Understanding the Role of an Investing NED and Its Functionality

An investing NED is a hybrid role between Non-Executive Director and Angel investor. Typically, you would invest an amount of between £25k and £50k in an early-stage startup business.

This investment is usually made under the HMRC SEIS or EIS schemes. This allows you to claim 50% or 30% (respectively) of your investment back against your tax bill. Thus, under SEIS, a £50k investment costs £25k after tax relief.

We collaborate with startups that are developing cutting-edge technology, software, or services, many of which deploy AI and originate from the UK’s leading universities

An investing NED is often looking for a startup in the field they previously worked in or in a sector they are passionate about.

In many respects, the aim here is to help startups benefit from your vast experience, knowledge, skills and connections, in a mentoring or coaching type role, whilst at the same time investing in an early-stage business where you hope to see good return in the future. Naturally, all investments carry risks, and startups are among the riskiest due to their early-stage nature. However, successful investments can yield significant returns, and your input can be instrumental in their success.

Those seeking paid NED roles will often be attracted to an investing NED role as part of a balanced portfolio – 2 or 3 paid NED roles plus one Investing role and maybe one charitable role. Investing NED roles add excitement and involvement – leveraging your network to make a startup business really fly is incredibly rewarding.

Balancing a startup team with established business professionals can make for a perfect structure, one that is attractive to future investors because of the experience it has. However, make sure you look for a good “fit” with the founders – do you share their vision, are they fully committed, can you clearly see where you can add value, and do you like them.

In the early stages, Investing NED roles are unpaid (cash is king in a startup). However, where specific objectives or goals are carved out for an investing NED, then reward mechanisms (usually around additional equity) can be put in place. Investing NED’s delivering added value, will often find themselves on a daily rate or retainer once the startup is in a position to afford this (usually after a bigger investment round or when they begin to generate revenue).

Each year, we place around 50 Investing NEDs with startup businesses through our partner, First Flight NEDs and Advisors. If you are interested, please email us at info@firstflightnonexec.com to schedule a call. You can also view our current live roles here.