In our latest “Meet The Investor” interview, we speak with Ben Legg, an angel investor and startup founder driven by a passion for promising founders and innovative ideas. Ben believes in the long-term benefits of angel investing, from gaining insights into fresh ideas to building wealth for retirement and the “warm, fuzzy feeling” of truly making a difference.
He shares his views on the exciting sectors gaining his interest, offers valuable advice for startups raising in the present climate, and explains why the mentoring power of angel investors is a formidable quality that shouldn’t be overlooked.
Why did you become an angel investor?
I have been mentoring founders for 15+ years. Now and again I would be mentoring a really promising one, and after a few months would think ‘I really believe in this founder, team and business’, so six years ago I started to invest in 1-2 companies per year.
What are the key benefits of being an angel investor?
Being an angel investor gives me three benefits:
- Insight. It’s really interesting to be exposed to so many fresh ideas
- Pension. This is my way of building long-term wealth for my retirement.
- Warm, fuzzy feeling. It just feels good to help entrepreneurs who want to make the world a better place.
What are the most exciting sectors gaining your interest at the moment?
Firstly, I am always focused on the future of work, plus related areas (e.g. adult education). That is where I am building my own startup – The Portfolio Collective, which helps professionals understand, launch, manage and grow successful portfolio careers.
Secondly, as a former army officer seeing the world become so much more dangerous, I feel compelled to support startups in defence and security technology. Part of my portfolio career involves working with GALLOS Technologies, in which we both invest in and build companies focused on improving our security with new technologies.
Thirdly, I find any startup that builds more interactivity interesting. Another hat I wear is heading Europe for GFR Fund, a Silicon Valley VC focused on gaming, AR, VR, the metaverse and any consumer technology that is deeply interactive.
What do you think are the benefits to startups of angel investment, versus other forms of funding?
As the CEO and cofounder of The Portfolio Collective, I have raised £1.3m from 200+ angel investors in our community. These investors believe deeply in our team and mission, which itself is very rewarding.
On top of that, they are all community members, power users and major referrers of new members, ensuring that we always have a steady stream of new members and feedback on what we are doing well, and where we need to improve things.
What red flags do you look out for when researching startups?
The reality is that when I invest, I am investing in the founders more than the strategy, as the strategy will likely change. I look for the following in founders:
- Integrity – one whiff of dishonesty – or flakiness – and I’m out.
- Insight – fresh insights on their industry that others haven’t developed (or can’t act on) plus deep curiousity and the ability to ‘outthink’ competitors over a sustained period of time.
- Rigour – proven passion for, and ability to, build new things – products, teams, services etc. They need to be able to turn slides into real world momentum.
- EQ – deep self awareness, listening skills and proven ability to assemble and work with a team with diverse skills and personalities.
- Cofounder Teamwork – do the cofounders work well with each other? Do they have different, but complementary, skills? Do they support AND challenge each other?
- Resilience – a proven work ethic and ability to overcome adversity. No ‘lifestyle founders’ for me.
We are in a very different investment climate. How should startups approach fundraising in the present climate that is different from previous years?
VCs have a lot less money to deploy now, and every investor of every type now expects a faster route to profitability. So no-one should plan on an easy raise with a pitch that doesn’t have a tangible plan to get to profitability fast.
For most startups at the moment, revenue, grants, angels and family offices are a better place to look than VCs, so focus more time there. And make sure you have proof points regarding market size, pricing, cost levels and customer likelihood to pay.
What is the most common mistake startups make in their fundraising journey?
The most common is starting too late – it always takes longer than expected. The second is raising in rounds. The most successful raising I am seeing at the moment is ‘always on’ raising, typically via an ASA (UK) or SAFE (US). That way you don’t need to hit a fundraising target, but can raise as you gain traction.
If you could offer just one piece of advice to a young startup, what would it be?
Find 3-5 great mentors or advisors, with complementary skills, and tie them in early. Give them about 5% of the company between them – either in stock options, or if early enough include them in the founders agreement (with clawbacks in case it doesn’t work out). These people will support you, challenge you and help you with fundraising, partnerships, talent acquisition and much more.
Are you positive or negative about the UK retaining its place as a key startup hub?
I am very positive. Within Europe, the UK still has by far the deepest pool of investment capital, entrepreneurial talent, top universities and supporting organisations.
Founding teams and indeed investors still have a very low representation of women or indeed ethnic diversity. How can this be improved to ensure we truly democratise the ecosystem?
There is no quick fix here. We need a 360 approach in which we showcase role models, train aspiring entrepreneurs, connect founders with capital, then support those founders on their journeys.
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