Strong opinions, weakly held

A lifetime of learning by Peter Cowley

 June 2022

So what have I learnt since writing ‘The Invested Investor’ book (buy here) nearly five years ago? I’ve spoken to hundreds more entrepreneurs and investors, invested in 15 new start-ups and invested in a further 20 follow-on rounds. In addition, over that period I have had ten positive exits and nine failures – a very good (perhaps lucky?) ratio.

I stopped investing in new start-ups from late 2020, except when I knew the founders already, and I continued following on in my portfolio until mid-2021 – 14 years after my first investment in mid-2007 in EPT Computing, which exited after 2.5 years for a 10+ multiple and perhaps gave me too much hope.

This article is almost identical to a new chapter written for the third edition of The Invested Investor, but it can be read without having read the book. A gentle warning that if you have read and memorised(!) the book, you will see a little overlap in places.

You may ask why this article is entitled 'Strong opinions, weakly held', a quote which was first attributed to Bob Johansen at the Palo Alto Institute for the Future, and which I have used as my WhatsApp status for many years. This is because I believe that one needs opinions to make investments and to build a personal brand, but that intransigence is a negative character trait. For instance, I used to be pretty negative about blockchain, partly because of the association with crypto-currencies and partly because a well-designed tamper-evident database offers similar functionality. But I have now come to the view that blockchain has uses in some verticals and circumstances. However, I am unlikely to change my opinion about crypto-currencies, which are commonly used for pure asset speculation and transfer of currency under the radar of regulators. And of course, Non-fungible Tokens (NFTs) seem to be evaporating even faster than Initial Coin Offerings (ICOs). I listen and learn from the many people I meet and alter my views and am happy to share that I have changed my opinion.

 

Angel investing is an art, not a science.

 

Data

It is almost impossible to find reliable data on angel portfolios, for a number of reasons. For one thing, almost all angel investors are unwilling to share their data, and even if they do, some have a tendency to report successes but ignore failures. Angel groups and trade bodies, too, find that their members are unwilling to answer surveys. While it’s true that a group will necessarily have data on investments if they have a carry (profit share) arrangement, in practice this is quite rare.

               If the investments are through a fund – for instance VCT – then that data will be available but it will still only rarely be publicised. Another source of data would be the UK tax authority, HMRC. Whilst HMRC has some data, I believe that a positive exit using (S)EIS with no Capital Gains Tax to pay does not need reporting. This means that HMRC will have visibility of (S)EIS investments and failures, but only a proportion of successes. And lastly, the media generally tends to report successes, but very rarely failures.

However, like Richard Hargreaves in his book ‘Business Angel Investing’, I have published all my results – failures as well as successes – both here and on my website, www.petercowley.org.

I made my first angel investment in summer 2007 and stopped in summer 2021, as the sort of start-ups I fund take eight to twelve years to reach a good exit, so I will be approaching 80 when almost all will have failed or succeeded in terms of my investments being liquidated.

Financial metrics as of June 2022

·        Total number of investments: 76

·        Number of investment rounds: 172

·        Hence average number of new investments/years: 5.4

·        Average number of investment rounds where I participated/year: 12.2

·        Hence average rounds per investment: 2.26 (I advocate 2 to 3 in total per company)

·        Average multiple of total invested divided by initial investment: 2.56

·        Successes where I made a positive return: 15

o   Of which two were less than 1X, but that’s still better than a failure

·        17 failures

·        On successful exits:

o   Annual rate of return from 14% to 152% with a mean and median of around 50%

o   Multiple from 1.4X to 107X with a median of 3.2X and mean of 12X

·        Blended multiple on all successes: 7.4X

·        Blended multiple including failures: 4.3X

·        Five of my successful exits had only one round of funding

·        Four of my failures only had one round of funding, illustrating the adage that if a start-up is going to fail, it’s probably best for it to fail fast

·        Total cash out divided by total invested: 2.06X, with 44 investments still alive. The effect of UK tax reliefs increases this from 2.06X to around 2.5X

·        TVPI (Total Value to Paid In) is 4.4X with the possibility of over 5X with tax reliefs, but beware: this is dreamland stuff

·        In the UK, (S)EIS tax reliefs are sometimes regarded as generous. In my case, as I have often invested within 3 years from an exit and invest in non-EIS shares, my overall tax benefit is around 15-20% uplift

Non-financial metrics

·        Served as a board member of 17 start-ups (plus another 24 of own companies/charities)

·        Experienced 21 down-rounds, including one that was 60X

·        Worked with 150+ founders, of which 10 founders have left voluntarily and 24 involuntarily

·        Led 31 investment rounds

·        23 of my portfolio have had at least three profitable months in their history, which of course leaves 53 that have not!

