Grombles

I've written several times about how risky angel investing in start-ups and early stage businesses can be. Having personally invested in about 20 such businesses over the past 10 years, I have probably had to write off at least half of them within the first couple of years - but that doesn't mean they have disappeared completely. Just that my shares are no longer worth anything. That annoys me not just because they cost me money, but because the assets I helped to create may now be earning money for someone else. It may even be illegal and I am letting them get away with it. Let me explain. When you buy shares in a company, depending on the class of shares you buy, you are probably entitled to a share of the profits it makes when the board issues what's known as a dividend. Otherwise the profit is retained in the business to be reinvested in growth. In due course, someone may offer to buy your shares for more money than you originally paid. So there are basically two ways o...

I have been investing in start-up companies (businesses with little or no trading history) for around 20 years. Unfortunately, despite knowing a great deal about starting and selling businesses, at least half of the ones I pick eventually fail and lose me all the money I invested in them... although some of it might be recoverable as tax relief. So over the years, I've come to realise that the odds are heavily stacked against me backing a winner - typically defined as a sale of my shares, known as an exit , within 10 years, paying me at least 10 times the money I invested. To get the same result from guaranteed compound interest over 10 years, you would have to be paid a rate of about 25% - so get it right, and it's a big prize. I've managed it a couple of times, so overall have recovered most of what I've lost on the many companies who died, but it's a very high risk game. So why do so many angel investments in particular die, and why is it so hard for us to spot t...

I subscribe to Newsweek Magazine. As its name states, it's a weekly magazine broadly arranged like a blog with articles rarely longer than a few pages, covering highly topical subjects such as cyberwarfare, Trump's legacy, vaccine science and the like, all from an American perspective. I strongly recommend you subscribe at https://subscribe.newsweek.com/ . In their Christmas 2021 issue they published a list of 50 people (or partnerships) whom they describe as 'agents for change' or 'disruptors', the most famous of whom is Elon Musk - considered the Thomas Edison of the digital age. It makes for a fascinating wander through what the world is turning into from many points of view, but especially new technologies, new politics, new awareness of the planet's fragility, new fashions, new fears and new excitements. Many of their choices raise further questions about what we are turning into such as overweight couch potatoes; superfluous actors in a world of robots...

I recently gave a presentation using my personal career journey to illustrate how the acquisition of experience over time enabled me to become increasingly useful to a broadening variety of businesses:- Education to Employment to Entrepreneur to Mentor to Angel to Non Executive Director There is plenty of overlap between each of these chapters. I have, and continue to form my own companies, invest in lots more, and mentor even more. So it's not a simple consecutive flow. However, what it does represent is an accumulation of sufficient experience and confidence to progress through each stage before exploring the next. There's no way, for example, that I could have been a successful entrepreneur without having first gained experience by working for someone else. Equally I didn't have the breadth of experience of other people's companies to feel confident about investing in them without first getting to know many of them through mentoring. Per...

Business is risky. It has to be so we aren't overwhelmed with an infinite number of businesses all demanding their right to flourish. It's pure Darwinian capitalism. Only the fittest survive, so businesses that don't attract enough revenue or capital to pay their costs, will fold. Cease trading and liquidate what's left. The founders, shareholders, directors, staff, suppliers, creditors and customers need to take a deep breath and move on. Easy to say, enormously hard to do. When you've poured you life, soul and probably your house, marriage and family's future into something, deciding when it's time to call it a day is massively difficult. Usually there are still reasons to be hopeful. An order about to drop; New product around the corner; New strategy to test; New advertising in the pipeline; New management; Competitors failing. Endless reasons to be optimistic, except one. You're running out of money and the risk of the business failing is increas...

