What Is Apollo Informal Investments?

Apollo is a group of investors who jointly select, research (Due Diligence), and invest in startup companies.  Every member decides individually how much they want to invest and which companies. Everyone within Apollo operates voluntarily and we do not have paid staff.

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What is the Apollo Mission statement? 

Providing exciting investment opportunities in the SEIS space by being the preferred early-stage investor for start-up companies.

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Who are the Apollo members?

Our members come from various backgrounds, with a special focus on relatively young investors who themselves are CEOs. CTO, COO, etc.  We aim to be as diverse as possible, as this will increase the quality of due diligence and support given to investee companies.

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In what kind of companies does Apollo invest?

We invest at the earliest stage and usually are the first outside investors. We invest in two types of companies.

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a)       Companies that are too early for other investors. Usually, these companies are in the Idea Stage, and the Apollo Funds allow the company to create enough traction to attract follow-up funding.

b)      Companies we like to call Lifestyle Plus. Typically, they do not require follow-up funding as they become cash flow positive soon after the Apollo Investment.

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What are the Apollo Criteria?

• Company Valuation is limited to a maximum of £ 1 mln.

• SEIS eligible.

• Investments between £20,000 and £200,000. Our sweet spot is £80,000-100,000.

• Sectors: no restriction.

• Scotland based,

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What is SEIS?

The United Kingdom government launched the Seed Enterprise Investment Scheme (SEIS) to encourage investors to finance startups by providing tax breaks for backing companies they may otherwise view as too risky.

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What are the SEIS tax reliefs?

• Income tax relief: Up to 50% income tax relief on investments up to £200,000 per tax year.

• CGT disposal relief: Any gain is Capital Gains Tax (CGT) free if the investment is held for at least three years.

• Loss relief: If the shares are disposed of at a loss, you can elect the loss to be set against any income tax of that year or the previous year.

• CGT reinvestment relief: 50% of capital gains are exempt from CGT if re-invested in a SEIS-qualifying company.

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How does Apollo select the investee companies?

Companies that fit our criteria are invited to upload their investment proposal to our portal (see Seeking Investment).  Every quarter our members vote on which companies they would like to see at the Apollo meeting. If enough members are interested, we will invest.

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How do Apollo members vote?

We use the voting function in our Dealum platform. Every quarter, the qualifying companies will be listed in the screening section of the Funnel. They can vote Yes (3 points), Maybe Yes (2 points), Maybe No (1 point), or No (0 points). If you have helpful info for your fellow members or feedback for the investee company, you can leave a comment. Every member will vote based on personal preference and criteria.

 

Maybe Yes and Maybe No can be used if a member is unsure and interested in hearing what fellow members are thinking. 

The companies with the highest average vote will be selected. In a tie, the company with the most votes will win. We choose the two highest-rated companies from 10-15 companies. 

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What is Dealum?

We use Dealum to select investments, coordinate Due Diligence, and keep updated on our investments. You can find  a useful help guide on the platform and their website (https://help.dealum.com/en/) 

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What kind of return can you expect?

Investing in pre-seed companies is extremely risky. Expect a failure rate of 70% or higher. We highly recommend creating a diversified portfolio by investing smaller amounts in different companies. Based on Monte Carlo Modelling, a portfolio return of +/-15% year on year (including SEIS benefits) is possible.

https://www.linkedin.com/pulse/seis-asset-class-why-you-should-consider-early-stage-investing-smith/?trackingId=4gTU4SkPRWeSj9TSgb8%2FkA%3D%3D

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Here is a link to another Mote Carlo model that simulates 20 investments over 10 Years. 

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Why is the maximum pre-money valuation £ 1mln?

Apollo investee companies are generally too early to value properly. Based on exit data, failure rates, expected dilution, time to exit, and other factors, we believe a valuation of £1mln should be the maximum to generate the returns that match the risk profile of illiquid investments in start-up companies.

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How do investee companies generate a return for the investor?

Normally, this would be via trade sale or IPO, which can take 8 years or longer. Lifestyle Plus companies are expected to generate a dividend in year 3. The Founders/Company can use dividends/excess cash to buy back the shares from the investors from year 5 onward.

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Who should join Apollo?

Angels who want to create diversified portfolios, help with Due Diligence, and support the investee companies (if asked). You need to be able to self-certify as a High-net-worth individual or Sophisticated investor. We will consider corporate investors as members, but they will be treated as any other member. You also need to complete an Anti-Money Laundering check.

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Who should not join Apollo?

Individuals who use Apollo to sell their services to (potential) Apollo investee companies.

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What is the membership fee?

£200 per year to help pay for various IT, Admin, and event costs We organize 4 investment meetings and several social events per year.

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How many investments do you make a year?

3-4 new investments per year and we offer the opportunity to join follow-up rounds in existing companies.

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How much should you invest?

Our members normally invest between £2,000 and 5,000 per deal.

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How do I join Apollo?

Please get in touch with one of our directors via LinkedIn.  We will set up a Video Call to have an introductory talk and invite you to our next meeting. 

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How hands-on is Apollo?

Apollo itself is very hands-off. Every member needs to do their Due Diligence, but we share and coordinate it via our platform. We let our investee companies get on with business but ask for quarterly updates and require Investor Majority approval for some actions. We appoint investment directors and/or observers to look after the interests of all shareholders and the company itself. Sometimes these are Apollo members, sometimes our co-investors appoint the Investment director.

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Who will be the Investment Director/Observer, and what role will they play?

We aim to select a member who can help investee companies grow while looking after the interests of all stakeholders.  They will be the contact person between the investee company and (Apollo) shareholders. The investee company and Investment director can determine the level of compensation. Usually, this is between £0 and £500 per month. 

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What fees does Apollo charge the investee companies?

We charge a 3% deal fee but no recurring monitoring fees. The company also needs to pay the legal fees which we try to keep as low as possible.

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Who are the co-investors/follow-up investors?

We have co-invested with various Angel Syndicate, VCs, and Family offices from the UK, Europe, and the USA.  We are not a Scottish co-investment partner. 

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What is the legal process?

We used standardized Investment Agreements and Articles of Association found on our website. We have used Seedlegals in the past.