·        Co-invested with about 28 VCs into 38 companies

·        Co-invested with seven Corporate VCs

·        Co-invested with the Angel CoFund seven times

 

Timing

The average time from the point of first contact to close has been 5.2 months. The shortest time from first investment to failure was five months – a great learning experience! The maximum time from first investment to failure was over ten years, resulting in a median of four years and a mean of approximately five years.

As far as successes from first investment are concerned, the shortest time here was 15 months (with a great internal rate of return (IRR), but a poor multiple), while the longest time was 9 years and 3 months. The median of this metric is just under four years and the mean 5.5 years.

 

What have I learned in the last fifteen years?

People, people, people

To get the most out of being an invested investor, in every way, you should enjoy the start-up-journeys you join. Enjoyment always revolves around people – as does success. I continue to advocate an approach where as an investor you back a team, rather than a technology or a market – people with a plan, rather than a plan with people. The best funding teams are made up of two or three people, but be wary of situations where the people concerned are in an emotional relationship. Entrepreneurs must be able to listen – what the Americans call ‘being coachable’ – and be truthful, and they should be prepared to ‘walk through walls’ or ‘find the hidden door’. Not much to ask for, I hear you say.

In the same way, always choose your co-investors with care. You are going on a journey together, sharing risk and workload. The core requirements of trust and transparency apply as much to your co-investors as to your entrepreneurs.

 

Numbers, numbers, numbers

You’ve found your people. The next step is to invest early and be prepared to write off the investment as soon as it is made. Seventy-five percent of your investments will likely fail, so any return is better than none. Once you’ve invested, add value by offering your skills and experience.

When building your portfolio, bear in mind that you should be prepared to allocate two or three times the investment to each company and remember that your portfolio is a numbers game. Just as a reminder, in my experience, the magic numbers are 15, 25, 45 and 90.

Fifteen is the number of investments where I believe as an invested investor you can keep in close contact with the companies. Twenty-five is the number that is recommended by me and by many as being the minimum number of investments before you get the benefits of spread and therefore portfolio theory. Statistical analysis from FounderCatalyst in the UK and the Angel Capital Association in the USA says that with 20 to 25 companies you have a pretty good chance of at least getting your money back. When you get to 45 investments or above it becomes quite onerous to keep up with everything. However, if you get up to 90, then, according to the theory, you get to the point where there is a good chance (not a guarantee!) of having a 100x exit.

But before we get carried away with three-digit multiple exits, let’s remember that three quarters of investments will fail, and that most failures are caused by a lack of equity, before break-even or forced exit.

Finally, if the last 15 years have taught me anything, it is that it really does pay off to follow the advice given in ‘The Invested Investor’: form a strategy based on your own investment criteria, refine and stick to it.

It is easier to get divorced (in most countries) than sell illiquid angel shares!

My failures and what I have learned

Most of my failures were caused by an inability of the company concerned to find product-market fit, usually for one of the following reasons. It could simply be that the technology never worked well enough for the product to take off. In other cases, the market was not accessible – perhaps the CAC (Customer Acquisition Cost) was too high or the value chain (from the start-up to the consumer) was too difficult to navigate. Then there were technologies that were ahead of their time, where the cost of educating the market was simply too great for the start-up to bear. In some failures, the price that the market would bear was not high enough for the company to become profitable – this is called unit economics. It is common in hardware, where it takes time and equity to get to the point where manufacturing costs drop rapidly as volumes scale. Less commonly, the failure was due to competitive pressure.

In all of these cases, more equity capital would have been needed, but both existing and potentially new investors did not have enough faith in the founders. These types of situations lead to one of three outcomes; a reduction of overheads (mainly employees) in order to reach break-even, a forced exit, or closure (hopefully solvently).

An example of a start-up that was ahead of its time was a company I invested in called Captive Media. It came up with the idea of advertising to the notoriously difficult target group of 18 – 30 year old men by installing advertising material in men’s toilets. Instead of there being a touch screen, the person could interact with the advert using a stream of ‘warm liquid’, in a location and at a time when they could not look anywhere else. Time and cash were spent educating the multiple stakeholders between brands and their potential consumers, but despite the company building a 100+ portfolio of venues, their form of advertising, Digital Out of Home (DOOH) was not (and is still not) widely recognised as a medium by the industry. It was probably also subscale. As a result, investors stopped funding, various exit options were investigated without success and the project ended in a well-run solvent closure.

