Kristina Pereckaite, the founder of South East Angels, believes the current slowdown in financing provides a strong opportunity for non-venture capital (VC) firm investors.
“Angel investors – if they weren’t investing through SEIS [seed enterprise investment scheme] funds – were kind of left behind a little bit because say we found a great company we wanted to invest in, a VC with a SEIS fund would normally get in there first, take the SEIS and then we would not have the time to get in.”
Less activity from VCs results in a “great opportunity” for angels to swoop in and get initial access to “better deals”, Pereckaite says.
“I think even though some people maybe are being slightly more cautious or turning down their investments, I think this is such a good time for angels to be making their investments because there’s less competition on the investment side.”
Pereckaite, who is also managing director, created South East Angels to draw capital into the South East of England due to a lack of early-stage funding available outside of London.
Set up in 2020 with five investors, the syndicate has since expanded to 20 members. It includes WPM founder Holger Bollmann, Piero Grieco and Ross James.
“The startup ecosystem is slowly building but other than what we’re doing, I haven’t seen much more investment activity here. We’re trying to fill that gap on our own,” explains Pereckaite.
South East Angels invest across the UK, but it will “prioritise local businesses” Pereckaite tells UKTN.
“The majority of our group are entrepreneurs who’ve sold their business in the last five or so years, and they’re now looking to stay involved in the startup game, not by starting another business themselves but investing in others.”
Space, sustainability and climate tech are key focus areas for the group of angel investors.
However, Pereckaite says these can be difficult due to the associated larger ticket sizes and the subsequent impact on negotiating deal terms. Co-investment funds could help with this, says the managing director.
“I know a lot of great UK companies that have ended up raising in Europe or in America because they couldn’t get money in England whereas actually, it would have been such a great innovation to come from England,” Pereckaite says.
Tech investments made by South East Angles include smart mouthguard startup ORB Innovations, University of Sussex drug delivery spinout Athos Medical Technology and electric cargo bike firm Zedify.
“I’m definitely seeing an uptick in interest in investing in health care,” says Pereckaite. “Everyone is talking about web3 and then everyone’s talking about AI but healthcare seems to be the thing that unites everybody because you don’t have to be specifically interested or understand it. You do with AI but not with healthcare. I think there’ll be an increase in investment in that space for sure.”
The Brighton ‘bubble’
Prior to founding South East Angels, Pereckaite ran a startup accelerator in Brighton, which received the “lowest level of investment” compared to the rest of the UK.
So far the group has invested in 12 businesses with investors from Kent, London, Surrey and Hampshire joining.
Brighton for now is overshadowed by nearby London, which means the rest of the South East is competing with better pay and similar living costs.
Another issue is what the South East Angels founder refers to Brighton as operating in a “bubble”. It needs additional connections to the world through initiatives like accelerators. Whilst the area is a good “incubator of companies”, growing into more prominent companies is a “struggle”, Pereckaite says.
“There’s just a lack of that scalability. I think if you want to do something, especially in sustainability or if you want to work with really diverse people, the South East really has that to offer.”
Beyond the Capital, an interview series with tech investors and venture capitalists based outside of London, is published monthly. Last month UKTN spoke with Midlands-based investor Midven.