For a few years now, I’ve been investing in technology startups for a very specific reason. I’ve built a number of businesses, but when I turned my attention to the online software space, I quickly discovered that it required a completely different approach to anything I had done before. Creating a property development business or an education consultancy required a certain level of professionalism and dedication, but the bar for making an online startup work turned out to be much much higher.
Alongside reading, researching and studying, and actually setting up my own first software company – 42 Tasks – I realised that the fastest way to acquire the knowledge and skillset that I needed to succeed was to learn from people who had already done so. I know many entrepreneurs, and spend a lot of time with them – mainly because when you’re involved in fast-growth businesses, it is difficult to find the usual topics of conversation interesting.
You get acclimatised to big ups and huge downs – to amazing breakthroughs one day and to huge failures the next. I remember Reid Hoffman, the founder of LinkedIn, saying that he flatly refused to go to parties and talk about what a great discount someone got on their new garden furniture. I completely agree, and so choose to spend time with people who enjoy talking about grand visions and great opportunities.
I knew that I needed to grow this network and surround myself by ever more experienced and successful entrepreneurs. Initially, I approached some of the people I most respected, and asked for their time to mentor me. But I quickly realised that the power balance in a relationship of this nature was always severely skewed, and I would always be asking for favours and waiting for them to find time for me.
This wasn’t going to work. I had a lot of respect for their achievements, but nonetheless saw them as peers and expected the same respect for my own achievements as well. The mentor relationship didn’t lead to this. It became clear that I needed to find another way.
After a lot of thinking, I noticed that even the most experienced, and wealthy, technology entrepreneurs didn’t fund their companies entirely on their own. They liked to optimise the risk profile of their capital, and to get other people involved in their business in order to leverage their intellect and turn them into brand ambassadors. They would raise money to validate their business, and its market valuation. By becoming an angel investor, I would be able to achieve the exact goal which I initially set for myself.