Every week The Sunday Times talk to a business angel investor, one of the early-stage investors who collectively inject £1.5bn a year into British start‑up companies. This week they featured our very own Olivia Sibony, Head of Impact at Angel Investment Network’s new impact-focused platform, Seedtribe.

Here’s the piece as printed in The Times:

Olivia Sibony runs SeedTribe, an online platform that connects investors who want to back ethical businesses with entrepreneurs looking for funding. It is part of Angel Investment Network, which has about 1.1m members.

SeedTribe raised £2m last year and is currently working on companies including gaming developer, Playmob, and 28 Well Hung, a “carbon-beneficial” steak and chips chain.

Sibony, 38, co-founded Grub Club, helping London diners find culinary experiences. Two years ago, it was sold and rebranded Eatwith. read more

Policy and regulation have a huge impact on the tech sector. A recent report by Allied For Startups takes a deep dive into how current regulatory systems are affecting the landscape for European startups…

We are in a period of unprecedented innovation and development across a wide range of sectors. Many of the new and impending technologies are so novel that it is unclear how existing regulation systems will manage them.

AI, drones and autonomous vehicles are just some examples of technologies giving regulators pause for thought. All three examples raise difficult moral as well as practical questions; and given the rate of innovation, it now seems like too many questions are coming at once.

The role of regulators is to ensure new technologies can be deployed in safe and meaningful ways. But this often slows the speed with which a new technology can come to market.

Regulators have to balance safe deployment with not hindering the release of exciting new tech. A difficult task – and one about which the investors interviewed in the report are concerned.

Who are Allied For Startups?

Allied For Startups is a worldwide network of startup associations and advocacy organizations focused on improving the policy environment for startups. Their report on ‘The Impact of Regulation in the Tech Sector’ provides insight into the views of technology investors (among others) on reactive regulation and policy decisions that impact the development of the sector.

What’s in the Report?

Tech ecosystems take time to develop, but the benefits to the economy are substantial as new companies are spun out of existing ones, and the sector as a whole creates jobs and wealth. Based on 185 interviews, this report flags areas of opportunity and risk for the European tech ecosystem in the coming years.

The report also highlights that tech investors are highly conscious and aware of the regulatory environment and that this can have a huge impact on their decision to invest or not. Furthermore, there are particular concerns among investors that regulation and taxes are designed to target larger companies but can have unintended consequences for startups, and that regulation is often reactive as opposed to strategic.

Allied For Startups conclude their report by stating that a fairer and more stable regulatory environment is needed to ensure the tech sector continues to flourish.

The gender pay gap has come under intense scrutiny in recent years. Movements like #MeToo and #TimesUp have brought sexism issues to mainstream attention. This is true across a spectrum of industries. But there is a nuance when it comes to the startup investment space. Female founders are still underfunded compared to their male counterparts.

As an industry, it’s time to close this gap. To do so, will require a concerted effort from all parties – founders, funds, networks and investors – to overcome biases and to support merit wherever it is found.

Elite Business Magazine recently did a feature on this to discuss why female founders find it harder to raise funding than males.

The feature includes an interview with our very own, Olivia Sibony. Olivia recently sold her startup to EatWith before joining our team. In the interview, she describes the difficulties she faced when fundraising including discrimination because she was “…of childbearing age”.

She now runs our impact crowdfunding arm, SeedTribe. Her mission encapsulates two main aims. She wants to help anyone fundraise evaluated purely on merit. And she wants to encourage more people to invest. She is confident that SeedTribe will be a great platform to achieve this. (A fact she discussed in an earlier interview for The Guardian).

You can read the full feature and Olivia’s thoughts on the Elite Business Magazine website.

Follow @Oliver_Jones7

Impact investing is a hot topic at the moment. And rightly so! We find this so encouraging because it is timely validation for the work we’ve been doing at our impact crowdfunding platform, SeedTribe. But there is more work to do before this industry can deliver the positive outcomes it promises. Part of this work involves incentivising the millennial generation of investors by giving them access to the best impact investments. Last month I wrote a piece on this ‘democratisation’ of impact investments for Angel News.

I wanted to share the message on here too:

Why Millennial Investors are Key for the Impact Space

“If you think you are too small to make a difference, try sleeping with a mosquito.”

