FT Columnist

You could be forgiven for thinking that the current recession will never end. Green shoots have not turned into a full-scale stock market recovery — and last month’s UK GDP figures did little to dispel fears of a flat economy and a lack of confidence. But there is a simple remedy to all this misery: go where the action is.

I was recently at two events focused on business angel investment where all the talk was of expanding markets and exciting opportunities.

At the Metabridge conference in Canadian city of Kewlona, British Columbia, many of the angel investors were from the west coast of the US.

Having endured three recessions, my general rule of thumb is that if Silicon Valley is recovering, then the UK high-tech market is about nine months behind. Once the hot new US start-ups get their first round of venture capital funding, they rush across the Atlantic to set up their European operations in a friendly, English-speaking country. This has trickle down benefits for UK service providers and the domestic employment market.

Tim Eades is an expatriate Brit who runs one such start-up: Silver Tail Systems, a security software company based in Palo Alto, California. It has just raised $20m in a funding round, and Eades’ challenge is now to hire the best possible team to execute on the business plan.

He has to be very creative and entrepreneurial to find the right people, as the local labour market in Silicon Valley is very competitive. Even the entry-level programmers can now command eye-watering salaries and stock option packages.

I found it fascinating to discover how hot start-ups pitching for investment at Metabridge planned to use this new money. They had developed their software to a workable state and had their first paying customers, so the time was right to hire an experienced vice-president of sales to ensure they hit revenue targets set by their new investors. It made me wish I were 20 years younger and seeking such an opportunity.

At UK angel conferences, it is a similar story. At the recent British Business Angels Association (BBAA) summit, the audience included a number of experienced entrepreneurs, many of whom had made the difficult personal transition from building their own companies to investing in the next generation of start-ups.

Karen Wilson of the Organisation for Economic Co-operation and Development presented some preliminary data from a report to be published in the autumn, giving an overview of angel investment activity around the globe.

In addition to the growth of angel groups and networks around the world, she also noted the emergence of a new breed of “super angels”: serial entrepreneurs and investors able to inject larger sums and continue investing in further funding rounds, either individually or through a fund structure.

For entrepreneurs, the best angel investors provide not only funding but also expertise and contacts to create the prototype of an early-stage customer project. This can help measure deliverable benefits for future customers.

My feeling is that angels would be even more effective if they formed their own balanced teams — mirroring the entrepreneurial teams that interest them. One investor should have sales skills and a good personal network, another should be expert at delivery and project management, and a third a wizard with spreadsheets, good at modelling cash flows.

Successful entrepreneurship is all about people and teams — whether you are just starting out on the journey or more experienced in business.

mike@beermat.biz
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More columns at www.ft.com/mikesouthon

Originally published in The Financial Times: www.ft.com Copyright ©Mike Southon 2011. All Rights Reserved. Not to be reproduced without permission in writing. Mike Southon- Co-author of The Beermat Entrepreneur & Business Speaker- www.mikesouthon.com

Mike is one of the world’s top business speakers, a Fellow of The Professional Speakers Association. Mike is a Visiting Fellow in Innovation and Entrepreneurship at London South Bank University. He has made frequent appearances on television and radio, has a monthly sales column in Real Business magazine and is a regular commentator in the Financial Times.


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