With stock markets dizzy eyed at what the ECB might do next, broader investor sentiment remains a bit muted into what is traditionally a sketchy time of year. The basic reason is that there are lots of people out of the office. High days and holidays loom large after a winter burning logs and watching re-runs of Dad’s Army and that means that the market takes on a lethargic air. Yet the startup scene is not known for its buy-in to holiday season and the Seedrs platform continues to be crowded with some attractive looking ideas.
A few months into my life as an angel and there are a couple of things that I’ve picked up. I thought I’d take a moment to share a few of the key things that I’ve learned from my foray into angel investing.
Big deals. They get the merchant bankers excited, and with memories of the financial crisis slowly fading, big deals have been back on the radar. Big deals show that the economy is on the mend. Confidence is back in the boardroom and the evening news is less about austerity measures and more about $100bn mergers. This is also good news for startups, who are right at the coal face of the economic recovery and will benefit considerably from optimistic headlines. Consumers watching the news (with a chicken jalfrezi straight out the microwave) are going to start thinking about adding a notch back onto the belt of the household budget. Confidence is a powerful commercial aphrodisiac, forget oysters and champagne, consumer confidence is where it’s at.
So where is all the money going to go? Retail. We are all secretly lazy, which is why we all seem to like the fact that we can now lie on the sofa and buy stuff. We also love stuff. Which is why in Britain we spend more money on useless tat than any other country in the developed world. Consider the spate of recent IPOs from companies that sell everything from tumble dryers to packs of dog food. And they deliver. Bargain.
This week we have a new guest investor. Sam has looked at the currently live startup campaigns on Seedrs and decided what to invest in. In this article he shares with us what he chose and why.
Sam Macrory is a Seedrs user and has shared the story of how he chose two recent investments.
Sam Macrory, previously Political Editor of House magazine, became the Editor of Total Politics in May 2013. He also blogs at http://www.sammacrory.com and tweets at @SamMacrory.
I can honestly say I’ve never been more tired…
The Guardian recently ran an interactive question and answer session about surviving your first year as an entrepreneur. The session was sponsored by Nominet who run the Nominet Internet Awards. The panel was facilitated by Matthew Caines the editor of the Guardian’s Culture Professionals Network. The session covered some fascinating topics like the difference between the corporate world and life in a startup. I’ve chosen a couple of the key conversations and insights to quote below. Check out the discussion page itself to see the rest of the comments and questions.
Joe Scarboro of the 3beards (Photo by Makeshift).
Why did you want to become an entrepreneur?
Joe Scarboro: Doing and creating something meaningful is the key, as well as being the master of your own destiny. I’d always had that feeling of wanting to do my own thing, at every job I’ve had I always felt that I’d be doing things a bit differently if I were in the driving seat!
Jeff Lynn: I wanted to create value, full stop. I didn’t want to look back on my life and feel that all I had done was push paper around for 40 years. I was determined to do something that had (or at least tried to have) a lasting impact. The specific idea only came later.
This article first appeared on Mark Hepburn’s blog Hepburn Says. Mark is a client relationship manager at a well known asset management firm based in London.
Mark Hepburn is a guest author. His articles appear first on the blog Hepburn Says.
The IPO market is getting a little bit squeaky. King Digital, the maker of the game Candy Crush, listed on the New York Stock Exchange recently with an initial valuation of more than $7bn. The stock then fell. Quite a bit. But still, $7bn for company that gets most of its revenues from Candy Crush, a game that has commuters staring blankly into their smartphones trying to make lines of sweets disappear. And that’s it. A game that has apparently been downloaded by 93m people who seemingly have nothing better to do on the way home. I don’t know what that says about modern society but you have to feel for the likes of Hemingway and Dickens. The valuation of the business today, however, is of little concern to those who put up the initial cash to make the game, as they are probably down Saville Row trying on velvet and barking at the tailor to make their paunch disappear. They are now properly minted, further stoking my coals for seed investing. The weekly email from Seedrs then had me reaching for the lighter fuel to further stoke said coals. Time to choose my first startups to invest in online.
This year we’re inviting a few journalists and interesting characters to try out Seedrs and write about their experiences here on our blog. Authors are given £100 to invest in a startup of their choosing. We publish their articles without comment or endorsement. The authors are not providing advice on which startups to invest in and nothing in their articles should be construed as financial advice. You can apply to be part of the programme and try out the Seedrs platform by providing a writing sample to firstname.lastname@example.org
Mark Hepburn is a first time Seedrs user and will be sharing his experiences. These articles appear first on his blog ‘Hepburn Says’.
Mark Hepburn is the first of our guest users. Mark is a client relationship manager at a well known asset management firm based in London. His articles appear first on his blog Hepburn Says where he also writes about investing, markets and the English middle order.
Luke Johnson, chairman of the Centre for Entrepreneurs is an investor in Seedrs through one of his funds. He gave a wonderful speech at the UK Business Angels Association networking dinner on 28th January 2014.
Luke Johnson speaking at the UK Business Angel Association.
The original transcript is available on the blog of the Centre For Entrepreneurs. Luke has kindly given us permission to share the speech with you because it sets out the importance of angel investment to the British economy…
A core principle underlying the whole Seedrs approach is that investing in startups can be highly profitable so long as you have a highly-diversified portfolio. We built Seedrs to allow both big and small investors to build a diversified portfolio of startups instead of being stuck in just one or two risky deals. Diversification is the key to success in angel investing.
Diversification makes intuitive sense in any asset class, but it’s vital in an asset class such as startups where most investments will fail but the ones that do succeed can do so in a big way. Diversification is also supported by the data: the “Siding with the Angels” report by Professor Robert Wiltbank (Nesta, 2009) shows just how skewed the distribution of returns inside a portfolio can be and why that makes diversification vital.
None of the the startup campaigns on Seedrs include financial projections. This was a conscious choice by us when we built the platform, and I thought I’d take a moment to explain why we made that decision.
Financial projections are always speculative. Even for the most well-established companies, saying what will happen in the future involves a substantial amount of guesswork.
Seedrs is about opening startup investing to a wider group of people than can currently access it—going beyond traditional angels and reaching the “mass affluent”. We think that sensible grown-ups should be able to allocate a reasonable proportion of their capital to businesses that they select and get the benefits of access to the possibly fantastic returns, excitement, portfolio diversity and tax reliefs that investing in startups provides.