The most valuable thing you can make is a mistake- you can’t learn anything from being perfect.

Adam Osborne (an entrepreneur most famously known for the first portable computer)

My exits and what I have learned

All positive exits are good news, even if they don’t return all the cash invested. However, it is less common that the exit value exceeds the founders’ dreams. I had two good exits shortly before the coronavirus pandemic, both with the same enterprise exit value (although I had considerably more shares in one company than the other). One of the companies consisted of about 15 people and had strong Intellectual Property (IP), but no customers. This company was sold on the strength of the IP and team. The other company had around 160 people and a technical product offering which was pivoted to a service offering, with a revenue of about £20M, a profit of around £2.5M and was therefore sold on a profit multiple.

Some more of my exits:

·        One company which was profitable but sold early to its biggest customer. On exit, it produced a good IRR (internal rate of return) but the sale happened too soon for the investors to make a good multiple. What I learned from this is that it is important to understand the ambitions of the founders. These founders weren’t really ambitious enough for angel investors

·        Two companies which were in a distressed situation – they had a very short cash runway – but both sets of founders pulled a “rabbit out of a hat” and sold for a good return.

·        Several “acqui-hires” which were bought for the IP and the team. I expect this of my university spin-outs, which partly reflects the very high cost of building a company to serve a global market and the lack of sufficient late-stage equity capital in the UK.

·        Two companies IPO-ed (company transferred to an initial public offering onto a stock market), which after a lock-in period, means I need to decide whether and when to sell some or all of my shares. On a side-note, I have found by experimenting with stock market trading, that I actually appreciate the illiquidity of angel shares, as I am not good at making decisions on when to buy and when to sell if I have a choice at any time

·        Two companies where the positive exit was only available to investors in the last round, which had preferential treatment (liquidation preference shares) but of course would not qualify for EIS tax relief as EIS almost always applies only to ordinary shares (also known as common stock) and the last round investments were considerably less than three years old

 

There is disagreement here in Cambridge (and this could easily be said of the UK as a whole) about whether the community/nation should be able to grow companies worth billions or that, like Israel, which classes itself as a 'Start-up Nation' we should grow to a value of perhaps £20M-200M and then exit to a global player with vastly greater market reach, which will take the company much further. The fact that UK companies exit early, is in my view, due to a relatively small local market and difficulty getting into the US and Chinese markets, a shortage of later stage capital and potentially a lack of ambition from UK entrepreneurs.

 

I have already had cash-back of over double my total investment over the last 15 years and, although I have discounted my remaining 44 investments to zero, I expect at least another 15 positive exits.

Angels are in the exit rather than the philanthropy business.

The coronavirus pandemic

Back in the beginning of 2020, when the coronavirus pandemic first reached European shores, there was huge fear and a level of panic in the angel investment community, not on the part of the investors so much as on the part of the entrepreneurs. Many angels, myself included, responded by rapidly providing their companies with a large amount of capital if they needed it, to help them through the expected massive global problems and a potential economic recession. Many governments, too, helped the start-up community, including the Future Fund in the UK.

               So far so good. The real issue came with new investment. In the first few months, investors were interviewing new entrepreneurs seeking funding using online video conferencing tools such as Zoom and Teams, which made it quite difficult to assess their personalities. In particular, team dynamics were difficult to gauge when no one could physically be in the same space with anyone else and each person was in a separate window on the screen. This led to a drop in the number of new investments, initially.

               However, as the pandemic went on, we became used to the new ways of working within the industry and – as in many other areas of life – these new ways are here to stay. Where in the past, angel investors would generally have invested in a geographic area that allowed them to meet and make personal visits fairly easily, these days, investors may be interested in remote deals, where the initial conversations are held online, leaving any personal meetings to a later stage. This situation is clearly advantageous for entrepreneurs, as it gives them access to a much larger pool of potential investors. Within the Cambridge Angel group of investors, we now have examples of investments being completed without any physical meetings at all.

               When it comes to supporting companies by serving on their boards in some capacity, the same changes have taken place, with many board meetings which used to be held in person now being held online. One example is a company I’m involved in, called Spotta, which has a board member in Boston, one in Dublin and the remainder in the UK.        

