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How did you get into angel investment?
I made my first angel investment in the ’90s in Silicon Valley. After being an entrepreneur in Australia and Silicon Valley, I co-founded Melbourne Venture Partners, which went on to be one of Australia’s best performing VC firms.
What was your best investment?
Coryphaeus Software Inc, a Silicon Valley software company that delivered a world leading solution for real-time 3D visual simulation. It was my first angel investment and delivered a 100 times return. My most recent positive exit was a Melbourne web business that morphed from being an online directory for small, local businesses to being a leading provider of search engine optimisation. I exited in late 2010 and it delivered a 34 times return.
What was your worst investment? What did you learn?
A company that had an entrepreneur who turned out to be a liar and abused investor capital for his own benefit. As well, there were incumbent investors for whom that was their first early-stage investment and they lacked discipline and understanding. The lessons learned included to be more insistent on securing my rights in the shareholders’ agreement and not to fail to exercise the rights I have when I know no-one else at the table can solve the problems better than I can. A big lesson was to have the guts and power to fire the entrepreneur if they turn out to be a major problem.
What makes a great pitch?
Clarity, brevity, a compelling knowledge of the market and opportunity, passion, vision all bound up in a narrative that illustrates the problem, why customers will pay to solve the problem, how that will scale in value and who will pay a significant premium to buy that value.
What are some common mistakes entrepreneurs make when pitching?
Claiming to be unique. Failing to ask for the money. Presenting a non-negotiable deal. Excessively high valuation. Having the wrong context, for example, pitching for Silicon Valley in Melbourne.
How do I get you to invest in my venture?
Respect my knowledge, experience and money. Be patient but not absent. Have an opportunity with a clear path to monetisation and scalable value in a large market. I prefer a disruptive business to a trend follower me-too business. Genuine, identifiable, differentiated intellectual property is better than minor business model innovation.
What kind of companies or sectors are you keen on?
Energy efficiency; novel sensors that deliver high value benefits for high-cost industries and processes; China-focused web and mobile apps; advanced search technology.