I’ve spent most of my life doing things ‘my way’, and as a pre-seed investor, I’m simply continuing along that path. When I look at pre-seed investments (i.e. businesses that are yet only in the mind of the founder, or just on a piece of paper) I look at things differently to other early stage investors.
Time will tell whether it’s the right approach as an investor, but I have no doubt it’s the right thing to do from the perspective of helping people that are in the same shoes as I once was. Here’s my crazy view of the world!
Only a draft business plan? I say no problem! A regular investor wants to see everything laid out and complete but I don’t. As an interested and active investor, I want to share my experience with you to give you and help mould your proposition with you to give you the best chance of success. I want to be a part of that planning process.
No proof of concept? Again no problem! Most investors know start-up success is down to execution and difficult to achieve. Statistically, start-ups only have a mere 20% chance of success. They will be looking for proof that there is a demand for your product or service but are unwilling to help get you to that point. I enjoy the challenge it takes to help you achieve that proof of concept.
Don’t have a team? So what! Every investor knows that start-up success is more about your team than your idea. I back more solopreneurs than fully formed teams. Coming in at concept level as an active investor, we help plug gaps in skills that solopreneurs may have and help them build the right team at the right time.
Revenue? Who cares? Most investors will tear your forecasts apart, saying they are unrealistic or not strong enough! At pre-seed, you can’t accurately predict sales or revenue until you know how your target market is responding to your offering. We therefore focus on generating the users and data needed to put together the right revenue model and figures.
What ROI? Yes, I did just say that! Most investors seek a certain return on their investment: 3 times, 7 times, 21 times. I’m investing in your idea so early that I don’t even consider ROI. We will work together in the here and now to build your business, rather than focus on some remote figure in the future that cannot be substantiated at such an early stage.
Full time? Don’t sweat the small stuff for now! We know you are committed to your venture but you may not be able to jump straight into your venture full time. Most investors aren’t willing to fund founder living expenses until they have a proof of concept and a team. I’ll back entrepreneurs still in full time employment and help them get to the point where they can start to focus on the start-up full time.
Exit! Exit! Exit! Every investor will have an exit strategy, normally at the most ‘profitable’ moment. My focus is more on the long term so I’m determined to come in earlier and leave later. In the venture life cycle this may not be the most profitable point, but it’s not always about the money, money, money!
And this brings me to the core of what I do. Investors are obviously in this business for the returns but when you are dealing with pre-seeds, you have to think differently. Compassion is required, as well as a capacity to work hard and take on risk. I take a chance on entrepreneurs that many others probably would not find investible at this stage. I might be crazy but I love making a difference by being different. I view my investment as providing a platform for people; what they choose to do with it is down to them.