This oft-quoted and amusing aphorism attributed to the Dalai Lama captures the spirit of bloody-mindedness (literally) that can drive anyone, irrespective of category, to their desired destination.

But in some industries, one can’t help but feel that size really does matter.

Early-stage investments are top of the list. For a long time, this space was a stomping ground for suits and wallets; a predominantly male sphere where prestige was gained by backing risky and exciting ventures.

This (slightly) unjustified stereotyping is not to undermine the important role those traditional types of investor have played in driving innovation.

But it’s important that this model evolve to become more inclusive and conscience-driven.

The advent of crowdfunding kicked off this shift: now individuals could invest in projects based on what they could afford and how much they valued the enterprise. Equity crowdfunding then allowed people to get a stake, as if they were a professional investor, in their chosen companies.

This democratisation helped spur an interest in innovation and startups among those previously unable to contribute. Now anyone could make a difference no matter how small.

However, it has become increasingly apparent that the quality of investments available on mainstream crowdfunding is still far below the level of deal flow available to professional investors.

You are never going to find the next AirBnB on a crowdfunding site. The traditional investors still hold a monopoly at the forefront of innovation.

So what? They will keep investing and funding visionary businesses and the merry parade will go on. We all benefit, right?

But the future they are creating is not one they will have to live with, at least not for very long. And that alters the motivation framework for them.

I’m not trying to denounce these investors or ascribe to them intentions which may or may not be there. But the truth is, the motivations for investing in a company inevitably differ between a 25-year old millennial and a 60-year old.

It’s not unreasonable to assume that, in most cases, the 60-year old will be more interested in wealth creation for themselves and their immediate family, while the younger person will have more concern for the future of the world they hope to inhabit for another 60 years or so.

The Rise of Capital with Conscience

The dramatic uplift in public concern over issues surrounding sustainability and the environment supports this. And it is the millennial generation who are driving this. They have come to realise that the effects of inaction will have irreparable consequences for their futures.

Sharing articles, protesting and walking to work are some ways individuals are trying to make a difference. We do these things but still feel too small to make a real difference.

Investing in impact businesses is a potential avenue for a new breed of investors to make a quantifiable difference. Impact or ‘profit-with-purpose’ businesses aim to change the world for the better while turning a profit and generating returns for investors. Included in this open attitude to positive change is a willingness to explore more inclusive methods of raising investment.

Young people, who are more environmentally engaged than ever before and willing to invest in ‘good’, neither have the resources nor the network to invest using traditional methods in the companies their conscience demands of them for a better future.

Luke Gavin, a 26-year old Greentech consultant, knows this difficulty: “One of the frustrating things about the low carbon energy sector is its inaccessibility to the average person – so much of the money comes from large institutional investors.”

A report by Barclays also shows the high appetite among younger generations with millennials four times more likely than older generations to put their money in impact funds.

How are we helping millennial investors?

At SeedTribe, we want to encourage this new generation of conscientious investors. We evaluate and vet the most exciting impact investment opportunities using the UN’s Sustainable Development Goals (SDGs) alongside commercial frameworks and allow people to invest online from £100 in exchange for equity.

Young people want to invest in the most promising impact businesses. It is a concern for the future motivated not simply by financial reward, but more importantly by the hope of a better world for themselves and future generations. We need to do everything we can to support this.

You can read the original article on Angel News here
Follow @Oliver_Jones7

The cryptocurrency market has caught the attention of many people in recent years – from traders who want to make a quick profit to angel investors concerned about the authenticity and transparency of the system. Within the startup community, ICOs (Initial Coin Offerings) have come into prominence.

So far, ICOs have helped many entrepreneurs raise funding far more rapidly than traditional avenues. Many investors too have reaped the rewards of being able to exchange an asset that would normally only realise its value when and if the business exited via trade sale or IPO.

How does an ICO work?

Before a currency is put on the market, ICOs are made available for sale as tokens, which can be converted into currency or resold as tokens once the company becomes successful. When an ICO is started, the tokens are usually sold at a very low price making it easy for investors to buy lots of them.

