Conversation with the Cowley’s
Podcast transcription - 18th December
Alan Cowley: Hi. I'm your host Alan Cowley and this week we have a slightly different Invested Investor podcast for you. I'm here sat with Peter Cowley, my co-founder and father, to talk about the Invested Investor movement and what we've learned along the way. So Peter and I set up the Invested Investor in 2017. This is your 13th start-up?
Peter Cowley: 13th or 14th, yeah.
Alan Cowley: 13th or 14th, having set up your first over 35 years ago. Alongside this you are a seasoned Angel Investor and committed Invested Investor. So we've interviewed over 80 people from around the world. We and our listeners have learned so much from them. This podcast is going to be about our own journey and also yours, touching on your investments and what you've learned along the way. And obviously we've got our very own lead in Invested Investor here to talk about that. So let's just start with the beginning of the Invested Investor. So what was the original vision?
Peter Cowley: Yes. Okay. So first of all, Alan, happy birthday. Happens to be recorded on his birthday today. So the original vision was slightly different. It was to have some sort of conference or society for helping Angel Investors become better angels. So it started as that, and this was about five years ago, and they talked it through several people. There was quite a lot of enthusiasm for it from other people, but less so from me because it just felt like it would be a one off event or once every year.
So it gradually morphed, by talking to other people, into being a content delivery of some form. And that content has ended up being obviously the first book, and now the second book, and the podcasts and information on the website. So that happened, it sort of formalized into that. Well, it became that vert form... Mark, replace that. So it became that form, which it is now about six months before you joined and we formed the company.
Alan Cowley: So it was about three years ago now.
Peter Cowley: About three years ago, exactly.
Alan Cowley: Yeah. Okay. So that was about three years ago and I came on board two and a half years ago. How do you think from that starting point, it's morphed in those years? So since we kind of almost incorporated the company until now, how has it changed since then? Because obviously start-ups pivot, don't they?
Peter Cowley: Yes.
Alan Cowley: And we've probably pivoted in many different ways along the way to try and understand how to run this business. So from that first start point, you've kind of given an overview, but to where we are now, how has it changed?
Peter Cowley: First of all, of course I'm pretty busy with a lot of other things and so there's no way I could make it into anything just by myself. So I had been thinking about who to get to do the work and I didn't think at that time it would be anything like a full time role. And so I'd been talking to people. And then of course you came back to Cambridge from London and it all starts fitting to place. And there are great reasons why it's been absolutely wonderful, or it is wonderful working with you. And how much you've learned from this, and how much I've learned from you as well at the same time. But to begin with, it just was going to be podcasts with the idea of having a book, but the actual content... In fact, even the name I think of the book at that point haven't been fixed. I think it was fixed some weeks or months later a punt. With a guy called Brian Harris who also helped name the second book as well
So we started with the podcasts and I'd record them. You helped me and you built the website, et cetera. And then we interviewed a few people to see who should write the book because it was clear that, well, it wasn't clear that you couldn't write a review. But it was certainly clear that I couldn't write it because I am A, I'm an engineer and a computer guy and B, my English isn't all that good. And C I didn't think I had the time.
So that's when we found Kate Kirk who was almost the obvious choice anyway because she's written a number of books about the Cambridge community. So that happened later in 2017. And then it stabilized really into just making sure the content got out there. So the content was gradually being created. We'd probably done about eight or nine podcasts by the end of '17. The book really had been planned and Kate had been given the go ahead by the end of that year but it didn't start to written till January '18.
Alan Cowley: So we got an author in. But why did we go down that route and we self-published, why did we not go to a publisher and just get all that done, sorted?
Peter Cowley: Yeah. When the author we'd probably have had to found anyway though, of course she's a combination of author and ghost writer here. Her name's on the book, but it was definitely my brand that was the first book and more so her brand on the second book. We did that primarily because for two reasons. One, I wanted you to learn running a business, so this would include accounting and building a small team and marketing and everything. And certainly the gross margin, if one self publishes is much higher than if you go through publishing. There's the sort of numbers I'd done. Happy to talk about this on the podcast.
On a £15 book, you'd probably make a pound or so if you go through a publisher. Now of course we haven't got all the hassle of printing books and marketing and everything else. And you can make around about £10 if you go do self published, so about five pounds to actually print and distribute through Amazon or whatever method one uses. So that's a 10X increase in gross margin, one pound to £10.