However, you won’t be surprised to hear that I still advocate meeting in person every so often. Support extends beyond board meetings and it is doubtless better to be in the same space physically, where there is an opportunity for chemistry to develop, and where there is room for creativity and for sparking off each other. I would say that the new, online, ways of working are best used as an additional tool.

From the companies’ point of view, online ways of working make life easier from a sales perspective, too – it is no doubt easier to meet new prospective customers. However, making high value sales in particular still requires that personal trust which can only be engendered by face-to-face meetings.

              

A reset in valuations in 2022

Since ‘The Invested Investor’ was first published, valuations have generally gone up. Instead of investors offering cash and it being taken up by the entrepreneurs, investors are having to ‘sell’ their cash, in other words, investors have to convince good and very good entrepreneurs that their cash is useful. You won’t be surprised to hear that in my view this is done by offering more than cash, by offering Invested Investor skills. Of course, in any situation where buying and selling occurs, there’s usually a slight power imbalance – you want to try and be on the buying side, not the selling side. In an ideal situation this would be a fair exchange. In ‘The Invested Investor’ you will find hints and tips on how to ensure that this is in fact a fair transaction.

Writing in June of 2022, there is a real worry that a recession is on the way, caused by a combination of the after-effects of the coronavirus pandemic, the war in Ukraine, energy and food price inflation and the huge debts that governments have built up. The current mood is leading to a rapid drying-up of investment money, which in turn causes valuations to come down. It is thought within the community that it will take a year to eighteen months to regain some stability in the industry. This doesn’t mean that investment capital won’t be available, just that it will be much more difficult to secure and at a lower valuation.

 

A word of warning

There’s a lot of emphasis throughout ‘The Invested Investor’ on due diligence, in fact an entire chapter is dedicated to just that. I’ve learned in the last 15 years that due diligence does not just apply to entrepreneurs and co-investors but to everyone involved in the process. For instance, one start-up known to me had quite a lot of funds in the bank, millions in fact. A new accounting employee raised some suspicion, as she was rather reticent about answering some of the HR department’s questions after she had started work at the company. A simple matter of Googling her name revealed that there had been a significant issue with her previous employer. She had to be asked to leave the building there and then and the subsequent court case led to a significant criminal penalty.

The same applied to another company I had invested in, when it was found that a potential employee had had a prison sentence. Whilst this sentence was for a non-business related offence, it still carried the risk of brand damage if there had been any connection between the company and that person – the person was not employed.

 

Dividends

It remains my strong opinion (strongly held!) that dividends should not be paid if a company has become profitable. Instead, they should be retained within the company to fund growth. Of course, if it gets to the point where the company is profitable, it probably won’t need new injections of equity capital anyway, and if it does, it would only be to fund an increase in the rate of growth. The money is much better left in the company. Apart from tax having to be paid on dividends, my experience (not evidenced, mind you), tells me that every pound taken out is probably worth about five or eight or even ten pounds if left in the company in order to fund growth.

In 2012 I became involved in a company called James & James Fulfilment Ltd, which was founded in 2010. The company was profitable from an early stage in its journey, when the decision was taken for minimal dividends to be taken out at that stage, in order to leave the vast majority of retained profits to fund the subsequent strong growth. This strategy paid off, as within seven years the company exited at a high valuation resulting in a multiple in excess of 100x on the investment.

 

Warranties

As explained in ‘The Invested Investor’, warranties are there to ensure that the founders have provided accurate information on all aspects of the company that the investors need in order to make an informed investment decision. In the early stages, warranties are almost useless, except to concentrate the minds of the entrepreneurs on what is required by investors. Companies warrant a number of things, some of them simple, such as that they actually own the shares, but also that the business plan is accurate. You probably already know that of course early-stage business plans are never achieved and companies would never be challenged on that. If they are challenged, the outcome may be disastrous and in any case the investor-entrepreneur relationship will be ruined. I have seen such a warranty claim by shareholders, in a situation where I wasn’t a shareholder myself. Rather than the founders admitting they were wrong or allowing themselves to be proven wrong in a court case, their response was to simply shut down the business. There are no winners here.

 

Live up to your name!