Once the ICO hits the exchange platforms, there are very high chances that their value will increase. Investors who bought the tokens can sell them at higher prices if there is demand.

There have been lots of success stories on ICO funding, and people are already anticipating that there will be an increase in the number of ICO fundings within the next five years. We have certainly seen a rise in the number of companies offering ICOs on Angel Investment Network in the last year or so.

Btxchange.io mentions the example of SpectreCoin in their infographic, as one of the most successful ICOs of all time with a whopping 37,175% increase in their crypto coin value.

Are ICOs all good news?

While ICOs can have advantages compared to conventional funding methods, there are some downsides that investors should be aware of.

ICOs are poorly regulated by nature, and there have been incidents of fake fundings like the Benebit case in 2017. The initiators of the coin offering scammed people into investing large sums of money, and then just disappeared with the funds, without a trace.

Also, even if the ICO is legitimate, there is no guarantee that the new coin will gain enough value for you to make a profit. It’s a gamble like any other investment!

The bottom line is that, if you are interested in ICOs, and you don’t mind taking the necessary risks, then there is an excellent opportunity to generate quick returns from startup investments. Initial coin offerings have fast returns which could double or triple your capital in just a few months.

If you are either a complementary investor or an angel investor, it’s a good time to get involved with ICOs.

Btxchange.io have produced a helpful infographic to explain the ICO landscape further:

https://btxchange.io/ico-roundups-infographic/

What is Due Diligence?

‘Due diligence’ sounds awfully serious.

When it came into use in the mid-fifteenth century, it simply meant ‘reasonable care’. It became a specialised legal/business term in the 1930s when the US government passed a law to ensure that securities brokers disclosed sufficient information when selling to investors.

It is now used as a general term for the process of verifying information.

The level of due diligence required and the level of due diligence possible varies depending on the information being checked. Naturally, a high-level corporate merger would require extensive due diligence.

When it comes to investor due diligence on early-stage companies and startups, the due diligence need not be overly laborious. It is necessary but should not be daunting, even if it’s your first investment of this kind.

So, for the remainder of the post, I shall refer to it as DD. It’s less daunting that way. (And easier to type!)

Why is due diligence different for early stage companies?

Any sort of institutional or corporate investment requires sophisticated and extensive DD.

Investment institutions tend to invest in companies who are well past the proof-of-concept and early growth stages. As such, they can examine substantive data in their assessment and check its validity. They also need to check it so that they can justify the investment to their own shareholders.

It’s only when a company has achieved a certain level of tangible traction that you can reasonably run analytics on it in the hope of predicting the eventual outcome and the risks involved. The later stage the company, the more data, the more due diligence, the more predictable the outcome.

Early-stage companies accepting investment from private investors tend to have less tangible evidence available for checking because the company simply hasn’t been operating long enough. This means that the checks an angel investor carries out are mostly formulaic.

Due diligence at the level of early-stage investments is predominantly about checking the claims of the company in their documents/

This does not mean you should carry out minimal DD. Evidence suggests that investors who spend longer on DD get higher returns (UKBAA research has shown that at least 20 hours due diligence has a positive impact on the likelihood of a multiple investment return (Siding with Angels; Robert Wiltbank, Nesta-UKBAA)).

Correlation or causation, it doesn’t really matter. You should carry out thorough due diligence.

But the point is that it is not a complicated process. People making their first skirmishes into angel investments are sometimes put off by the idea of DD. They think that they don’t have sufficient experience to do it properly and as a result, they’ll be throwing away money.

They think like this because they have the expectation that their DD ought to be as rigorous and detailed as that carried out by a private equity firm, for example.

But this is an unfortunate belief. It’s naïve to think that the same level of DD should be carried out – there is not enough information on early-stage companies. Because they are early-stage!

If there was more information to check, then the investment would probably not be open to private investors. Nor would the opportunity for the huge returns possible for early-stage investors be available because the risk quotient would be so much reduced.

It’s important to remember the reasons why we choose to invest in early-stage companies:

• We want to bring our experience and network to bear so that we have an active role in helping the company grow and succeed.
• We want to take a calculated risk to help a team of founders we believe in to achieve something cool.
• And in so doing, we want to make a good return on our investment.