Of course you have to do your own, the printing isn't the problem, once we found out how to do it, the distribution via Amazon is a difficult thing to understand, but it's there. The big issue is whether the volume will be as many should one self-publish, and we'll never know the answer to that.
Alan Cowley: Yeah. So there's a bit of advice for anyone that's thinking about writing their own book and what to do. You get your gross margin and you get a bit more money for each book or a lot more money for each but it's a hell of a lot more work. But I think one thing you didn't touch on there is also control of the content, which I understand that if you, even if you write a book and you give it to a publisher, they can still change things and edit things. Whereas we've had complete control on additions and everything like that, haven't we? On design of it.
Peter Cowley: Yes. Well that's true. I think in this case because, in fact many cases, there wouldn't be that much editorial control, but they would certainly run with that process. I think more importantly, we had the ability to create our own brand, because I'm sure the brand would have been altered by them probably and then led to higher sales of course. Going down the self-publishing route has been a very interesting journey and I think we've both learnt a huge amount from it.
Bear in mind, primarily though that most authors are content providers and not business people. So they're not actually, they'd only want to learn, never might the dirty thing, pricing and marketing and everything. They want to create content that people read primarily. So therefore the publisher does a great job for them. In our case, we were running a business that had content, so we looked at it quite a different way from a normal writer or author.
Alan Cowley: Okay. So this content that you're talking about is our first book, The Invested Investor: The new rules for start-ups, scale-ups and angel investing and our new book that should be out at the moment, Founder to Founder: tips and tails from a hundred entrepreneurs and investors. So we've also produced podcasts, obviously. You're listening to one right now, but what else has been produced? And also, a question just after that. Just quickly so that is what makes you originally credible to write this stuff and educate the start-up world?
Peter Cowley: Two very different questions there. So let's do the first one. So the other content has obviously been news items as well, thought pieces, the blogs I have been writing every month or so. Obviously social media like LinkedIn and Twitter. But there's more to that because actually, I've been doing quite a lot of lectures and you've been doing quite a few as well. Lectures and talks and doing training. I've done some training overseas, which you created the content and I delivered.
So it's been a lot more than just the podcasts and the book. Though they are clearly the most consumed part of what we've done. The other part of the question was why is my brand such that I am listened to? That is something that I really don't know. I've got to the point where I'm quite well known in the UK and around Europe because of my role in Brussels that I'm very, very keen to share my experiences. I'm pretty open and transparent.
What I do is you'd see on my website. And it was just a sort of giving back. My background was a bit of engineering, computer science at uni, a bit of corporate life and then many, many, many years of being an entrepreneur, which is very, very hard work. And all the entrepreneurs listening to this, particularly if you're about two, three or four years into your journeys will be completely, completely empathizing with that statement. So when I sort of stumbled into angel investing about 12 years ago, having effectively co-founded a business that sold quite quickly, I really love the concept of investing, helping the entrepreneurs.
But as I like to say, though it's probably not the right analogy. It's like being a grandparent, although I'm not a grandparent, where you can give the baby back to your children between board meetings in the same way as you would do. So effectively when you're actually an entrepreneur, you've got everything going on, you've got the HR problems and the customer problems and the supply problems and [inaudible 00:10:59] problems and the money problems and everything. I would have that as a board meeting and in between, if the entrepreneurs, my investees get back to me, but generally I can forget about it and let them worry about it.
So actually, because I'm now 64, I started in my early 50s, at this point in my life, it's actually much less stressful being an investor than being an entrepreneur. Though having said that a year, and I still run Camdata and the Invested Investor, which are two small lifestyle businesses.
Alan Cowley: Yeah. So we've heard from a lot of people over the last couple of years, whether that's through the start-up spotlight or for podcasts and various bits and pieces. As an investor that's been doing it for nearly 15 years now, what do you think you can add to what we've already learned in previous episodes?
Peter Cowley: That's a great question. And I've listened to probably 80% of all the episodes. I've really loved them. They're not all as good as all the other ones, but I really enjoy it, I particularly enjoy the way you swapped over and do the interviewing. So you've probably done two thirds and then I've done one third of them and you tease out the sort of things I tease out of people. It's important that humours in there.
