Deal, Swansea Bay Region Deal, North Wales Growth Deal, and the South West XXXXXXX. 

 

As an Investment Partner, you will:

 

  1. Confirm your commitment to being one of our partners on this bid in writing to us by XXXX December.

  2. Provide Innovation Point with your company information necessary to complete this competition bid within a tight competition timeline.  Our planned bid entry deadline is Friday 21 December (before the Christmas Break) because this will then allow for us to polish the document in the New year and submit before the competition deadline of 9 Jan 2019. 

  3. Consider quality deal flow opportunities put forward by Innovation Point throughout the potential two-year project 

  4. Consider whether any companies you invest into within the potential two-year project timeframe are suitable to work with Innovation Point to secure R&D grant funding from this growth programme

  5. Work with Innovation Point and project partners to raise awareness of the opportunities presented by the “Growth Programme” to other investment partners and disruptive tech companies.  

  6. Engage with the delivery of the Growth Programme project throughout the two-year life cycle as required, including appointing an internal project owner to act as our point of contact for open communication channels

 

As the Project Lead, Innovation Point will: 

  1. Complete and submit a competitive application into Innovate UK’s ‘Regional Angel Investment Accelerator Pilot’ competition by the confirmed deadline of 9 Jan 2019

  2. Create a strong project offering as part of the bid which meets the aims and ambitions of Innovate UK though this competition, and the critical requirements as set-out within application documents presented by Innovate UK

  3. Bring together a range of impressive consortium partners able to meet the requirements of the competition, and deliver a successful project if awarded the contract by Innovate UK 

  4. Communicate with project partners in a timely and effective manner, providing support and guidance where appropriate and required throughout the bidding and delivery phases

  5. Regularly engage with Innovate UK and their supporting sister organisation, the Knowledge Transfer Network to enhance the quality of a bid and partnership network

  6. Deliver an effective strategy for attracting suitable companies to take advantage of the Growth Programme including a range of online and offline activity designed to attract and engage the innovative SMEs. 

  7. Support suitable companies put forward by investment partners with the creation of innovative R&D projects which can be funded through the Growth Programme and provide synergies to the private equity deal being offered

  8. Act as the required ‘Angel Investment Partner’ (AIP) with access to a range of investors, and project managing the successful delivery of the Western Powerhouse Growth programme. Our role will include managing the £1 million grant allocation budget, carrying out required administrative functions, liaising with funded companies and their investors, tracking the progress of funded companies, and providing agreed information and reports to Innovate UK

Timelines

Innovate UK Regional Angel Investment Accelerator Pilot 

Competition Opens:Monday 29 October 2018

Registration Closes:Wednesday 2 January 2019

Application Deadline: 9 January 2019 

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