Maintain steadfast conviction in your vision

START-UP SPOTLIGHT from the Invested Investor, published in partnership with AngelNews

 In partnership with AngelNews this month’s Start-up Spotlight focuses on Alex Sleigh, Investment Director at Newable Private Investing (NPI), one of the leading service providers to UK based SME’s. Alex has a rich history in the investment world and has brought his vast experience to NPI to help with their investment in deep tech at the post-seed stage at the same time as helping disruptive companies scale effectively. Alex has been responsible for making 50 investments, leveraging NPI’s network of over 500 Angel investors. Before this, he was Investment Director at London Business Angels.

1)    Why/How did you become an investor?

I first entered the City as a TMT analyst in 2010 where I focused on researching and analysing a range of companies across the sector. The part of the role that I enjoyed the most was meeting management teams and hearing about their visions and plans. I was always particularly struck by the passion and enthusiasm of the management teams of young nascent companies who were generally on a mission to innovate and disrupt. This infectiousness rubbed off on me and I had a brief stint as part of the team of a start-up venture in the broadband space. I was then fortunate enough to land a role looking after the London Business Angels' (LBA) network, one of the UK’s oldest and most established angel investment networks. LBA was subsequently acquired and rebranded to NPI albeit the mission continues to be to provide a best in class experience to our investor clients and to work with some of the UK’s fastest growing start-ups and scale-ups.  We do this through our angel investment network, our own proprietary EIS evergreen fund and various co-investment partnerships.

2)    What do you invest in and at what stage?

NPI focuses on providing funding to companies between the post-seed to pre-series A stage. We allow businesses to “cross the chasm” when they need more funding than individual angels can provide but aren’t sufficiently mature to attract institutional venture funding. We typically participate in rounds of between £300k - £2m and we always invest as part of a syndicate of investors led by an investor who brings domain expertise to the table and can actively support the company post-investment.

We invest in disruptive technology-driven companies led by passionate and credible management teams. Given our partnerships with sector experts such as Medcity and Seraphim Capital, we have a preference to invest in health-tech, space-tech, electronics and automation-based opportunities.

Some of our notable portfolio companies include City Pantry, Hopster, Blu Wireless Technologies and Cognism.

3)    What are the challenges faced when you become an investor?

There are several challenges for individuals to become an early stage investor.

The first major challenge is that there is a lack of awareness across the market of the existing opportunity provided by an early-stage investment. The EIS Association estimates that in the U.K, there are 500k or so investors who can be early-stage investors, yet there are only 30k active investors. A lot of work is being done by organisations such as EISA and the UKBAA to tackle this.

The second major challenge is knowing where to find quality deal flow. The best way to achieve this is by joining an angel investment network such as NPI. It is the job of the network managers to ensure that there is a robust filtration process to ensure that only quality opportunities are presented to investor members.

The third major challenge is being able to properly carry out due diligence on an early stage opportunity in a timely and effective manner. I would always recommend that investors invest as part of a syndicate so that Due Diligence (DD) can be shared across syndicate members. Ideally, individual angels can focus on areas of DD that correspond to their own skill sets. Research conducted by the UKBAA has indicated that investing as part of a syndicate that undertakes more than 20 hours of DD leads to better financial returns on average.

4)    What are the great stories of ‘rewards or satisfaction’ that you can share?

Through our various proprietary EIS funds, we have supported over 40 exciting early-stage businesses. Some of these businesses have gone on to become household names in the venture capital industry.

Notable examples include Cognism, a developer of an innovative AI enabled solution to enhance an organisation’s lead generation activities. NPI first supported the company at the seed stage in early 2017 when the company had only a handful of early adopter customers. Since then the company has grown extremely quickly and has raised a further circa £5m, including by a recent round led by Oliver Wyman. We think that the company is well on the way to becoming one of the market leaders in the B2B marketing technology sector.

6)    Please give the top three factors that influence your decision to invest.

The three main factors that influence our decision to invest are, team, product and market. We often use the analogy of the jockey, horse and track to describe this. To win a horse race, you need a quality horse led by a champion jockey running on a track that suits the horse and is big enough to enable that horse to outrun competitors.

When looking at a product, we are primarily seeking to understand whether it is solving a real pain point in a market or whether it is a “nice to have”.

When looking at the team, we try to understand their domain expertise, vision, management style and their “skin in the game”.

When looking at the market, we try to assess the size of the total addressable market and whether it is big enough to support venture style returns.

7)    How do you view your relationship with your investees? What is a good relationship?

NPI seeks to be a pragmatic, supportive and value adding investor. In addition to providing capital, we can leverage the wider Newable support offerings to our investees. These include the provision of serviced office space, support with grant funding applications, expert export advice and innovation and mentorship support.

A number of our investees have benefitted from these services. For example, we provided managed office space to support City Pantry and we supported Hummingbird Technologies with their successful application for a feasibility study award from the European Space Agency.

8)    How do you maintain a work/life balance?

Working in the early stage investment eco-system is very rewarding and stimulating, no two days are ever the same! From meeting entrepreneurs to reviewing legal agreements and cash flow models or drafting portfolio monitoring reports there is always plenty to do!

Outside of work I actively engage in a number of sporting activities such as football, squash, tennis and golf. I often find these help me to come up with a new perspective on a work-related issue.

9)    Who inspires you and why?

I have a huge amount of empathy for anyone who sets off down the entrepreneurial path, it is a long and winding path filled with ups and downs albeit the rewards at the end can be very gratifying.

I draw the most inspiration from entrepreneurs who in the words of Billy Joel, can “Get going when the going gets tough”. It’s not easy to maintain steadfast conviction in your vision when others start to doubt you. A great example of this is Giles Palmer, CEO of Brandwatch who has gone on to build a multi-award-winning social monitoring company backed by the likes of Highland Capital in spite of a fairly turbulent time, when he first raised angel funding.

 10) If you could offer an early investor one piece of business advice, what would it be?

Build the best network that you possibly can. The whole early stage eco-system relies on signals and a hot entrepreneurial referral from a fellow investor, contact is almost always more valuable than a cold random approach.