But generally, when the questions ask, what lessons have you learned? What can you teach? There is a lot of same old, same old. There's a huge amount of hire slowly, fire fast, all these sorts of mantras that wander around in our industry. I suppose what I have done, which is more than I think anybody you've interviewed is been, except possibly Chris Mairs, I've been on more journeys than anybody else.
I've been on these 14 or so of my own founded or confounded businesses, most of which I founded by myself. And have been on now low 70s of investments. I've been on 85 journeys of which of the 14, 12 I've closed, sold or even gone bust of my own businesses. And I've just done the numbers this morning, it's 20 of the investments. That's 20 plus 12, 32. So I've still got 50 or so journeys I'm on. And these go back of course, in fact it's more than 40 years. Because my first business was to run a traveling discotheque, whatever. You probably don't know what it is, I'll say to the listeners, won't. But it's being a DJ, but not saying anything and not mixing your own music. Back in 1975, so this is 44 years ago now. So I've taken risk and had fun and had a lot of pain as well for a long time.
So that's probably what I can add to more than most of my colleagues within the Cambridge Angels have had a single successful exit. So they've been entrepreneurial. They've come out of it with sometimes a huge amount of money. Sometimes it's relatively small amounts of money. And they haven't had the ups and downs in the way that I have.
Alan Cowley: So you're saying that resilience from the start-ups and all the journeys, is that what you add?
Peter Cowley: No. I'm saying that I've experienced so much more. So I've experienced huge and terminal, in one case, cashflow problems and
Peter Cowley: ... what to do about it, they often use a little story about the VAT man who came into the company 30 years ago and he stuck little stickers on the desks and the PCs saying he was in possession of that. He wasn't actually, because he hadn't actually got a court order at that point, but it meant when the next bailiff came in to try and get some money out of us from a creditor, they looked round and see all these stickers and just walked straight out of the door. I don't suppose anybody else in my community's had to go through that, but that was so painful.
So it's that, it's the experiences. It's hiring loads of people, having to fire loads of people sometimes for... Like, I don't know whether it's mentioned in the book where I had to fire somebody because he'd thrown a screwdriver at one of my other employees. There's a lot of stuff, and that's partly reflected in my grey hair and now grey beard. So that's possibly why I've got more to offer.
What I haven't got though, and this is very noticeable, particularly amongst the group, I haven't been involved in a company that's truly scaled, so this is companies that have gone past the 50 to 100 mark, and that's where I actually have found that I can't contribute as much and I shouldn't really be treading on that. We should have other people coming onto the board at that point.
Alan Cowley: Okay, so what have been the best bits of all this? So you've talked about a couple of things that were shit, so what have been the best bits, or maybe-
Peter Cowley: Of my life?
Alan Cowley: ... they were the best bits.
Peter Cowley: Of my life? Having children.
Alan Cowley: Well the entrepreneurial and the investor side of it. Or let's go for the investor side of it.
Peter Cowley: Yeah, I'm often asked that, which is your best investment? Who are your best entrepreneurs?
Alan Cowley: Just the best bits. What're the best memories?
Peter Cowley: Yeah, it's people. It's working with people. It's seeing people develop. It's not making money out of it, though obviously that's quite useful to replenish the money that I've invested. That I haven't yet got to a cash on cash point where everything I've invested has come back again, it's looking pretty close. And we're recording in November at the moment in 2019, and I think if we had this conversation in three months' time, I'd have been saying I've actually now got all my money back and I've got 50 million investment.
But it isn't that that matters, it's spending the time with the entrepreneurs, seeing them develop. Sometimes it's frustrating, but it's actually wonderful to do that. In many ways it's no different... Effectively I'm mentoring, but it's no different, I suspect, from being a teacher. I don't think I could cope with being a teacher, but I think seeing the children, or some children, not all of them, clearly, increase and develop.
And of course I'm experience this with you, Alan, aren't I? The way you've developed over the last two or three years is phenomenal. You obviously left it a bit late to get back into sort of normal working life, but the times you had before that, and I don't think you've mentioned it on the podcast, has been phenomenal. You're traveling around the world for several years, so to see you develop... So it does count. The best bits are definitely the people and not the money.