We're all familiar with Dragons Den, the popular TV series where all manner of weird and wonderful ideas are pitched to a panel of wealthy self-made business men and women in the hope of attracting investment. Well Dragons are not mythical beasts who only exist on TV for our entertainment. All over the UK there are clubs of relatively wealthy people known as angels, not dragons, where businesses pitch their ideas in much the same way as you see on TV (usually 5 or 10 minute Powerpoint presentations). The better ones attract angels to invest typically £10,000 to £20,000 each, or occasionally more, in exchange for shares in their companies. It's fun, and it's vital for the economy. It's also immensely satisfying for those of us who were fortunate enough in our day to have had help to build our own wealth, to assist younger men and women to do the same - hopefully. I'm a member of an angel group called The Surrey 100 Club. It operates under the auspices of Surrey Uni...

I'm a member of a local angel investment group known as the S100 Club . It's part of SETsquared , the world's largest university incubator network. We meet every other month to see half a dozen pitches from businesses seeking funding in the £200k-£1m bracket. Banks won't lend to high risk start-ups, and investment funds tend to only be interested in established companies needing upwards of £2m to accelerate their already proven potential for growth. So angels are a vital source of funding between Family, Friends and Fools risking their savings and mortgages on their homes, and the larger, more risk-averse venture funds. About 2 years ago the club had a pitch from a company which was then called Playcaddy. Basically it was a website that managed sports activities like leagues, competitions, teams and other group events for clubs. Impressively their system was already being used by several high profile clubs, especially tennis (the founder is a keen player who built ...

Have you realised how excessive almost everything has become? Today we are literally overwhelmed by choices and by stuff. What to watch Which app to use Phone to buy Tweets to follow and read News Transport Clothes Food Education Holidays, flights, hotels Careers Sports Friends Choice choice choice Reading, buying, watching, doing, meeting, exploring, finding etc etc. So much more to do, to own, to use, or to waste our money on than any generation has ever experienced - and it's relentlessly getting worse (or better if you relish excess). The global marketplace has only just begun to assail us with all its offerings, and it's limitless. So how do we control this overload of decision making? And it's not just individuals who need to become better organised to manage this deluge. Organisations are called this for a reason too. We assign values to each and every element trying to impinge on our lives. Will it resolve a problem? Will it look good on me? Can...

After a fairly short but traditional crawl through big company management structures, I decided someone else's rat-race wasn't for me. I wanted to try my luck at creating my own. So at the age of 29 I became an entrepreneur. How hard could it be? Think of an idea, borrow some money, make lots, pay it back, invest in more ideas. Several decades later I can look back and compress my experiences into precisely that chain of events, but oh boy it was neither as easy nor as fast as I ever imagined. But in a way, if I'd been more prepared, I either wouldn't have bothered or I wouldn't have experienced the pitfalls that helped me meander my way to where I am today.   What doesn't kill you makes you stronger. This post is not about how to come up with ideas that stand a chance. I've written plenty of posts discussing that - click here to read them . After a series of decent successes (and some failures), I reached 50 and decided to start investing in other peopl...

I've been a business angel for a number of years. An angel is someone who invests in young companies (usually), even pre-start-up (occasionally), in exchange for shares in that business (typically), in the hope they'll one day be worth more than we paid for them (rarely). It's a very risky game, so why do I do it? I'm an entrepreneur myself. Salaried life frustrated my need to challenge myself. I was easily bored by process and reporting. In short, I became unemployable. I grew up in a house full of my father's wacky inventions (holographic fires, carburetor balancers, jet nozzles, squirrel-proof bird feeders etc), all of which lost him the money he'd made consulting for other people's companies on boring things like process and reporting. Dad's creativity missed one vital component that successful entrepreneurs discover. It's not about what you want to sell, it's about what people want to buy. I too learned this the hard way. Fortunately I p...

I am truly puzzled by a new fad that's sweeping the youth of today. I'm puzzled because it's not new at all. In fact it seems to me to be a retrograde step in the relentless evolution of technology. I'm talking about the Polaroid or Instant Camera. This is one of the originals from the 1960s (in fact Mr Land invented the first 'Instant Camera' in 1948):  And here's the one my son just got for Christmas: In 2008, Polaroid went bust (again!). The world had gone digital. Film cameras had all but disappeared. Serious photographers today use digital SLRs made by the likes of Canon and Nikon. The rest of us use our ubiquitous smartphones. And with cloud storage, we are no longer constrained to the thousands of high resolution images our phones and cameras could store locally. Now our personal picture-taking capacity is limitless. Film and cartridge cameras limit you to a handful of pictures before you had to - expensively - load the camera again. An...

