The Good The Bad And The Ugly - My 6 Month Angel Update

As some people know I didn't do a lot after I sold our site at the end of 2005. Sure, I got a lot of business plans sent through to me - perhaps 2 a month on average - but over 6 years I did very little in terms of investments.

To be honest, I didn't know what I was doing and I didn't really have a plan. I invested blindly in a mobile company (blown out of water by iPhone and went bust), a carbon offsetting business (still going ok), a financial betting site (made a quick profit), a crowd funding music site (went bust) and various other pretty boring investments. In fact the more boring the more chance of success as I am currently sitting on nice ones to do with Pensions, Ship Wrecks, Films and Cancer research.

Some of my rejects were classic, my favourites being an Albanian Motorway project and Ugandan Peanut importing idea.

That was all in 6 years. And I didn't really have an interest in tech based businesses.

Something happened to me at the end of last year. I suddenly was interested in tech again and in particular anything to do with social. I tentatively put my toe in the Shoreditch tech scene (and believe me that can sometimes be a scary thing to do) and suddenly I was away.

So I decided to create my own little Seed Fund and start looking for startups of interest. Lets call it the Spanky Capital United Media Fund - or SCUM Fund for short. I had a small amount to invest and reckoned on getting a couple closed over a 6 month period.

Well this is my 6 month report on the tech startup scene and my investment experience.

First off, please forgive me if I upset anyone. If anyone recognises themselves then its pure coincidence - honest. I will not mention anyone or company by name.

So off I set. Well actually not a lot happened. I went to a few events to network - and anyone who knows me knows I don't do networking. My basic networking rule is to find a corner, talk to someone I vaguely know and drink lots of free booze.

Then slowly but surely after a few weeks word must have got out that there is some piss head who might have a stash of money in his pockets looking to invest in startups. It started as a trickle, then a flow, then a flood of  emails and business plans started arriving in my inbox. I'd say at one point at least one a day. I can almost feel sorry for VC's  and feeling sorry for VC's is not something that I think has ever been uttered in a blog before.

So, the deal flow started, the meetings started and then the meetings started to rack up more and more. This was beginning to seriously eat into my already busy lifestyle (read my Public Resignation to get an idea) Adam Street and Hoxton Hotel have made serious expenses from me.

Over the next 4 months I suspect I've read well in excess of a 100 business plans. Counting up I reckon approximately

- 55 different companies met (sometimes 2-3 meetings) or which
- 35 rejected
- 3 invested in
- 4 giving free advice (for what its worth)
- 5 waiting for more info
- 4 still to meet
- 3 Interested but waiting follow up
- 1 rejected me (!!!!!!)

So whats my criteria for investment. Now this is the mad part. Over the last 6 years Ive sort of realised the experience hasn't been that much fun and was pretty boring. Ive gradually learnt that I actually like to invest in very early stage seed startups and there are certain areas that I enjoy. So I came up with my own 3 part criteria, namely

1. The investment must be fun.
By that I mean in areas that I have an interest so that I will take an interest in the business - these areas are namely Music, Football, Drinking, Food, Sport, Retro and Twitter amongst others.
2. I have to like the people.
Startups are all about the founders. I have bad experiences and don't want to make that mistake again too many times.
3. The journey must be high risk/high reward.
I am not interested in small returns - I want businesses that will either go bust very quickly or will become a phenomena in a year or 2. It must disrupt a market.

Now not all startups will fit all 3 so 2 out of 3 will sometimes interest me and sometimes even 1 out of 3. But basically this is what I had on my mind whenever I met someone.

Yes - I know its a crazy approach - but its mine so there. (Its lovely to be your own boss)

How did the process go?

THE GOOD

I have now invested in or have an interest in a number of startups (I'll let you try and work out from the descriptions who they are)

- Pinterest type site for all things retro (everyone should know that one)
- disruptor in the takeaway service (thats a hard one to guess)
- twitter aggregator
- underground music site
- football app
- sports twitter site
- video messaging service
- bar and nightlife site
- Photo sharing app
- location social network
- and a few other social sites that are in areas of interest to me

THE BAD

The general state of the startup scene in London at the moment is pretty healthy if my meetings are anything to go by. I've met loads of people. Of course some of them and some of their ideas are vacuous - you would expect that. However, there is also an excellent buzz and energy about tech startup at the moment. The only downside that comes with that is the over inflated valuations that some people think their idea is worth. Really really crazy sometimes. Startups wanting seed funding of 400K on a 2m valuation for instance. Thats a fucking big seed - what monster are they trying to grow.

I also feel there seems to be a lot of angels out there at the moment with no experience in the industry - tech is cool at the moment. Which means some people are investing a bit blindly and hence ramping up valuations and expectations for mere mortals like me.

Another moan is that there is sometimes an expectation amongst startups to that it is their god given right to get funding and hence success. Nothing wrong with a bit of confidence but your right to money is not a given.

THE UGLY

One of my pet hates is people I meet who I then politely write back that I won't be investing. I don't think Ive ever done it in a nasty way. So you do that and don't ever get anything back - not even a thank you for turning up and wasting my time in an attempt to get my money.

However, the worst moment though was from one who again I politely rejected. They suggested they "buy" my shares so that they could pretend I had invested even though I had no intention, as a way to try and entice other investors in. Not happy with that one. I may be stupid but I think at least I am honest. (answers on a postcard)

And finally to the person (sorry) who in desperation said "Steve, invest in me, I'll make you your money back" - hmmmm.....

Thats all for now. Its actually been really good fun. I've met some fantastic people who I will hopefully work with for a long time. I'll update again in 6 months, hopefully a few of investments will still be in business. The Scum Fund is closed at the moment. I need a rest from meetings so please don't send me your business plans.

[BTW - I hate that term Angel - can someone please change it. ]

@spankyhurst