Alan Cowley: Yeah, I'd say over the last two and half years having run this company with you and predominantly the last year and a half, the amount I've learned is just absolutely ridiculous. And I sometimes say this to people, it's not whether I've, although I know a lot about podcasting, for instance, I don't know something expertly, but I know a lot about a lot of things, if that makes sense, so so many different aspects of entrepreneurship.
Peter Cowley: Yeah, the finance and the cash flow.
Alan Cowley: The hiring and-
Peter Cowley: Hiring, exactly.
Alan Cowley: Customers and-
Peter Cowley: So for me-
Alan Cowley: ... B2B, B2C.
Peter Cowley: Yes, and sponsorship and all the other thing. I say the same thing, though I think it'll obviously be broader and clearly I've a few more years of life than you, is that I know so much because I've seen 10, 12, 13,000 business plans now, and I've seen well over a thousand entrepreneurs pitch to me. I don't know B2C very well, but I know almost all aspects of B2B to a relatively shallow depth, and it's fascinating.
One of the main drivers of my life is to continue to learn and contribute every single day, and I do that.
Alan Cowley: So what do you think of this business then, you've learned from it? The Invested Investor.
Peter Cowley: I've learnt, yet again, that B2C business is hard work and that the B2C element of this is not the training, because that's usually done with a group, it's selling books. It comes back down to this cost for customer acquisition lifetime value.
The lifetime value, if you sell one book, is the gross margin of one book. Let's say it's £10. It's probably a bit less now. It's probably near £8. What's the cost of acquisition of that customer? I still haven't a clue. I still don't know whether the tweets we send out, how that relates back to books. I know that if I'm standing in front of somebody and I've got a book in my hand, I can probably sell it to them. But £8 of my time for gross margin, that's probably not that many tens of minutes. It certainly isn't as much as an hour, so is that worthwhile?
But what I of course get out of that is spending the time with the person, not on the sales process, I've been selling for 40-odd years, it's the enjoyment, that interaction and the enjoyment I know they'll get and what they'll learn from the book itself.
So, yeah, the B2C element of it I've learnt, again, that I don't like it, and I've done B2C in the property business, I've done to B2C in the tech business, so I have been doing this... And I often say it's get down to this customer acquisition cost. I can work it out in an enterprise sale, but I cannot work it out in a consumer sale.
Alan Cowley: So how do people, how do these investors that purely invest in B2C...?
Peter Cowley: Well, two things. One, experience. Their own experiences. And obviously positive experiences, because many of those have been entrepreneurial in the B2C space, whether that's retail or food or clothing or whatever, and secondly, which is the same also for B2B, it's spending time working these numbers out by doing transactions and counting how much the cost is, et cetera, and therefore working out what the customer acquisition cost is. And thirdly, which is the only way you can do it, if you're pitching for somebody, pitching for money, is to use comparatives. Trying to work it out from if you've got a business that say is doing delivering or something, try and work out from the accounts of Deliveroo, or talk to somebody, for instance, I'm only taking Deliveroo as an example there, what their cost of customer acquisition it probably is and then you can work out the lifetime value probably.
So, any business plan that comes to me has assumptions in it on the finances. You've got to get them from somewhere.
Alan Cowley: Okay. Just while we finish up on these kind of what we've learnt, from the 80 or so that we've done and we've interviewed and things like that, what are the key things you've actually learnt from some of our interviewees?
Peter Cowley: That everybody's passionate about what they do, that they really enjoy it. I mean, there's probably self-selecting, because they probably wouldn't do a podcast unless they wanted to. A, they enjoyed what they do, and B, they wanted to help other people, so it's certainly true the passion. The realism as well, particularly maybe when they're a bit older, probably a bit older than you, how really, really, really difficult it is to be a successful entrepreneur, and how challenging it is and how can it affect your family life, et cetera, and your finances, but how rewarding it is as well. That's on the entrepreneurial side.
On the investment side, as I've said many times, one shouldn't be an angel investor unless you do two things. One is to build a reasonable size portfolio, because it's a numbers game. Whatever you see in front of you and when you invest, they'll have pivoted and moved and the market'll have moved, et cetera, to the point where you actually get your money back times the multiple of some sort. And secondly that you've really got to enjoy what you're doing. You've got to interact. You can't use it as an asset class, an asset class being property or cash or bombs or stock market shares. You can't just allocate it and say, "I'm going to get a return out of this," because with luck and with decent portfolio and with a lot of patience, you should get 20, 25% return per year. That is huge compared with current bank rates of 1.5... deposit rates 1.5%, but if you can offset the risk there and the time involved but enjoying the journey by interacting with the entrepreneurs, then it's hugely fulfilling.
