THE BLOG

Angel Investors - Worth Their Weight in Gold?

20/06/2013 17:31 BST | Updated 20/08/2013 10:12 BST

As the founder of one of the country's biggest angel investment firms, there are two questions people often ask me.

The first is what I think makes a good company to invest in. The second, is why new businesses should opt for an angel investor in the first place.

The answer to the first may be surprising, as my years of working in the finance industry and then as an investor have taught me that contrary to popular opinion, it's not always the 'great idea' or product that makes a company thrive and grow, although, of course, it helps.

The driving factor we look for when deciding whether to invest, is the person. We want people with a work ethic, who are ambitious, tenacious, cheeky and have a good background or knowledge in their domain.

We think the person is as important as the idea. You need someone who is adaptive and can change as the markets and economy do.

We're not so bothered about academic results - in fact, one thing we've learnt is that academia certainly doesn't equal success, as some of the most successful people in the world have dyslexia, which more often than not held them back during their education.

But if they have all these qualities and a good understanding of their subject matter, we are more likely to be interested in investing and mentoring them.

We receive approximately 600 business plans a month - which is increasing all the time.

But every now and again, there's a candidate that really sticks out.

Last year, for instance, we were really blown away by David Rubie-Todd of Witlr. He was selling karting stickers at 16 and grew his company to become the UK's biggest supplier of stickers and vinyls in the karting industry.

We were impressed by David's business acumen, tenacity and his ability to be 'proud to be different'.

We backed him in his graduate recruitment database, have helped expand his team to 10 and are mentoring him through his imminent launch.

Which brings me nicely on to the second question; why new businesses should opt for an angel investor.

Not every angel investor is the same. They have vastly different amounts of money they are willing to invest and business acumen, while many will just want to invest money for a share of the profits.

But where loans can be hard to come by for many new businesses, especially in a struggling economy, angel investors are often the best solution to finding the money to get a new business off the ground, or take a venture onto the next level.

However, I like to think of it as more than investing just money.

Some 15 years ago I approached Peter Hargreaves and Stephen Lansdown with an idea to sell pensions by post, phone and online. They not only put the money into the project, but mentored me along the way. The advice and guidance I received was immeasurable.

My company, Pensions Direct, grew and was absorbed by the Hargreaves Lansdown group which is now valued at more than £4bn.

I was able to retire at 36 - but I was soon setting up the investment firm to try to replicate, in some small way, the help I received.

We have helped companies we have invested in with trademark and supplier agreement questions; establishing overseas licenses; counseled over staff management issues; helped with recruitment, business strategy and sales and motivation techniques.

MyKindaCrowd was a company with a brilliant idea of allowing companies to post real-life challenges and for students to respond with their ideas within lessons - and get rewarded with work experience, mentoring, internships and jobs.

But we could offer more than just a lump sum of money to help the company move forward. Our network of contacts and experience in growing a billion pound business, meant if they needed advice or mentoring we were on the end of the phone. In the end, we helped identify what areas needed developing, with strategy and gave support for management of staff issues. But we are always available should they need any input.

Just 12 months after launch 92 per cent of universities and 55 per cent of schools and colleges have signed up.

Angel investors certainly aren't the answer for every new company.

However, there are plenty of young people with brilliant ideas and the attitude to make them succeed, who sometimes just need the right people, with the right experience behind them, to help them make the most of it.

That's where an angel investor is worth their weight in gold.