D5 Capital has launched an angel investor group for private investors seeking exciting returns in technology and media.

The angel service is provided to sophisticated, high net worth investors that want to gain exposure to high growth media & technology companies in Israel and the UK, with a view to making substantial capital gains over a 5-year time scale.

We aim to identify up to five companies per year that, in our opinion, are capable of rapid growth within a five year time period – with an uplift target of over 5 x the amount originally invested. The Enterprise 5 investment ‘sweet spot’ is the Seed/Series ‘A’ rounds of between $0.5m – $1.5m of equity or convertible debt, where pre-money company valuations are within the $2m- $5m range.

Investment Criteria

The companies selected for Enterprise 5 must offer investors the following attributes:

  • Outstanding management teams
  • Original, disruptive and scalable business models
  • Original intellectual property
  • Plans to address large, global markets
  • Potential for rapid growth of customer bases and revenues.

Preferred sectors

D5 Capital focuses its research on certain media and technology sub-segments in looking for high performance assets:

  • Analytics and data
  • Applications (Internet)
  • Digital media & publishing
  • eCommerce & mCommerce
  • Marketing technology
  • Security software
  • Social media & networks
  • Software as a service (SaaS)
  • Sports technology

How the Angel Service operates

Members of the angel service are under no obligation to invest in any particular transaction. Once an investor has registered and completed the required paperwork to state that he/she is a ‘sophisticated investor’, the investor will receive all updates and notices of individual company road shows and stock issues. In the event that an individual makes an investment in a company identified by D5 Capital, the investment is made directly in that company. Any fees and expenses arising from the funding round are charged to the company. The minimum funding unit is $50,000 (£31,250).

Due Diligence

On every investment, D5 Capital will require the company to pay for legal and financial due diligence to ensure the company has a ‘clean bill of health’. The fees for this work will be subject to a negotiated cap, depending on how much work is required. These due diligence reports are available to investors. A commercial review is conducted by D5 Capital, often using third party analysts.

Tax benefits

Where a company operates from the UK or has a permanent establishment in the UK, D5 Capital will seek proof that the company will qualify for EIS tax relief on amounts invested. Where the company is based in Israel and is focused on global markets outside the UK, D5 Capital will seek to negotiate an investment in a Convertible Preference Share or Convertible Loan Note to provide yield and security, with a liquidity preference in the event of an early sale or liquidation. Gains enjoyed by UK residents arising from the sale of technology companies are free of withholding tax in Israel.

 

Next steps

If you are a sophisticated investor (as defined by FSMA 2000) and may wish to invest individual amounts of $50,000 or more in growth companies identified by Enterprise 5, please register your interest with Rupert Ashe at Rupert@d5capital.com or call 0207 812 6567.