Above: The Outsiders by William N. Thorndike.
Life has suddenly become quite busy recently. Three things, all very positive. Two are connected with angel investing and one is a secret-squirrel 9others project that perhaps shouldn’t be so secret.
Of the two connected with angel investing one is a ‘live’ DMG Syndicate opportunity that is still ongoing. I can’t share everything but I do want to elaborate a bit on the kinds of questions the angel investors were asking as they made their decisions.
Remember: As a syndicate the members of DMG each make their own decision about whether to invest or not. I invested in the last round of this ‘live’ one, I am not investing in this round and I am certainly not here to convince anyone — the investment decision is theirs and theirs alone.
But first, and in brief, the first two things…
The First Thing
I first invested in LiveSmart in September 2018, which was actually DMG’s first syndicate investment (although my DMG Co-founder, Kash, was already an angel investor) so it’s great to be part of LiveSmart’s largest round to date (nice mention in the FT here).
The new funding, all of it raised in amongst Lockdown 1.0, will help the company grow in their established markets in the UK and Malaysia as well as expand to other countries in order to continue their mission to provide health assessments and one-to-one coaching to help build a happier, healthier workforce.
I’ve been through the LiveSmart process twice and it was life changing. It really was. If you want to find out more or if you work at a company that you think ought to take up LiveSmart’s services please email me on email@example.com
The Second Thing
The second thing is that 9others is in the middle of a 'briefing' project. I'm still not sure what to call these so if you have a neat title for what I’ll describe below please let me know.
These projects come up every now and then and are a bit under-the-radar. Whereas the regular 9others sessions focus on entrepreneurs and their particular challenges, the ‘briefings’ are where larger organisations (growing startups, large corporations, governments, innovation labs etc) have a particular challenge or objective that they need some entrepreneurial help with.
What we can do through 9others is give our own insights plus rapidly connect them to remarkable entrepreneurs around the world. Those super-curated ‘others’ have a unique perspective to help inspire the client and solve their challenge. These people might be in the same or adjacent sectors or they might be completely non-obvious. It works because both sides know and trust 9others to connect them to the right people for a bit of win-win collaboration.
These projects are pretty intense and take a lot of brain power in order to do a deep dive into the 9others network around the world. Perhaps I should shout about them more because it's a wonderful thing to be part of and gets almost money-can't-buy insight.
The ‘live’ investment
Last weekend, just before Lockdown 2.0, I was again up in Northumberland. As well as running around the stunning countryside (here) I hosted a Zoom call for the DMG Syndicate to hear from the founding team of a company already in our portfolio, which was raising a new funding round.
DMG is now up to 70 Syndicate Members and many joined the call ‘live’ but of course this being Zoom I recorded it to share with the other Syndicate Members so they could watch it later. (We’re always looking for more syndicate members by the way — you can join DMG here).
While I can’t yet share which company this call was about I thought it would be helpful to show you some of the questions that sparked the greatest discussion. It was the answers to these questions that has allowed each Syndicate Member to make up their mind about whether to invest or not (the comments below each in italics are mine):
Q: Can you elaborate on your Covid19 trading update? What does revenue, cash burn, demand and customer sentiment look like now compared to pre-Covid19?
Thankfully the business is doing well and this investment round is to give fuel for growth rather than emergency-propping-up-cash. However, in all businesses this year tough decisions have had to be made. How the company dealt with staff, their office, suppliers and customers is important. Did they pull back or push ahead?
Even now it’s easy to forget what the end of March 2020 was like. For me, a key thing that Covid19 has done is force founders to think hard and make tough decisions under extreme pressure. That kind of pressure might not have been around in the company to date. I want to see how founders have conducted themselves in times of real stress as that can give me insight into how customers, suppliers and investors will want (or not) to continue to deal with them.
Q: How will things look in 2021?
Founders are usually and quite rightly optimistic and upbeat. Most of the time they’re in ‘sales mode’ because they have to get investment in, recruit the best staff and acquire and retain customers. But investors aren’t daft either. Of course we want to hear unstoppable optimism for the business but we also want to hear about the challenges and the top two of three areas of focus for the year ahead.
Q: What will you spend the money on?
The never ending dilemma of when to be frugal and when to spend. Everyone has a view: we’re all right and we’re all wrong.
Being able to articulate where capital will be allocated and why is essential (and is a fascinating theme in the above ‘Outsiders’ book).
Capital allocation is not just about ‘spend on growth marketing’ or ‘hire more staff’, the thinking behind the strategic allocation of cash can give insights into how a founder will weather the inevitable storms ahead. I’ve recently been thinking a lot about whether the companies and founders I meet are ‘anti-fragile’.
(As an aside, I once met a startup founder that used to boast about how much more he paid his staff compared with other startups (many of these recruits were his friends). Very noble. Also a massive, great big red flag.)
Q: If Covid continues for another 12-18 months, what does this mean for the business?
Often it’s not about the answer but it’s the thought process behind the answer where the truth lies. None of us know what the world will look like if Covid19 continues. Personally I think we’re stuck with it forever and, even with a vaccine, many of the behaviour changes we’ve seen will be hard and/or undesirable to undo. But, I don’t know. What I can do though is assess whether the founder has thought about and planned scenarios for 2020 and 2021.
Our 30 minute call ended after about 45 minutes. I took that as a good sign.
Being an insider on these calls as part of a group like DMG has many benefits, not least for me. I love patiently finding and assessing the startups I invest in, I love setting up the calls and I love mixing with some of the smartest people I know. I also love that I don’t have to know all the answers and I don’t have to know all the smart questions either.
Once we’re all done and dusted I’ll be able to name names, and in the meantime if you want to hear about the next investment opportunity I’m looking at then please get in touch.
Changes now & coming soon…
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Important: None of these posts are investment advice. If you are thinking about investing you should seek the advice of a suitably qualified independent advisor.