Investment Thesis

In the following sections I set out the criteria that contributes to an investment decision.

Investment Qualifiers

Number and size of investments

In order to build a diverse portfolio I invest modest sums in 4-6 startups annually (including follow-on rounds). I invest a fixed amount and don’t exceed it. Sometimes I will invest a reduced amount in order to further diversify or support a worthwhile social enterprise that I might otherwise not have invested in due to risk or returns.

Platform

Having evaluated a number of investment platforms I have doubled down on Seedrs as the best option for investors looking for the deal flow and investment size I currently pursue. This is due to Seedrs having struck a good balance (and aligned incentives) between founders, investors, and the platform. Seedrs also provides mechanisms for ongoing communications and exchange of ideas, protecting pre-emption rights, and operating a functioning secondary market. If you aren’t on Seedrs - I’m not going to invest at this time.

Tax incentives - EIS / SEIS

The income tax rebates, capital gains shielding, and loss offset makes the risk-adjusted return on investment significantly more attractive for SEIS and EIS enterprises. This makes it very unlikely I will invest in an startup that doesn’t fall under these schemes (even though this limits international diversification).

Structure

The founders and executive team should own the majority of the business - in order to allow them a meaningful ownership after multiple investment rounds. I am extremely wary of dependencies on intellectual property that requires significant royalty payments to another party, or incubators that extract significant cash from the business.

Exits

If you don’t have a clear exit opportunity (and intent) of at least 4-10x in 3-6 years, or 100x in 10-12 years I’m out. I’m not interested in plans for dividends or supporting a lifestyle business. I generally prefer investments with a realistic prospect of early exits.

Stage

I will not invest at idea-stage unless you are a successful serial founder, or I know you personally. For definition of successful see “Exits” above. You need to have demonstrated the capability to execute effectively on your idea, proven there is a market demand for what you offer, as well as the ability to survive competition.

Team

You need to have a strong and balanced capability across business development and technology. This usually requires a team - but sometimes a sole-founder will be well-rounded enough. If you can’t build something great, and most importantly sell it at scale - I’m not interested. I am happy for the founders to draw a modest salary.

Market and Marketing

The market has to be of sufficient size to provide realistic prospects of an “Exit” as described above. I also have a strong preference for scale businesses where revenue opportunity is not linearly proportional to overheads. This is often but not always digitisation or technology startups - areas I know well. There needs to be an extremely strong go-to-market plan based on research, expertise, experience, and experiments - not wishful thinking. I will consider investing in product businesses where there is patent protection or some other barrier to competition in order to protect margins.

Involvement Expectation

Updates and dialogue

I welcome connections on LinkedIn from portfolio founders. I expect to see quarterly updates including progress against plan, changes to plan, and future plans - usually through the Seedrs portal. A commitment to ongoing engagement with shareholders through the investment forum is also important.

Advisory

I offer all portfolio companies a few hours of support and advice in the areas of information security and technology strategy and architecture. This is never imposed but rather offered in order to help assure successful outcome for the venture - it is up to the founders whether they wish to utilise this.

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Seedrs (PENDING)

Seedrs is establishing itself as a market leader in Europe with a strong team, good governance, and a fantastic product. As a long-time user of the platform I see a lot of potential to further grow market share and indeed the size of the market.

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Ding (ACTIVE)

I've been a long-time home automation experimenter and one thing I've learnt is that for day-to-day use products must be simple, intuitive, responsive, and resilient. Ding have a great product in this context, a strong go-to-market partnership, and a capable team.

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CityFALCOLN (ACTIVE)

This is a scalable startup in an interesting space. The team is driven and has good traction with early customers. They are in a market which sees a good number of deals so there is a good chance of a profitable exit.

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Den (ACTIVE)

Another play in the home automation space which is likely to see consolidation in the medium term. The appeal of Den is that their product blends seamlessly into traditional decor and is designed to function as a traditional switch - essential for mass-market adoption and integration into building projects.


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Morpher - Folding Helmet (ACTIVE)

In general I'm not keen on manufacturing companies - it tends to be low margin - however the Morpher team have key patents in hand, a large market with lots of opportunity to diversify, great traction, and a fantastic product.

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Twickets (ACTIVE)

Solving the issue of ticket touts through allowing an official platform for exchange of tickets at or below face value. The key thing here was the traction as the official reseller for main-stream entertainers giving a strong marketing strategy.

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Pocket App (ACTIVE)

The UK's largest independent app development company with a well managed low-cost development methodology. They are also building a wealth of intellectual property that should improve margins over time.

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Lettingsupermarket.com (ACTIVE)

A nationwide low cost lettings service allowing landlords to save money on management fees. A good scaleable business with a well thought out model.


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Wriggle (ACTIVE)

Deals on top quality lunches - just before lunchtime. The team has excellent execution and robust unit economics. It's a tough market but the marketing strategy is great.

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Wealthify (EXITING)

There is a lot of competition in the "robo advisor" space, however Wealthify stood out amongst them as the simplest and best presented offering - making it really easy for people to move long-term savings into tax efficient high return investments. Aviva will be buying a majority stake, held for less time than I would like but yielding an expected IRR of around 50%.

Recommended reading

I read extensively. Books I would happily recommend to entrepreneurs and investors are linked below.

Getting in Touch

Feel free to contact me on Twitter or LinkedIn