In the ‘Invested Investor rules of angel investing’, I write that less than angelic or downright bad behaviour will come back to bite you in the years of investing and cooperation ahead. Nonetheless, I have sadly seen many cases of bad behaviour by angel investors in my years in the industry. This is just a small selection:

 

·        An angel dropping out after signing the legal documents, which then had to be changed and re-signed by all the investors

·        Delaying payment after signing – in one case for five months – supposedly ‘due to Brexit’

·        Successfully suing the founders of one company for £5,000 after they could not complete the investment round, and the potential investor wanting payment for his time. He had a contract and now runs a London VC – I commonly share this story, including his details, in private

·        Refusing to sign exit paperwork (drag-along does not always work with American acquirers) until he was paid £25,000 ‘compensation’ for the loss on his investment

·        Weekly confrontational visits, causing the founders of the company to re-locate to another country. This investor was the company’s biggest backer

·        Refusing to allow an exit to occur (as some investors in the group believed the value was too low) hence delaying the exit by forcing drag-along, which takes two to three weeks. The errant investors still made over £1 million and a 4x multiple so this was a pointless gesture, motivated by greed, and potentially endangering the whole deal

·        Asking the board to consider compensation as the exit share price was less than this person had bought in at. This was a director who had invested in the last round

·        Misunderstanding the title of founder. In one case someone joined the company nearly five years after it was formed and called himself a founder. In another case, an investor became a director six months before the ‘founders’ joined

 

University spin-outs

My experience with university spin-outs – their role in innovation, the barriers to successful commercialisation and investment success

 This article discusses my experience investing in 17 university spin-outs, which have generally been more successful than my other investments. It was written for the European Research Council and discussed at their 15th anniversary event in Paris in February 2022.

 As a serial technology and property entrepreneur for the last 40 years and an angel investor for nearly 15 years, I have invested in over 75 start-ups. I am also a President Emeritus of the European Business Angel Network (EBAN) and have written two books under the Invested Investor brand.

I am lucky to live in Cambridge, UK, which is a hotbed of technology start-ups, and I have invested in 17 university spin-outs. In all cases, the technology has been researched and developed by doctoral, post-doctoral and professorial academics within universities, funded by the university and by grants. Some research is pure, some part-funded by corporate partners and some is focussed by governmental industrial strategy.

I tend to think of these investments as late stage ‘science experiments’ where a market has not yet been identified, or even if it has, a pivot to another application of the technology commonly occurs.

So, what do I believe are the barriers to successful commercialisation of frontier research from universities? Primarily, early-stage investors, including angel investors, always invest in an entrepreneurial team, which I class as investing in ‘people with a plan’ rather than a ‘plan with people’. This can lead to a significant problem, as most great academics do not make great entrepreneurs. This means that an academic co-founder almost always needs a commercial co-founder, who can raise external finance, can identify markets and sell the product/technology and, of course recruit and manage a team and create a positive culture. The pool of experienced start-up managers is small, hence it can be really difficult to find the right commercial partner. In addition, most spin-outs will need to reform their management team as they develop.

Another issue – although one which may potentially be outdated in the UK – is the attitude of those within the university itself, both in terms of commercialising the research and the barriers to raising equity finance. Many academics and members of university management believe that research should be in the public domain, through research papers. This makes it difficult for investors, who need to see defined defensibility (usually filed, although not necessarily granted, patents), otherwise it may be easy for a competitor to develop similar products.

A further problem lies in converting academic ideas and research results into a working commercial product. Simply transferring the technology from the lab to a spin-out company can create major hurdles, compounded by the very early stage of the technology. It commonly takes a university spin-out seven to ten years to mature, which can mean a substantial amount of funding is required from patient investors.

Finally, in the UK, many universities recognise the UK Patents Act 1977. The research has been undertaken by employed researchers in university owned laboratories and therefore the university owns a significant share of the spin-out company. This is thought to hinder entrepreneurship, as it affords less room for shareholder ownership (and hence motivation) for the academic founder(s). In some cases, universities take 30% or more of the initial equity (75+% is not unknown).

Because of my location, I have extensive experience of the workings of the Technology Transfer Office (TTO) at Cambridge University, although I have investigated and invested in spin-outs from other universities. Cambridge does not take any shareholding of the spin-out company, but commonly purchases shares by investing in the spin-out, using their own funds and buying equity at the same valuation as other investors – either angels or VCs.

In addition, the university takes a licence fee for any intellectual property rights (which may sometimes have an equity component), with any cash payment commencing only once commercial traction has been achieved. Pre spin-out, the university funds the patent application process and allows academics to elect to develop ideas without university ownership, although the University may still invest in these companies.