The early stage means that we have the opportunity for all those things but, naturally, the risk is larger. Proper due diligence is your armour against this risk.

Is there an optimum way to carry out due diligence? read more

Podcasts are becoming some of the most avidly consumed content available. More and more people are tuning for their ‘microdose’ of wisdom from industry leaders and pioneers. It’s a great and easy way to broaden your mind while you commute, work, cook, exercise and relax.

I’ve got in on the act with my colleague, Ed Stephens, from the senior team at Angel Investment Network.

On our show, The Startup Microdose Podcast, we interview successful entrepreneurs and investors to unpack their stories, opinions, quirks and wisdom.

Popular episodes include:

Oleg Fomenko, Founder of Sweatcoin – the fastest growing health and fitness app in history

Anthony Rose, CEO of Seedlegals – angel investor and the man who built BBC iPlayer

Pip Jamieson, CEO of The Dots – ‘The LinkedIn for Creatives’

Tim Armoo – the 23-year- old marketing whizz behind Fanbytes – a Snapchat-focused influencer marketing platform

You can view all available episodes with full descriptions on iTunes

The Future of Podcasting – The Interactive Experience with Entale

As part of this project, we’ve teamed up with our friends at Founders Factory-backed Entale.

They are revolutionising the podcast experience by incorporating visual context, time-stamped links and chaptering. These additional features allow listeners to derive a deeper and more interactive experience from their favourite podcasts.

They’ve got a tonne of great shows already on the platform including The Startup Microdose, so make sure you check out their app!

Coming up on The Startup Microdose Podcast:

– Maya Pindeus, Founder of Humanising Autonomy (Deep Machine Learning in Autonomous Vehicles)

– Emma Sayle, Founder of Killing Kittens & one of the UK’s leading ‘sex-entrepreneurs

– Julian Hearn, Founder of Huel (Nutritionally complete food)

– Giles Rhy-Jones, CMO of what3words (A new address sysstem for the world – previously featured on this blog in a post called “How what3words are Changing the World”

We are very excited to share this with you – enjoy!

Do you want to be interviewed on the podcast? Or know someone with entrepreneurial flair and knowledge to share? read more

In the past few years, there has been a dramatic surge in interest relating to so-called ‘impact’ companies and investments. Public awareness and concern for global economic, environmental and social issues are at an all-time high. We attribute this in part to the so-called ‘Blue Planet Effect‘ and in part, to the ever more ominous severity of the issues we face. As a result, institutions like United Nations have set out strategies like their Sustainable Development Goals to help solve these issues (more on these below).

The data from Angel Investment Network‘s 1 million users reflect this growth in interest. We’ve seen an astonishing 250% increase in the number of investors interested in the Greentech & Environment industry in the UK since 2016. The number of companies raising money who define themselves as ‘ethical’ and ‘sustainable’ has blown up at a similar rate.

And we don’t expect this interest to dwindle anytime soon. Our newest product, Seedtribe, was built to support investors and companies in the ‘impact’ sector. In a previous post, I described how Seedtribe is encouraging investors to commit more to this space and I defined ‘impact’ in this context as:

…when an investor backs a business which has a social and/or environmental mission at its core…[but is also] targetting profitability alongside its social mission.

This works as a general definition. And makes the important point that investing in ‘impact’ is NOT philanthropy.

This point is reflected in Seedtribe’s model for selecting companies. There two key focus areas in our evaluation:

• We are committed to generating returns for our investors. We select businesses that we believe have the strongest chance of achieving high-growth and/or high-profit. These will ultimately have the best chance of producing returns for investors. Our investment committee has 14 years’ experience investing in and raising finance for startups. It employs due diligence methods honed over this period to pick the most promising companies.
• We are also committed to working on ‘impact’ businesses. Our investment committee also evaluates businesses according to criteria developed by the United Nations, known as ‘Sustainable Development Goals’ (SDGs). It is these businesses which we believe will produce positive and lasting change in the world and allow our investors to invest in impact.

But what are the UN’s Sustainable Development Goal (SDGs)?

The SDGs, or Global Goals for Sustainable Development, are a collection of 17 global objectives set by the United Nations in 2015.

