Russian to judgement…

A winter’s tale of my failure to find anything good and new to justify international expansion in a Russia-British trade event…

Highgate, North London. Dark, bitterly cold, snow in the air. I slowly pulled into a driveway I’d passed so many times, but never noticed before. Guards approached. Greatcoats, dour expressions. All they were missing were fur hats. After all, this was a little piece of Russia in London. Guard 1 scanned his list of names, looking for mine, a task frustrated by the dark and wind. Guard 2, clearly the boss, put him out of his misery, deciding that my car looked the part, even if I didn’t, and waved me forward onto a narrow winding drive uphill through trees.… Keep reading...

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Global Thinking for Digital Health and MedTech

I’m getting ever more excited by the new businesses that I’m seeing in the healthcare sector. Whilst the introduction of new drugs largely remains with established companies, there’s a proliferation of new technology and software, promoted by some really smart entrepreneurs, that will bring real benefits to all of us.

The most visible are physical devices, which have acquired a class label of MedTech. There’s already a vast number of patient-centric apps, covering everything from lifestyle improvement to self-management of medical care. And behind the scenes, there are new apps and software tools for professional use in hospitals and care homes – classed as “Digital Health” – destined to really improve patient outcomes and healthcare sector efficiency.… Keep reading...

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Frustrations of an Angel Investor #4 – Some Angels rush in where fools fear to tread

Where one leads, others follow. New start-ups are therefore desperate to get one or two substantial initial investors, especially those that they can “name drop” to motivate others to invest too.

This has led to a proliferation of “assistance”, some clearly very professional and helpful, but much of it just parasitical.

The growing numbers of Angel Funds attract investors by appearing to amortise risk. They do due diligence to filter the start-ups, and investments are pro-rated across multiple companies to reduce risk. I’m sure there are really good ones, but I’ve been discouraged by meeting some where the due diligence is clearly minimal, and some of the companies in their portfolios appear to be chosen on the basis of quantity rather than quality.… Keep reading...

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Frustrations of an Angel Investor #3 – Brilliant Inventors, Copycat Deniers, Lazybones and Serial Failures

Angels meet them all. In my experience, too few of the first, and too many of the others.

Of course, it’s not necessary to be a brilliant inventor to have a wonderful business idea, and, with the help of Angel funding, go on to success. There is very little that is new under the sun, but there are always ways of developing, updating and improving existing concepts. So I’m always happy to meet enthusiastic would-be entrepreneurs with a sound business plan, who are prepared to dedicate themselves and work hard to build a business, and never mind if their concept is derivative.… Keep reading...

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Frustrations of an Angel Investor 2: More thoughts on Business Plans

In the last month alone I have received 4 proposals from start-ups for Angel funding, seeking between £150,000 and £750,000. Not one of the principals presenting their decks could explain exactly how the money would be spent, or detail what revenue was expected, or when, or how.

The problem is, of course, that neither they nor anyone else knows. Every startup entrepreneur wants to present their idea as a “Disruptor” and dreams of it being the next “Unicorn” like Uber or Airbnb.

But creating a new app or website to deliver a service is only, at best, disruptive with a small “d” – it’s really just modernisation, adapting new technology (developed by others) to meet an existing need.… Keep reading...

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Frustrations of an Angel Investor – Introduction

In the last two or three years, I’ve been fortunate to have some money to invest, and was quickly attracted to becoming an “Angel”. In my twenties, I was a reluctant entrepreneur – there was a terrible recession and few good jobs to be had, and, faced with redundancy and a young family, went into business on my own, latching onto something that enthused me, used all my talents and that “just might work”. In those days there were no Angels, and I had no rich family. Like everyone else, I went begging to the banks, and got mortgaged up to the hilt.… Keep reading...

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Frustrations of an Angel Investor 1: 80% of new businesses fail, so why take the risk?

Why do investors keep pumping in money when most start-ups fail?  To an extent, it’s blind faith, but a lot can be attributed to the EIS tax avoidance system.  This was perfectly illustrated in a recent presentation I attended.

This isn’t exactly what was said, but I think it’s a fair illustration:

  • An investor puts a total of £100,000 into 100 startups – £1000 each – making the following assumptions:
  • 80 will fail, so that £80,000 will be lost
  • 10 will trade successfully (but not phenomenally) and the investor will get their money back eventually, let’s assume with no premium.
  • 8 will be sold at an average multiple of 3x the original investment
  • 1 will sell at a multiple of 10x
  • Just one – the nascent “unicorn” – will sell at a multiple of 50x, netting the investor £50,000

So overall, the investor will get back £94,000 – which looks like a loss of £6,000 on the original investment.… Keep reading...

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