Interviews with members of the UK Business Angels Association
Eva Weber
Investment Director, Venture Founders
(crowdfunding Platform)
How did you get into early stage finance?
It was during my MBA at INSEAD that I got more exposure to startups, having spent the previous 6 years in traditional finance roles including corporate finance and investment banking. As Venture Founders was about to launch as a platform, they offered me a chance to work in a more entrepreneurial role.
Your favourite investment so far
I have worked on ten VentureFounders investments and can not point a single one out as a favourite. Although I have a personal interest in medtech, one of the best parts of my job is that I meet with entrepreneurs across industries and learn about new technologies every day.
The one that got away
Our very selective sourcing means that we decline around 95% of applications on the VentureFounders platform, many of which have great ideas but are too early stage for us. I hope we will be able to help some of them with growth capital further down the line.
5 qualities that an ideal investment for you should have:
First and foremost, it is about the team behind the investments, i.e. their experience and passion to drive the business. Then we look for the scalability of the business model. We also need a sound legal structure and minority shareholder protection rights in order for us to consider the investment.
Which industries and technologies are you looking at right now?
I look for investment opportunities across sectors, searching for businesses that are scalable, often challenging the incumbent players in their industry through disruptive technologies. Every business we back has a strong technology angle to its offering.
Do you think fintech is going to deliver on its promises of a reformed financial sector?
A number of fintech businesses have already driven significant change in the financial sector, and I expect many more to challenge the traditional banking system and hopefully as a by-product help other entrepreneurs to gain better access to finance at more competitive rates.
Should valuations be seen as a target, or a consequence?
Valuations should be a reflection of an investor’s assessment of the underlying value of a company and its potential to create future value, taking into consideration the risk profile. Given that this asset class is highly illiquid, investors should not invest in companies unless they believe there is a clear path to monetising their investment.
What advice would you give to startups looking to raise finance from online platforms for the first time?
Critically assess the team behind each platform and consider the investment structure (direct vs. nominee), as well as the investor base. Also, think about what level of support you want to have post fundraise and make sure that the investor base and structure are conducive to future follow-on raises, for example VC involvement.
Jamie Burke
Angel Investor & Co Founder of Outlier Ventures
How did you get into early stage investing?
When I came across the blockchain space in 2014, the opportunity was so big, but the technology so nascent, I thought it was time to start building a portfolio to explore new market opportunities.
Your favourite investment so far?
My favourite one so far is MoneyCircles because it addresses financial inclusion in a way traditional p2p lending doesn’t. It is aimed at the global $1 trillion credit union market. It offers to be both hugely pro table whilst dramatically improving the lives of millions of people across the world who are stuck in permanent indebtedness.
The one that got away?
The market is so new it will be 5 or so years before we can see what we missed out on. However, I regret not buying into Ether at their first crowdsale, a crypto-currency for the blockchain system, that now represents 10% of Bitcoin’s market cap but is in definitely more versatile as a token for blockchain app developers.
5 qualities that an ideal investment for you should have:
1) It needs to be leveraging blockchain technology.
2) It should either secure, scale or make a $1bn+ market much more efficient;
3) Great teams of at least two people with the combined experience of a minimum of 25 years in their respective verticals;
4) We invest in European-based companies but with global potential, also considering developing world;
5) Have a genuine social mission and purpose at their heart.
Which industries and technologies are you looking at right now? / Which do you think will be key growth sectors in the next 5 years?
All our ventures are based on leveraging blockchain tech but we believe they will make most impact to ecommerce, the sharing economy, health, insuretech and fintech. We believe blockchain accelerate: IoT, AI, Big Data, Automation, 3D printing and allow them to converge into what will be a Cambrian explosion of innovation to Ray Kurzweil levels.
Do you think fintech is going to deliver on its promises of a reformed financial sector?
Blockchains are already reforming capital markets through initiatives like R3 and Digital Assets Holdings. A consequence of using these technologies is better governance and auditability. But generally my concern for fintech is it’s often just about shiny new user experiences, not fundamentally addressing problems like financial inclusion.
Should valuations be seen as a target, or a consequence?
A consequence. However, it’s only natural they serve as targets for investors and entrepreneurs. The reality is there are so many unknowns, that anything other than what someone will pay today is irrelevant. I sometimes discussed exits at board meetings whilst a company was still classed as a startup. I think it can be distracting.
What advice would you give to startups looking to raise finance from angel groups for the first time?
Validate the idea as much as possible before you take any investment. Make sure you have some personal savings in the bank and a backup plan. That your significant other, should you have one, is bought into the journey. Forget dilution and take as much money as you can get upfront. 90% of something that runs out of cash is worth zero. Just get on with running the business rather than bootstrapping and constantly be trying to raise money.
Simon Menashy
Investment Director,MMC Ventures
(Venture Capital)
How did you get into venture capital?
A career in tech and strategy consultancy at Deloitte gave me an essential commercial grounding. Once I decided the action and excitement was in smaller, fast-moving companies, I networked as hard as I could, figuring out what firms were interesting and who could get me through the door (including the good headhunters).
Your favourite investment so far
I’m proud to have led the largest drone deal in Europe with Sky-Futures – they use drones and data in the global oil and gas market.
The one that got away?
If we’re seeing the best deal ow then there should be lots! Shutl, Secret Escapes and Deliveroo are three good ones.
5 qualities that an ideal investment for you / MMC Ventures should have: Potential to become a sustainable, category-leading business. Designed from the start to scale fast. Attracts incredibly talented people. Obsessed with the customer experience. Open to challenge, iteration and learning.
Which industries and technologies are you looking at right now? / Which do you think will be key growth sectors in the next 5 years?
Fintech in London is going to steamroll on for many years yet. SaaS has a long way to go, and we like marketplace and subscription models in spaces that haven’t worked that way before. Finally, we’ve just closed Admedo, an ad-tech investment – that’s a sector that lots of VCs don’t put in the work to understand, so an area of opportunity.
Do you think fintech is going to deliver on its promises of a reformed financial sector?
We’re starting to see the most profitable business and consumer financial services getting picked off one by one as younger, nimbler companies out-compete the banks, brokers and insurance companies. The incumbents are going to need to reform and take some hard technology decisions, or see their margins disappear in the long-term. So it’s interesting to compare ‘replace the bank’ vs ‘fix the bank’ startups – hopefully a healthy balance.
Should valuations be seen as a target, or a consequence?
Definitely not a scorecard! Some founders get fixated on valuation and either put off investors, raise the wrong amount or don’t focus enough on other important terms. Valuation should be a consequence of a good long-term funding strategy.
What advice would you give to startups looking to raise finance from VC for the first time?
Get introduced at least six months before you plan to ask for money. Personalise your approach. Be open and willing to have a debate. And do it yourself – it’s a job for founders.
