In this piece, learn more about Cambridge Angels member James Viggers who shares his path to angel investing, and some of the lessons he has learned along the way. James is one of leading experts in the Cambridge Angels group on how companies should prepare for exit and has led talks for the Cambridge Angels portfolio companies on this topic.
Can you give a bit of background about yourself?
I’m in the relative minority at Cambridge Angels in that I have a background in finance rather than as an entrepreneur. I had what I tend to describe as a short, lucky career as an M&A banker in London and New York. An exit in 2012 gave me the freedom to take the skills I had learned and go back to my first intellectual passion, which was engineering. I wanted to find a way to work with high quality people on interesting projects in a flexible way – my wife and I love to travel and our old lifestyle of 80+ hour work weeks got in the way rather. Angel investing fit the bill perfectly.
What made you apply to join CA and what do you think makes it different?
I wish I could say that me applying to join CA was deeply strategic and thoughtful, but it wasn’t! Serendipity brought me to the door, then I was basically just hugely impressed by the membership.
There are many things that make CA unique, but at their core angel networks do three things: they find high quality investor members, they find high quality entrepreneurs looking for capital, and they bring them together in supportive, stimulating and hopefully entertaining ways. Other than a small error of judgement in letting me join, Cambridge Angels does all these things extremely well.
Can you give a couple of examples of CA deals you've invested in that you're currently excited about?
Don’t get me started – I could enthuse about my portfolio all day! I hugely enjoy seeing smart teams working with new technologies. On the basis that these are the latest two cheques I am writing:
• Silveray – high sensitivity flexible X-ray detectors built with innovative bismuth oxide nanoparticle technology. A great team headed up by Dan Cathie, looking to disrupt multiple markets and so far executing really well.
• Radiant Matter – very early stage. A blend of fashion and photonics. Mimics natural iridescence (think beetles’ wings) initially to make biodegradable sequins. The plan is to expand into to coatings, cosmetics etc. – anywhere people want shiny without damaging the environment.
Do you have any sector focus and if you do, why?
My personal investing preference is for early stage companies with strong and defensible IP at the more engineering end of technology – robotics, manufacturing, medical devices, materials science. On the positive side, these are areas I feel I understand fairly well with my engineering background. I believe it’s important when investing to stick to what you know (or think you know!). On the negative side, this does point me at relatively capital-intensive businesses. Raising large amounts of capital in cyclical markets with large investors taking preference shares is not without risks for an early stage angel investor!
How do you tend to get involved with your investments?
It very much depends. With Heartfelt Technologies I have taken the Chairman role. With others I send congratulations when I receive shareholder updates. Most are somewhere in between. I probably spend a third of my investing time doing favours for portfolio companies, both mine and others’. One thing I do like to do is help companies think through their long term exit planning – basically I have a wish list of what I would have wanted my old M&A clients to have done well before they hired me. There are a few relatively easy things that can help smooth the path to exit if done a couple of years in advance.
What have you learnt about being an Angel investor since you've started?
Oh, where to start? People have been so generous with their time and advice since I joined Cambridge Angels. I won’t repeat the excellent advice of Andy Phillipps in his interview but there are a couple of additional things to add to the list:
• Pace yourself at the start. It’s tempting to try to outperform at the beginning by reading all the business plans and rushing into all the investments. Really good ones don’t come along every day and even the best investments sometimes require multiple rounds of funding. Plus, you learn so much from watching the portfolio and the management teams develop at every stage, all of which feeds back over the years to make you a (hopefully) better investor.
• Celebrate the successes. The brutal truth of angel investing is that the majority of the companies we invest in are likely to fail. With those numbers in mind, it’s important to celebrate progress and success as much as you rue delay and failure, otherwise this game might make you unhappy!
Is there an investment exit you are most proud of?
I have had one great early exit that returned the portfolio and more, but it was a special situation and not really a classic angel investment so to me it didn’t prove the model.
So, an actual early stage start up that I invested in that has positively exited within the eight years that I have been doing this? Not one. I think there is a lesson here: I personally believe that as an angel you should be prepared to invest for 10 years before maybe seeing some returns. It is critical to invest with enough patience and hold back enough capital to do this. Otherwise you can time yourself out – bad for the individual and for the group as all that investing experience can be lost.
In the interim, everything is looking very strong on paper. However, a lesson I learned in my M&A days is that until the cash is in the bank it isn’t real. Let’s wait and see!
