26 October 2016

UK smart thermostat maker among angels’ targets in October

There have so far been 21 European angel investments worth a combined EUR 71 million signed off during October 2016, according to Zephyr, the M&A database published by Bureau van Dijk. This means the month remains some way behind September in terms of both volume and value and with 11 days to go until the end of the month at the time of writing there will need to be a significant upturn in activity over the coming weeks if results are to come close to the EUR 133 million invested across 60 deals last month. The decline would be slightly steeper year-on-year when compared to the 65 deals worth EUR 134 million announced in October 2015. Despite the fact that September would be a very disappointing month if results remain at the current levels, value for the month has already surpassed a number of other recent periods, including August 2016 (EUR 25 million) and February 2016 (EUR 41 million). Nevertheless, many will be hoping to see some high value angel investments signed off over the course of the next 11 days. This could result in values being boosted closer to the EUR 133 million invested in September, although there would need to be some very large individual considerations to reach this level or beyond. Indeed, it is the lack of a single very high value transaction which appears to have held results down in the month to date, given that October’s largest deal to date is worth just EUR 15 million while transactions worth as much as EUR 96 million have been signed off at other points in 2016.

The largest European angel investment announced so far in October involves Irish camera manufacturer Smartfrog, which secured EUR 15 million in a funding round from Target Global, e.ventures, Jean-Pierre Wyss and undisclosed family offices. This deal accounts for 21 per cent of total European angel investment in October and was worth one third more than the second placed deal – a EUR 10 million injection in French online foreign exchange manager FX4BIZ by Xavier Niel and other undisclosed parties. In all six deals have so far broken the EUR 5 million barrier in October and while these are all sizeable investments and certainly not to be sniffed at, they are not on the scale which is likely to lead to a record-breaking month in terms of aggregate value.

It is not always easy to predict the type of sectors angel investors are likely to take an interest in, but it is safe to say the software industry is frequently targeted and often accounts for a sizeable chunk of the deals signed off in any given month. However, there are always a few sectors which crop up and are not glimpsed quite so often and October has proven to be no exception. One of the deals which caught the eye this month was worth just EUR 700,000 and featured a company manufacturing a smart connected thermostat. UK-headquartered Switchee, which is based in London, has secured the investment from ClearlySo, Mustard Seed Impact, Telefonica Open Future, Pi Labs and Ian Nolan. Switchee bills itself as the designer of a product which aims to help providers of affordable housing to fight fuel poverty, which in essence means the thermostat regulates itself with a view to lowering energy bills. The product learns a household’s weekly routine and turns the heating off when it knows no-one is at home. It also has the ability to compare a house’s energy usage with that of neighbouring properties and prompts the user to turn the heating down. Switchee said proceeds of the deal will be used to expand the reach of its technology and help the company to meet growing demand and upgrade its analytics.

In comparison to other sectors, manufacturers of measuring and controlling devices have been targeted fairly frequently by angel investors in recent years; since the beginning of 2006 there have been 31 such injections announced worldwide. The most valuable of these was actually signed off earlier this year; in April German data analytics sensors maker Konux brought in almost EUR 7 million via a Series A round from New Enterprise Associates and MIG Verwaltungs, with additional participation from UnternehmerTUM, Founder.org, Andy Bechtolsheim and Warren Weiss. Another German firm was targeted in the second-placed deal as inspection technology developer Nanda Technologies received EUR 5 million in a Series B round from BrainsToVentures, Ventegis Capital, Bayern Kapital and Alexander Bruehl back in May 2008. Other such companies to have been targeted by angels since the beginning of 2006 include Italian biological testing device developer Silicon Biosystems and US-based anonymous people counter technology maker Density.

To sum up, October appears to be unlikely to surpass the investment levels recorded in August, and actually looks to be one of the quietest months of 2016 to date in terms of European angel investment activity. However, a few large injections over the course of the next 11 days could completely change the course of results as we move towards the end of the year.

© Zephyr