Andrew Davidson is an angel investor and one of the regular panellists at our monthly Pitch For Investment event. He is also an investor in Othership – but he provides much more than a financial investment – one of our co-founders, Ben, refers to Andrew as a trusted partner and mentor.
“He is what I would call a real angel. Andrew made a substantial investment in Othership and I call him once a week. Whenever I’m struggling, he always offers sensible advice and great support.” (Ben Carew, Co-founder of Othership)
We have spoken to Andrew about his role as an investor, his tips for young businesses and the things he looks for in a pitch.
How would you describe your job?
Andrew: I invest in early-stage businesses at Pre-Seed stage. I’m unusual for a UK Angel in that I invest internationally, for example I have investments in New Zealand, China, Germany, Norway, USA as well as in the UK, within a wide spectrum of sectors.
For how long have you been investing in businesses?
Andrew: For about 12 years, although I was an Institutional Equity Salesmen for over 25 years prior to starting my Angel career.
Is there any industry you primarily invest in and why?
Andrew: The genesis of my Angel investing began with me identifying industries that I felt hadn’t, for whatever reason, seen significant technical innovation and investing in those Start-ups I felt might become real disruptors. These sectors included Fintech, Energy Management, Insurance, Energy Storage, Traceability, Food Waste, Data Analytics and I’m currently looking at the Construction Sector, though haven’t yet invested. I’m not particularly Tech Savvy and avoid sectors I don’t have a personal interest/technical knowledge of (which are many!)
How many business pitches have you heard or seen over the years?
Andrew: A lot. I can’t give you a precise number, but certainly thousands over both my careers. At the moment I hear about 20 pitches per week and those are the ones I want to hear. I am contacted by many more people, but I’m very selective and very upfront on my LinkedIn. I tell people what I’m looking for and what I’m not looking for. If someone contacts me to discuss an investment in property assets, oil and gas or mining, then they haven’t done their due diligence. It clearly says on my profile the business sectors and stages I’m interested in investing in and that is early-stage businesses.
Is there one particular pitch you heard over the years that stuck to your mind?
Andrew: I’m fortunate to be a Pre-Seed investor in a German company called Scalable Capital. The Founders presentation was so compelling, that I decided on the spot to invest in them, something I have never regretted. The four founders are also inspirational individuals who have never lost their humility and drive. I always trust my initial gut instinct after any pitch, that’s why for me, its so important for Founders seeking investment to get it right.
What are you looking for in a business to invest in?
Andrew: I’m very intuitive and hate wasting people’s time. I know what I’m looking for and I look for similar traits in my Founders. The stage at which I am investing, requires a longer-term view and patience as often I am committing to between a 5- and 7-year investment period. Over the years I’ve discovered there are two certainties attached with early-stage investing; that they invariably take longer to gain momentum and it always costs more! When I pick an investment, I’m backing a team or an individual because I know a close relationship with the Founders is vitally important.
What would you say is the number one mistake that most young businesses make when they’re raising funds?
Andrew: It is a problem if the Founders aren’t able to articulate succinctly what problem their business is trying to solve and how they are going to monetise it. A common mistake is a lack of due diligence about the people they’re speaking to or an unsolicited approach via LinkedIn. It just isn’t good enough, in my view.
What information do you need from a pitch to even think about investing?
Andrew: I would need to hear a pitch with a very clear idea of their proposition and how they’re going to achieve it. Problem, solution and how they are going to go about delivering this.
In a pitch what would put you, as an investor, immediately off?
Andrew: If they can’t get the 3 most important points over to me in the first few minutes or if they can’t articulate what the problem is. They really need to have identified what issue they’re trying to solve. I don’t look at 3-year discounted cash flow (DCF), as they’ll be wrong. I always ask myself: is this person/team investable? Have they got a clear why and how? Is the addressable market they are hoping to disrupt big enough? Do they have the necessary drive and determination to deliver a successful outcome?
What happens once you invested in a business?
Andrew: For me as an investor, I’m not just a source of money but am also a Mentor. I want to be involved, I want to help and I want them to know that I’m always available to be used as a springboard and that I’m only a phone call away. I always want to hear the bad news first and it’s important that the Founders feel able to ask for help and advice as things won’t always go smoothly.
What problems could this be, for example?
Andrew: Very few founders are natural fundraisers. Once they’ve raised capital, many are reluctant to spend it. I’d much rather businesses fail with nothing in the bank than fail with two-thirds of any funds raised languishing in the bank. Once they’ve raised the funds, I want them to deploy the capital. Another example is when Founders are reluctant to delegate to other members of their team as they just can’t do it all by yourself. In my experience, successful Founders have to ascertain where their strengths are and delegate to others, where they are not. I’ve seen so many great businesses fail because founders haven’t been willing to delegate. Finally, Founders should only hire people who are smarter than themselves!
Any last tips for young businesses?
Andrew: Be careful who you take funding from, as not all Funders are the same. Getting the right legal advice from the start is also crucial. Seedlegals (A business I unfortunately have no attachment to) are in my experience a fantastic platform for Start-ups, as they offer help, support and advice on a whole host of subjects many Founders haven’t even thought about. For me, a Start-up that has used SeedLegals for their SEIS/EIS application is a material plus point as regards potential investment. The whole Start-up advisory space has changed and mushroomed over the last couple of years and there are now hundreds of organisations out there offering advice on all aspects of fundraising and pitch deck generation. Be very careful and read the small print!
Pitch to Andrew and other Angel Investors
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