Alex Sleigh on the investor experience
Investment director, Alex Sleigh was recently interviewed by GT focusing on the NPI experience.
Alex is responsible for overseeing investments across the Fund, and has been involved in over 50 investments since 2011. Alex has an MA (Hons) in Economics and Modern History from the University of St. Andrews and a Masters in General Management from Vlerick Leuven Ghent Management School, Belgium.
Could you tell us a little bit more about yourself/your fund?
Newable Private Investing (formerly London Business Angels) is one of the UK’s leading early-stage investment houses. We support a range of technology driven companies through our sector specific investment networks, our propreitary seed and scale up funds and our co-investment partnerships with government funds such as the London Co-Investment Fund. In 2017, our network and funds invested into 35 companies. Some of our portfolio companies include Hopsterand Blu Wireless Technologies which are amongst the fastest growing in the U.K. As investment director my role is to oversee our investment and due diligence processes and, post-investment, I provide support to our portfolio companies.
How big is your portfolio? And how much do you typically invest?
Each year NPI investors invest in over 25 companies. Our funds have been investing since 2011 and the portfolio now stands at some 45 companies, and it’s getting bigger and bigger by the year! We aim to focus on early stage companies raising between £250k – £2m which have signs of commercial traction and are raising money to grow their commercial operations. NPI syndicates invest between £100k – £500k. Our model is all about syndication where we seek to co-invest alongside other funds/investors, and we can back a lead angel investor who can join the investee company’s board to provide governance and advice going forwards.
What are the top three things you look at when considering a new investment?
Our three key considerations are:
- The quality of a company’s product
- The quality of its management team
- The size of the product’s total addressable market.
Investors often use the analogy of the horse, the jockey and the track to break this down. As any horse racing fan will attest, a good jockey is vital to execute a race plan. The same goes for an entrepreneur where an ability to execute a business plan in a flexible and adaptable way is crucial. Investors often look at how much “skin in the game” an entrepreneur has before deciding on whether to proceed with an investment. The quality of a company’s product, as validated by customers, gives investors an indication of its market appeal and the likelihood of customers placing repeat orders – it is much easier to sell to existing customers than to find new ones! Given that investing at the early stage is inherently risky, investors want to know that a company’s products addresses a large target market which significantly enhances the prospect of a big return.
Many of the challenges faced by founders are similar across different industries and growth stages
Are there any companies you’d like to highlight that you’ve worked with?
NPI has been fortunate to work with some of the UK’s brightest and most successful ventures. These range from Advizzo, a SaaS platform using machine learning to enhance customer engagement with utilities, which NPI seed funded and is now turning over more than £2m, to Hopster, the number one kid’s grossing application in over 35 countries and Airsorted, a leading Airbnb management service provider.
Any companies that got away that you wish you’d backed?
I think that almost all investors have “if only” stories – it’s the nature of the game and hindsight is a nice thing! Many years ago the founders of Atlas Genetics pitched to NPI investors. While our investors came close to investing they missed out on this company which has since raised close to £100m from a number of stellar investors.
What are the big red flags for you when reviewing investment propositions?
In a pitch deck we always like to see some domain expertise/sector knowledge within a company’s founding team. We also like to understand the founders’ vision and in many respects, the easiest way to do this is by understanding the financial model. I’m always amazed at the number of investment decks that we receive which lack a basic three year high-level profit and loss forecast. Services such as G’s Growth Finance service are a vital part of the eco-system in educating entrepreneurs about the importance of these numbers to investors.
I wish I saw more…
The UK is one of the world’s leading players in research and development. Some of the innovations being developed in our universities are extremely exciting and have the potential to disrupt industries. The challenge remains commercialising these technologies and this requires a better interface between business leaders/commercial executives and academic technologists.
I wish I saw fewer…
Investors like to understand how their capital is going to be used following their investment. This requires entrepreneurs to really think through where they are going to spend money and what the likely return on that spend is going to be. I would like to see more entrepreneurs being able to articulate the breakdown of use of investment proceeds.
What I wish I could tell every founder…
Speak, interact and learn as much as you can from fellow founders. Many of the challenges faced by founders are similar across different industries and growth stages.
What do you see as the next industry to be disrupted?
Through a recent partnership with friends at Seraphim Capital, we have created the UK Space Technology network which aims to create a vibrant funding environment for companies developing downstream space technologies such as earth observation technologies. Space is definitely the next frontier for investment!
How should a business seeking finance approach you?
Like most investors, most of our best deal flow comes through trusted referrals from partners. Always try to get a warm intro where possible.
For more information on Funds, visit https://investment.newable.co.uk/.
Newable Ventures Limited (FRN 795277) is an Appointed Representative of Larpent Newton & Co Ltd. Larpent Newton & Co Ltd is authorised and regulated by the Financial Conduct Authority, FRN 141275.
Neither Newable Capital Limited nor Newable Private Investing Limited are Authorised and Regulated by the Financial Conduct Authority. Risk warning: Your capital is at risk. Investing in early stage companies involves risks including loss of capital, illiquidity, lack of dividends and dilution. Newable Ventures Limited does not give tax or investment advice.
The availability of tax relief depends on individual investors’ circumstances, and on investee companies’ qualifying status, both of which may be subject to change. If you are in doubt about eligibility for tax reliefs or the tax treatment of your investment, you should seek independent tax advice.