'Hockey stick growth curves are a thing of the past' - Angel investor shares top tips for budding start-ups
Rowan Devereux took over as Chair of the Bloom Equity angel syndicate at Halo Business Angel Network (HBAN) in October, with an aim to recruit new angels, "increasing the number of high calibre, serial investors we have by 25pc".
Under the chairmanship of his predecessor, Anthony Bermingham, the syndicate has been a prolific investor in high potential start-ups, particularly in the tech space, over the last six years.
Independent.ie caught up with Devereux to find out his plan as he takes over the mantle, how he sees the investor and start-up space in Ireland evolving, and his top tips for budding entrepreneurs.
Where have we heard the name Rowan Devereux before?
The well-known entrepreneur is the founder and managing director of Roznat Investments. He is perhaps best known as the co-founder of Blue Insurances, which created Annual Multi Trip Travel Insurance, Gadget Insurance and Car Hire Excess Insurance among other brands.
"I started Blue Insurance with Ciaran Mulligan and I exited the company in 2013," said Rowan. "I was fairly active on the angel scene prior to 2013, however, as the start-up scene has always interested me.
"With Blue Insurance, we were entirely self-funded. In 2011, we reached the final of the Ernst & Young Entrepreneur of the Year Awards but half of the room said we would have arrived five years quicker by taking on money [from investors].
"It's the burning question between giving up equity versus having funding to expand. It's a delicate balancing act."
The benefits of syndicated investment
Devereux has a broad investment portfolio which includes online marketplaces in the Middle East, facilities management software in Australia and a UK-based Global Equine Network.
"Early on in the investment space it was very black and white in terms of appraising pitches that came across your desk. However, now there's so much potential in so many new companies, everything seems like a viable option and it can be troublesome. It makes the qualification process all the more difficult as there is possibility with pretty much anything as the quality of start-ups are hugely better.
"However, one of the benefits of syndicated investment or HBAN you get to share these ideas amongst a consortium of like-minded individuals and some may have some relevant experience in that space.
"There's safety in numbers on that front, in terms of knowledge and funds".
What can we expect next from the syndicate?
"Angel investment is not the black heart everyone thinks it is. You're not going to get 'the hiding' ten years ago like when you were backing paper ideas.
"We're dealing mostly with expansion capital requests and Enterprise Ireland (EI) have done a fair bit of due diligence for the companies; there's a degree of credence behind them.
"Over the next few months, I want to increase the visibility of the syndication. It's really just to say it's out there, to inform those potential investors that it's a very relaxed and informal gathering. There's no pressure to get involved or to invest any particular amount."
How do you see the investor scene in Ireland developing?
"I believe that Ireland is the world leader when it comes to innovation. The multi-national companies located here in the tech and pharma sectors particularly, have created a fertile ecosystem for people with the skills, experience and knowledge to set up innovative and exciting companies. This means that there is a consistent supply of great companies pitching at our monthly sessions," he said.
"We are uniquely placed with the big five tech firms here, there is a tremendous amount of 'bedroom' talent being developed. Ireland has one of the most vibrant startup scenes in Europe and I think a bit more could be done for that nationally as tax relief for entrepreneurs is still way behind."
What calibre of investors are you looking for?
"We are looking for industry smarts to help us to make the right investment decisions, a few more people from retail and from other various sectors. We're appealing for knowledge and appealing to people not to be put off.
"How much time you get involved is completely optional, even in terms of mentoring it's primarily about utilising Roladex. It's about joining the dots, the more dots in the forum, the wider the network."
Top tips for start-ups pitching to investors?
"It shows a bit of foresight to look at cap tables and acknowledge that a startup has allowed a certain amount for future [skilled] hires. A successful long term strategic plan of the company will involve the procurement of invested employees.
"When I see startups that have thought that far ahead, it shows that they see the value of having a degree of skin on the game. Don't be too precious about equity if you want a good team behind you. There's a fine line between realising the value of your equity while not being too tight with it.
"I see a lot of messy cap tables out there. Hockey stick growth curves are a thing of the past, you need to have realistic expectations of growth or the tables are no use to anyone."