Ask the investor: Billy Tucker, Cudo founder

What was your best investment?

I founded Cudo for the investors Microsoft and Nine Entertainment Co. [Cudo] was built in a little under eight weeks. I exited in February 2012 to focus on 57 Signals.

What was your worst investment? What did you learn?

I developed a direct real estate agency [where customer interaction was all done online or by phone] in Britain in the 1990s, which could reasonably be described as a disaster. The internet was in its infancy. I forged ahead with an online model at considerable cost and the business closed after two years.

What makes a great pitch?

Data, data and more data. A thoughtful pitch based on market data, competitor positioning, a clear view of the unique selling points, biographies of the team and the outcomes from tests and trials that have been performed to prove the assumptions made in the models.

What are some common mistakes entrepreneurs make when pitching?

Pitching ideas rather than businesses. A pilot is as good as a full-blown business for demonstrating a relationship between market opportunity, operational expenses and likely revenue.

As an investor, what is your attitude to failure?

Borrowing a phrase, a smooth sea never made a skilful sailor. Entrepreneurs will learn much more from failure than from success. What’s important is that every [gram] of failure is absorbed and converted into a [kilogram] of learning.

Why or when shouldn’t a business raise equity capital?

Eric Ries’s book The Lean Start-up has some profound lessons in when to go to the next stage. Organic, self-funded growth is quite possible to an extent and investment-funded growth should only be a priority when time to market is critical. For seed capital, entrepreneurs often seem unwilling to tread the well-worn path of taking out personal loans and leaning on friends and family. This is a prerequisite before more structured capital should be sought.

What kind of companies or sectors are you keen on?

Any business that drives additional yield from existing assets is a no-brainer. Data is often the key to unlocking value, and start-ups that embrace this get my attention very quickly.

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