Ryan Prince, one of the co-founders of the iGabriel network, met Charles Muirhead towards the end of 1999 when he was beginning to ease out of Orchestream. Orchestream was floated on the London Stock Exchange in June last year making founder Muirhead a popular man: Prince notes that Muirhead’s brainchild made a number of angel investors millionaires. Some of those angel investors are currently members (not referred to as investors) in iGabriel.
iGabriel is an invitation only seed and early stage investment and networking club of sorts. That makes it sound rather snooty, in fact Muirhead’s intention was to put together an organisation that would supply all of the things to start ups that he would like to have been around when he began Orchestream in 1996. It is well to remember that Muirhead, Prince and the other co-founders, Mark Woodall and Esther Dyson, were having this conversation against the backdrop of a burgeoning incubator/ accelerator scene, where it was difficult to differentiate between players and, even, where they added value to start ups.
Given the availability of funds traditional venture capital investors were upping their initial minimum investment in company’s thanks to a need to deploy their raised capital in an effective manner. Consequently, seed and start up funding in the sub GBP1 million bracket was difficult to find outside the clutch of incubators and accelerators.
So the iGabriel way forward was found. Prince notes: “We thought the value that really helps in the early days of building a business is relationships that build credibility immediately.” Money was a prerequisite so beyond that it was decided that iGabriel would be best to offer access to a network of contacts rather than a host of incubator-type services that would involve the setting up and maintenance of a costly infrastructure. And it was not something that “smart” entrepreneurs want or need.
Typically iGabriel members are likely to have engaged in business angel activity in one form or another and it takes an average investment of around euro300 million to euro500 million to become a member. iGabriel hopes that this money spread across between 15 to 20 companies over a three-year period will give its members greater diversity than if they were angel investing alone. It is also designed to make the angel investing process less time consuming.
iGabriel will only make an investment in a company if that company is sponsored by at least one of its members. Sponsorship is most usually in the form of an individual financial commitment by a member. Members bringing deals to the iGabriel network are encouraged to invest alongside the iGabriel investment if they wish to increase their exposure to the potential upside. On the flip side by only investing in companies where at least one of its members has a financial sponsorship interest this ensures that the network members only give their best deals to the group.
Prince co-ordinates the membership and appears to have a good understanding of the level of contact that each of the members in iGabriel will appreciate. There is a members only extranet and Prince organises member only events he sports a tan when meeting EVCJ having just returned from a skiing weekend with 50 individuals related to the iGabriel network.
iGabriel has just five members that pass muster on the networking and contacts front but do have the liquid assets to front iGabriel’s euro300 million to euro500 million price tag. Brent Hoberman of Lastminute.com is one such individual. He and others in this category are known officially as associate members and are, as Prince says, iGabriel’s members of the future.
Following an increase in its membership in November last year iGabriel has some euro12 million to invest. The first members joined in June 1999 and some of those chose to increase their investment in November so as not to suffer dilution following the increase in membership. iGabriel effectively works as a holding company for its members and takes between five per cent and 30 per cent stakes in the companies in which it invests. Typically the grouping is interested in deals requiring euro50,000 to euro500,000, with the former targeted for deep investigation of a good idea and the latter for developed business plans with a management team in place.