Alan Cowley: So obviously if you're able to interact with the entrepreneurs, but you're saying not as an asset class but enjoy it, how is it different from gambling then?
Peter Cowley: Well, the big one, and I love this story. If you're going to gamble on something, generally you know the result quite quickly. So if you're going to gamble on a football match, you're probably going to get the result by the weekend, because you usually gamble during the week. With angel investing, you can wait 10 years, so the feedback loop between doing something and getting a result is... I mean, to the point where I'm going to stop investing next year when I get to 65, because I don't want to leave, assuming I live into my late '70s, who knows how long? I don't want to leave you with a mess of unfinished business which is a whole load of shit, so it takes such a long time.
The other thing about gambling, which there's some similarities, if you really know the form, say, of a horse race and you know what the jockey does with that horse on that type of grass and that sort of weather and dot, dot, dot, then you've got information which can help make the decisions, as opposed to a punter. If we go down to Newmarket races and just put 20 quid on and lost it all, we're just punters then.
It's sort of similar with angel investing. You are trying to choose based on information, based obviously on the opportunity or the size of the opportunity or the plan, but also on your interpretation of whether the entrepreneurs, i.e. the jockey, and people do use the jockey-horse analogy sometimes, whether the jockey or jockeys, because it needs to be an entrepreneurial team, are going to be good enough to run through that journey to get a reasonable result out of it.
Alan Cowley: But I guess the big difference, and I can't think of any in the top of my head sport and gambling, where along that journey, say the race... you're actually able to help-
Peter Cowley: Correct.
Alan Cowley: ... the jockey out at a point, aren't you? You can't get behind the horse and push it along any quicker, can you?
Peter Cowley: That's right. Exactly right. That's a great extension to the analogy there, that it is actually possible, if you're close enough, either on the board or interested shareholding, you could spend some time helping them, connecting them. It could be argued that you're cutting the grass in front of the horse or making the fence sturdier or something. We can go crazy with this analogy, so we probably ought to stop here. But you're right, you're actually helping them improving, hopefully, not reducing the chance for success.
Alan Cowley: Yeah, okay. So, we obviously educate the start-up ecosystem with all the content that we have, and you talked about the vision at the beginning and trying to change the mentality. What good actually comes from this education, and have you seen it in the last two and a half years? Are we ever going to see it?
Peter Cowley: Yeah, so again two elements to this. One is, is what we're doing actually going to make an effect on the world, which is a really big philosophical question, and we'll answer that. And secondly, has there been feedback on this journey which we can see that it's actually been worthwhile?
I think it's pretty clear, and of course I know this industry pretty well now having travelled all over the world speaking at conferences and knowing people in the States and Singapore and all over Europe and South Africa. We went to Cape Town a year ago this weekend to an angel conference. It's clear that start-ups are much more prevalent. It's become a sort of almost career choice in many cases, because the labour market's changing, and has been changing. I'm sure it hasn't changing that much than it was say 10 or 15 years ago, certainly is compared when I was growing up, and it's changing further as we get robotisation of both software and the hardware robots. Being an entrepreneur almost becomes a requirement for some people, plus the level of independence, the way the media and press are talking about it, et cetera, so that's on the side of the entrepreneur.
If you look at it on the other side in terms of the way that big companies and corporates are changing, the rate of change of things on the world, it may be driven by technology, is such that the big companies are proving again they're not as agile as they need to be to cope with change, and the agility's happening in the smaller companies. Not the very small companies, clearly, but the sort of ones who've scaled past a certain size. So that's effectively given them suppliers for their own use and onto their own customers, and potential acquisitions which they can buy. And these acquisitions, there's plenty of those around. There aren't that many in number, but they do happen. So therefore if you go forward another 10 or 15 years, I believe that the number of start-ups will continue to grow and the big corporates will continue to purchase.
