Talking points

“There’s plenty of venture capital out there right now – but it’s choosy”

The entrepreneur, the impact angel investor and the venture capital broker: three key figures give their views on the current state of markets

08/11/2018

Nicholas Sanderson

Nicholas Sanderson

Portfolio Director

Electric vehicle entrepreneur Erik Fairbairn, venture capital specialist Garri Jones from Numis Securities and impact investor angel Brian Rusling were guest speakers at Cazenove Capital’s latest entrepreneur event at Soho’s Ham Yard Hotel on October 30.

All three brought their own deep – and different – experience to a wide range of topics that spanned fund-raising to exiting a business and included discussion about the current climate for global entrepreneurs and VC investors.

Erik Fairbairn founded Pod Point in 2009, seeing the provision of charging points as a key way to play the explosive growth in electric vehicle use. Since then, backed by multiple fund-raisings from a range of sources, Pod Point has sold more than 60,000 charge points and grown to become the UK’s biggest provider of EV charging.

Garri Jones heads up Numis’s Venture Broking team, which brings together global sources of VC capital with platforms (for earlier-stage start-ups) as well as directly funding more established, growing enterprises.

Brian Rusling is a former telecoms analyst who since 2000 has been investing directly in fledgling businesses. His areas of interest are energy and health, particularly where the latter focuses on ageing society.

The discussion was hosted by Cazenove Capital’s Nick Sanderson and Robert Snuggs. 

Your one minute read: what they said about…  

…sources of funding… 

  • “At different stages you’re probably going to have to consider everything: self funding, crowd-funding, high net worth angels, larger VC funders. Everything.”
  • “To begin with it’s likely to be your savings, your mortgage, your overdraft. And then your family’s savings. And so on.”
  • “If your ratio of having meetings with potential backers to actually getting money is 100:1, you’re doing very well.”
  • “One of the big questions you’ll ask is ‘how on earth do I run a business at the same time as raise money?’ And that’s one advantage of crowdfunding – it gives you more freedom to get on with building your company and talking to your clients.”
  • “You want experience too from your backer. Look for evidence that they have a network in your field. They could get you contacts, even customers. Money is the lifeblood of your business but experience should come with it – and it tends to. If I’m buying into a business I’ll like the business, and that means I’ll know something about the industry.” 

…winning angel backing…

  • “It’s true there is a lot of investor money out there right now, you could even say bucketloads: but it’s very choosy.”
  • “Don’t be indiscriminate. Do your homework and find out which VC group or angel is best aimed at your business.”
  • “As an angel investor, the first thing I’m interested in is your concept. I’m looking for a truly standout idea.”
  • “You need to talk and talk well. Excellent communication is a common thread in successful startups. If the CEO or FD of the business can’t sell, they’re not going to raise money.” 

…achieving a successful exit…

  • “Don’t build a business to achieve a great exit. Build a great business.”
  • “Keep potential buyers in the field. Stay in touch with them. Consider which of these businesses is going to be the best to have a relationship with in the future.”
  • “In certain fields like AI, genomics, electric vehicle tech and cybersecurity, established companies are pulling back on research and development investment. Instead they’re looking to buy smaller businesses – and in these areas they’re buying them like there’s no tomorrow.”
  • “The number one rule in your exit strategy? It’s to not make the exit strategy your number one thing. Your number one thing is to get on and build a great business.” 

…the likelihood of failure…

  • “About one in ten crowdfunded business fails and that’s about right for the industry [Crowdcube says of the 700-plus businesses who’ve raised money on its platform since 2011, 89% are still trading].”
  • “In my experience expect one in eight or one in ten originally investable businesses to fail”
  • “Once you get past three or four years the likelihood of failure falls away fast.” 

… what needs to change in the wider investment culture…

  • “The tech cycle is different from the business cycle, which is one of the biggest reasons why we need more patient capital.”
  • “One answer is pension funds. We need our pension funds to be taking bigger bets.” 

…and the basic requirement for success

  • “Get a thick skin and sell your heart out.”

Cazenove Capital has supported generations of entrepreneurs and is proud of its association with wealth creators. If you’d like to register your interest for our next event, please email nicholas.sanderson@cazenovecapital.com or robert.snuggs@cazenovecapital.com

Author

Nicholas Sanderson

Nicholas Sanderson

Portfolio Director

Nick joined in 2011 and is a Portfolio Director working closely with many of our entrepreneurial clients. Prior to that he spent just over three years working at Deloitte Private Clients, managing investment portfolios. He gained a degree in Politics from Durham University in 2007 and has passed both the Investment Management Certificate and the Chartered Institute for Securities and Investment Diploma.

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

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