Other universities are gradually taking note of this model (especially as it has worked well for Cambridge University and its spin-outs) and its advantages in terms of commercialising research for societal and economic benefit.

To conclude, a large proportion of frontier research is absolutely essential for innovation, but there are many obstacles on the road between the lab and the market. These are generally problems in product development when turning research into a commercial proposition, often caused by insufficient funding and inexperienced management.

As of early 2022, of the 17 University spin-outs, I have had three positive exits, three are in an exit process and one has been a failure, leaving ten. By any standards, these results are excellent, as if the other ten all fail (pretty unlikely), I hope still to have a success rate of over 40%, which is generally regarded as high for an angel investor.

I leave it to the reader to work out how, and why, I have had so much ‘luck’.

 

INVESTED INVESTOR TAKEAWAY

·        Form an investment strategy, refine and stick to it.

·        Back ambitious, determined and coachable people with a plan.

·        Write off your investment as soon as it is made and be prepared to follow up with two or three times the initial amount.

·        Add value by offering your skills and experience.

·        Learn from your failures and from your successes.

·        Three-quarters of failures are caused by a lack of equity before break-even or a forced exit.

·        Due diligence applies to everyone involved: founders, staff and co-investors.

·        Be prepared to change your mind as you build experience.

·        Show good behaviour.

·        Enjoy the many journeys you join!

 AN ENTREPRENEUR’S STORY

Letter to my 29-year-old self

This is a letter I was asked to write by a wonderful exited tech entrepreneur, Shirin Dehghan, when she was a partner at Frog Capital. It reflects my learnings as an entrepreneur over the previous 30 years.

Dear 29-year-old Peter,

You have already had some entrepreneurial experience at university and as a co-founder of Gercom GmbH in Bavaria, but this is the big plunge, the high risk, with which you will not only “cut your teeth”, but many other bodily parts, as well as your pride. The Camdata journey you are about to embark upon continues even now, 39 years later, with your, as yet unborn, youngest son running Camdata as a lifestyle business. And you will go on to create another dozen start-ups, with varying levels of success.

Within six years, Camdata will suffer a painful failure, followed by a cautious phoenix, and a decade later you will sell Camdata and buy it back (within just six months), followed three years later by buying your acquirer and then your main competitor.

The journey will give you decades of gradually greying hair which, when you undertake an unforeseen metamorphosis into an angel investor, will provide invaluable experience and anecdotes to help the many hundreds of entrepreneurs you will meet, and act as a catalyst for the Invested Investor book and podcast publishing project.

Some of the things that I know now, that would have prevented mistakes and heartache, and probably led you to better, although less interesting, outcomes are:

  • Grasp opportunities – whether being an entrepreneur is nature and/or nurture, you have always been comfortable with risk, albeit conducting more and more analysis as you age, before taking the plunge.

  • Luck is also important – having nearly £100K of personal credit card debt to help finance building three houses in late 2001 could have bankrupted you, but luckily didn’t.

  • Build a great team – you have hired juniors who have become great leaders, but you have also made mistakes by hiring fast and/or firing slowly.

  • Don’t skimp on skills within finance – letting a bookkeeper allocate cost of sale transactions onto the balance sheet, leading to a large unexpected write-down and therefore loss, was very painful.

  • Follow macroeconomic trends – not foreseeing the 1990 recession and hence not downsizing in time, when this might have saved the business.

  • Understand Lifetime Value – ensure it is a multiple of the fully loaded Customer Acquisition Cost, especially when mainly making capex sales. By the way, despite analysis, you got it wrong with ZedCam – CAC using Google AdWords equalled LTV for nearly 2 years, before you decided that could not scale, and you shut down the business.

Remember:

  • Financial leverage using debt works in both directions – with a rising asset price, the reward is large; when falling, the pain is even larger.

  • Revenue is vanity, profit is sanity, but cash is reality – memorise this adage.

  • Choose your advisors and Non-Executive Directors with care – and renew them as the company grows

  • Regretting and FOMO (Fear Of Missing Out) are futile – you will need to learn that these are potentially destructive character traits

The saying that ‘what doesn’t kill you makes you stronger’ is quite true, and building a business takes courage and, at times, blind faith and perseverance.

By the time you get to my age, you will find that your many, many ‘war stories’ are of more use than you could possibly have imagined, when helping young entrepreneurs. So, go for it, take the risks, make the mistakes and you will find incredible satisfaction in helping build multiple companies, as an Invested Investor.

Yours,

Peter (your future self)