I can't see past my own lifespan, say 30 years out, as to what the globe will actually look like. It's still going to have to consist of large organizations, and no doubt both scale and reach are quite important in the current capitalist system. It may be this sort of implosion back again to local produce, local supply and that scale doesn't really work, but that, it's a huge societal change that we're not going to talk about now.
Alan Cowley: So you think that there'll be more very, very large organizations, multinational organizations, and more start-ups entrepreneurs for that middle section. The kind of medium to large size companies they are diminishing. They've either gone bust or they've got huge.
Peter Cowley: No. No. I don't think the lesser'd be more of the big companies. I think there'll be more of the middle companies, actually. So I think the start-ups are there. The start-ups, there's a lot of noise on that level. There's a lot that don't last very long. It's the scale-ups that really matters. So these are the ones, there are lots of definitions of scale-up. Let's say between about 50 and 150 people. The bottom end of the SME. The big corporates I'm not really sure.
So I think it may well be the smaller companies, particularly as things change in terms of people's approach to travel and air travel and supply of energy, et cetera. I think that things will become more localised. I mean you don't got to look at the way the movements are happening and Trump pulling the reigns in, the UK fiddling around about with Brexit at the moment, other countries as well. That things will become less globalised.
It does feel like that. I think it's the middle section of companies, the ones who've scaled into the hundreds, and this is just my view, hasn't come from anywhere else, were the ones that will be the more prevalent in 20, 30 years’ time.
Alan Cowley: So that's the future. But how are we seeing that the invest investors actually changing at the moment? The present.
Peter Cowley: Yeah. We had that right from the beginning. We discussed that. What KPIs are we going to use to try and work out whether we're succeeding or not. And we knew that we could measure Twitter impressions and book sales of course, and podcast downloads somewhat. It's a bit non-transparency, the podcast download industry at the moment. But how can we actually get the feedback?
And the feedback has been purely at the moment, as far as I can see, subjective. It's people coming to us and said, I've learnt a lot from that book. I've made some changes to the way I'm doing things. Whether that's been positive or negative changes, we don't know for definite. But confident the ones who've come back to us, have done it in a positive way so that they will hopefully improve the journeys.
So we're never going to know whether the transparency, honesty, trust, which is what the book's all about is the relationship between the investors, investees. I'm pretty confident that is improving. Just see that from people's transparency. I was looking at VC's website the other day and much more on that than there was before in terms of what they want. And if you look at my website, of course I'm almost over transparent.
So that's the case, but I think we're going to have to look at this again in five years’ time probably and re-analyse that and have the same conversation. And then from that realize that yes, we have had positive results. I don't we're going to have negative results. Whether we've had as much result as we'd like, I'm not sure.
Alan Cowley: Okay. Well in response to that, if the listeners could actually write some comments on our website, that'd be absolutely fantastic.
Peter Cowley: Or just email them in or...
Alan Cowley: Or feedback to that.
Peter Cowley: Yeah, please.
Alan Cowley: Okay. So let's just go on to one of my final questions here. And what do you think the actual start-up world is missing? What could improve it?
Peter Cowley: Well, it depends where you're talking about. I mean with my European role, it's clear that the entrepreneurs are all over Europe, but the money isn't. Now we know that for the tax reasons that came in about 35 years ago in the UK. And the fact that we speak English and the fact digital adoption been pretty quick in the UK, that in Britain has become much more dominant in terms of start-ups and funding than anywhere else in Europe.
Something like half of all the early stage funding in the whole of Europe comes through the UK. And of course most of that unfortunately is in the Southeast of England. Possibly driven somewhat by the money made in London, particularly in the city, possibly driven somewhat by the universities, Cambridge, Oxford and other universities. So the money's there, but also the entrepreneurs are around in the area as well, particularly serial entrepreneurs. And so within my European role, cross-border investing, I have money from one country going to investments in other countries, something we're working very hard on.
And so those connections. And I was with Linda Smith who we've podcast last week actually. That we're going to cut that bit Mark. I was with somebody last week who was heavily involved in the Angel Industry in the States and they're having a similar problem. They speak the same language as us, the same market, mostly the same tax rules, et cetera. But there's still cross-border, as in cross-state, and particularly over long distances isn't happening as much.