The 17 goals focus on global social, environmental and economic issues. Their purpose is to produce positive and lasting change across key development problems in all countries.

The official title for the project is ‘Transforming our World: the 2030 Agenda for Sustainable Development’.

The goals are broad and interdependent, but each has its own specific targets. Each goal is described in brief below:

Goal 1: No Poverty

End poverty in all its forms

Goal 2: Zero Hunger

End hunger, achieve food security and improve nutrition and promote sustainable agriculture

Goal 3: Good Health & Wellbeing

Ensure healthy lives and promote well-being for all at all ages

Goal 4: Quality Education

Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

Goal 5: Gender Equality

Achieve gender equality and empower all women and girls

Goal 6: Clean Water & Sanitation

Ensure availability and sustainable management of water and sanitation for all

Goal 7: Affordable & Clean Energy

Ensure access to affordable, reliable, sustainable and modern energy for all

Goal 8: Decent Work & Economic Growth

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Goal 9: Industry, Innovation & Infrastructure

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

Goal 10: Reduced Inequalities

Reduce inequality within and among countries

Goal 11: Sustainable Cities and Communities read more

My first project when I joined Angel Investment Network back in 2014 was to organise a pitching event in central London. We selected five of the most exciting UK companies who were fundraising; we had no specific agenda to include impact companies – we just wanted innovation! We prepped them to pitch to 150 investors whom we had specially invited from our network.

what3words was one of those companies.

Mike Lebus & James Badgett, the founders of Angel Investment Network, had already invested in what3words’ seed round – so they were keen for Chris Sheldrick, the CEO and co-founder, to put in a good performance.

He obliged. His understated charisma perfectly complemented the visionary nature of the project – dividing the globe into 57 trillion 3×3 squares and giving each a three-word “postcode”.

I was thoroughly impressed. The investors appeared less so, preferring to engage the other companies (some SaaS products and a few apps) in conversation during the post-pitch drinks. This lack of impact baffled me. I asked some of them what they thought of what3words – it was a cool idea but apparently, they couldn’t see its application.

Four years later they must be kicking themselves!

Since closing £600k through Angel Investment Network, they have gone on to raise $13.8m across several funding rounds with Intel Capital leading a $3.5m Series A; and Aramex International leading a $8.5m Series B. Their most recent round was a corporate one with German car manufacturer Daimler buying 10% of the company in January 2018.

And that application problem?

Well, I’ll let you read for yourself in my interview with the what3words team below.

Prepare to have your mind blown…

The Interview

Part 1 – About what3words

What’s your mission?

We are on a mission to make the world more efficient, less frustrating and safer. Our goal is to be a global standard, giving everyone and everything a simple, accurate and reliable address they can use whenever they need it.

We want businesses, governments and services worldwide to use 3-word addresses to become more efficient, and improve their customer experience.

At the same time, we look forward to showing how better addressing can reduce businesses’ environmental impact, ease pressure on crowded cities, fuel economic growth in developing nations and save lives.

Who are your clients?

Our 3-word addresses are now used by over 650 businesses, government agencies and NGOs across over 170 countries, and by sectors including automotive, e-commerce, logistics, automotive & mobility, travel & navigation, post, national infrastructure, events, humanitarian, disaster response and emergency services.

Our customers include Mercedes-Benz, who are about to launch the world’s first car with built-in what3words voice navigation. Drivers will be able to say a 3-word address and navigate to a precise destination, anywhere in the world.

Global logistics giant Aramex has integrated what3words to optimise its last mile operations in the Middle East and South Africa. Many other couriers and food delivery customers are using 3-word addresses, including Domino’s Pizza in Saudi Arabia.

National postal services in 10 countries to date have adopted what3words, giving over 200 million people an accurate and reliable address, many for the first time. Many of our customers are innovative future-facing companies including DXC Drones and IBM’s #AccessibleOlli.

Our humanitarian partners include the United Nations, who have adopted the what3words system for its disaster response and recovery app UN-ASIGN, alongside the Red Cross. Other NGOs include Gateway Health in South Africa, who are using what3words to address township homes on the outskirts of Durban, and who have trained local ambulance drivers to use 3-word addresses to reach pregnant women faster in the township areas, saving lives.

(Remember that application problem?) read more