"A country for the many not the few". The slogan for Labour in the recent 'snap-election' which our cretinous Tory government of Brexit dreamers expected would strengthen their mandate. Even I predicted a hung parliament as the obvious outcome of May's pathetic attempt to 'exploit' in-fighting within Labour ranks (I won on PaddyPower at ridiculous odds of  7:2... but more about gambling and winning later). She forgot that she was elected by Remainers. My problem with Labour's slogan is the implication that the 'few' are bad for the UK and that the 'many' are in some way being unfairly treated by them. Pol Pot had the same idea in Cambodia. That worked out well. Lenin too. In more recent times Hugo Chavez's social spending and high taxation totally destroyed Venezuela. Once a shining example of prosperity in South America, now a horrifically failed state. His Robin Hood politics shattered a successful country. But his popularity wa...

Having created a handful of successful start-ups over the years, and mentored dozens more, I've evolved a simple 3-point checklist to help new businesses beat the odds (the majority of businesses fail within their first year). There are three considerations - Need, Awareness and Trust:- NEED Does your target market really need what you're thinking about selling to them? It's not about like or even want . Neither of these emotions may be strong enough to relieve them of money. I developed this graphic to demonstrate this gradient of sales potential: The key is to really understand your market. Just hoping or guessing that people NEED your product or service, is not enough. You must know. And you can only begin to do that by researching your market. And that means meeting them, as many as possible, and with as much cynicism as you can muster that what you're showing them is probably NOT what they need. Let them tell you, not the other way around. Of cour...

"They loved it. It's in the bag." (Business buyers are usually polite and often complementary even if they have no intention to buy) "It's getting loads of 'likes' on Facebook. This is a winner." (People are often keen to demonstrate to others how they feel about things. But this is different from deciding to buy where many other considerations need to be satisfied) "The majority of people we asked said they'd buy one." (But would they when you ask them to pay?) It's so easy to confuse 'like' with 'need'. People and businesses rarely spend money on things they just like. What they are far more likely to spend money on are things they need, especially things they can't do without. Businesses need to measure propensities to buy their products far more carefully than superficial reactions might indicate. They also need to consider WHY their products might be purchased, as well as WHEN and HOW, not just IF. ...

Yesterday I bought some sardines from a local fish market near where I live in Portugal every summer. The lady selling the fish had a display of sardines in front of a box of them. I felt one or two of the sardines in front of the box to test how fresh they were. The stiffer they are, the better. The flavour of fish changes dramatically after a day or so. These were fresh. They were also large and plump (not like the pathetic version we see in the UK). I asked for 2 kilos (enough for 10 people we were entertaining at the villa that evening). Instead of picking the fresh sardines on display, she picked them from the box. I assumed they would be the same. But when I got home and started to prepare them, I discovered that the ones she had sold me were a couple of days older than the ones on display. She had deliberately deceived me, and presumably all her customers until she had emptied her box and then had to sell her display fish. A couple of years ago I was in a French market. Spyi...

I've spent most of the past thirty years trying to invent, develop, launch and sell new products. There's an anarchic side to my character that can't be bothered trying to sell something that someone else already sells. Or perhaps it's not about searching for challenges, but satisfying my insecurities. Maybe I just don't want to be beaten. If I'm selling something that nobody else sells, then if I fail it's not because somebody else is better than me at selling, it's because I didn't get the pitch right in some way, or that the market is simply not ready for my vision - like the company I co-founded which developed intelligent search engines in the mid-80s for example, or the social networks idea in the early 90s. Well they always say that timing is everything. But in the case of New Products there are other factors at play. Now I'm in the twilight of my career, I've amassed plenty of experience in trying to make business successes out of n...