So getting the capital in the right place is one thing. But the other thing which is probably more important is the support for entrepreneurs improving. And it is doing but it's doing pretty slowly. There are more and more accelerator programs, incubators of course, but there still needs to be. The people who will help best an entrepreneur are people who have experienced it before.
Not somebody who's trained to be a coach. So it's the mentoring, somebody mentoring using previous knowledge as opposed to use coaching where you're using a toolbox. I mean a coach still works but he works much better in a bigger environment than does an early stage.
So increasing the smartness, which again is happening gradually. As people experience. The more activity and the more experience is generated and therefore the more education can be done from people who've experienced it before. But that's happening too slowly for the requirements and the Silicon Valley entrepreneurs. And too slowly also for quite a lot of governments and local governments around Europe. Because I see this in the way that they're trying to do it.
What is getting in the way slightly is government, either EU government or local government backed grant funding and quasi-equity funding because that doesn't necessarily bring smart money in. And commonly doesn't bring smart money in at all, it just brings money. And therefore, the entrepreneurs, particularly the younger entrepreneurs, sub-30 or so, are probably going to make too many mistakes really to grow the business.
Alan Cowley: But at the same time, if you want more entrepreneurs to actually exit and get into that process and then turn themselves over almost, and transition into an investor, don't you need that though? Because otherwise the number of start-ups being invested in will obviously shrink a lot without these grant funding and things like that.
Peter Cowley: Yeah, that's certainly true. But in the end, the differences are the scale-ups. But things that scale into decent size. And I'm not just talking about monetary returns for the founders, the investors. I'm talking about employment. I'm talking about intellectual property generation. I'm talking about market changes, market education, et cetera.
It's lots of little small start-ups, all that are necessary because who knows which start-ups would come scale-ups. I'm trying to guess that. I'm trying to kiss the right frogs of course. and I'm going to try and help them turn into princesses or terrible analogy there. But it's getting them over that hump. Finding enough funding, enough customer, income, et cetera, to the point where the scale-up is the only thing that's going to make a difference to local economies.
I was in Portugal a couple of weeks ago. They're really struggling to grow their start-ups. There's lots of them. And you need capital to grow technology start-up usually. You don't really with a service one, you can probably use it in debt finance. But angels don't invest in service businesses generally.
So you need the capital for the tech ones to develop the technically because you can't get customers straight away. And also then to educate the market. And then the capital availability for growth capital is probably there, but there's this big gap.
Alan Cowley: So that's what needs to be done at the moment in the start-up world. Also the education. So let's just do a quick plug for ourselves and for the listeners. The Founder to Founder, the tips and tales from 100 entrepreneurs and investors, is a book written by the people that you're talking about. These people that have been through those journeys. The entrepreneurs, the investors and some of the grant. We've had some UK and whatnot. And what this book is teaching people is this. This journey of a start-up and the difficulties along the way, the ups and downs, the challenges from those people, isn't it? Those people that you've just talked about.
Peter Cowley: Yeah, they haven't actually written it. Okay, Cowley wrote them, but they...
Alan Cowley: It's their stories isn't it?
Peter Cowley: Exactly. It's their content. In fact, in some respects they have written it because the transcription of the podcast has been used and then analyzed. Yeah, exactly. We hope, both of us hope, that the way the content is delivered through that, the openness, honesty, the ups and downs, will be really strong benefit for entrepreneurs.
Less so probably for investors. The first book was aimed at investors, mostly read by entrepreneurs. It turns out this is fairly and squarely aimed at entrepreneurs. Probably any stage of the journey. The ones who want to be entrepreneurs, the ones who'll probably never be an entrepreneur, that level, right through to the people who might have had seven, eight, nine years of journey already.
Alan Cowley: Yeah. Okay. And one final one. In Lloyd's Yes Business Can, we've written a piece on how to find the right investor. Which anyone will find that's thinking about starting their own business and wants to go down this route of finance, they should read that. So Peter, thank you very much for today. It's been fun. It's been interesting. It's been very different. And this is the end of season four, so thanks very much.
Peter Cowley: Thank you very much Alan. Thank you.
Peter Cowley: Thanks for listening to another Invested Investor podcast. You can subscribe to all future podcasts via our website Investedinvestor.com or via a number of online podcast platforms. And be sure to follow us on Twitter, LinkedIn, and Facebook to get the most up to date, interesting and insightful content.
