Investor Interview: Jan Rees | Seedrs

When investing, your capital is in danger.

When approaching a brand new idea, there’s lots you possibly can be taught from the consultants – and personal fairness investing isn’t any totally different.

That’s why over the previous few weeks, we’ve been amassing insights from our most lively buyers. Lots of them, together with Jan Rees have been investing for various years and have acquired a couple of ideas alongside the best way.

Questioning the place to start along with your portfolio, or easy methods to assess an funding alternative? Listed here are a couple of insights to consider.

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How did you first develop into eager about personal fairness investing and what drew you to Seedrs as an choice to take action?

I used to be attracted very early on to the idea of democratising early stage funding – opening up this asset class to a broader vary of contributors and serving to to drive startup innovation. Crowdfunding gives the chance to take part in enterprise capital, giving publicity to attention-grabbing, early stage corporations that will sooner or later present a wholesome monetary return. I’ve invested by way of various crowdfunding platforms within the UK, Europe and the USA, however Seedrs is my most popular funding platform, and I’ve been investing recurrently because it first began.

Roughly what number of investments have you ever made on Seedrs?

I’ve made about 120 investments since 2012. Numerous these arrive in my portfolio by way of accelerator fund constructions, which has tended to spice up the general quantity. Investing on this means has been helpful when it comes to publicity to all kinds of early stage corporations after which enabling follow-on funding by way of pre-emption rights for those that seem essentially the most promising. The truth is, Seedrs itself was considered one of my earlier investments, again in 2014!

Why had been you drawn to this chance?

Seedrs has a well-designed product that units out to stability its personal wants together with these of founders and buyers, to make sure stakeholder incentives are appropriately aligned in the long run. That is achieved primarily by way of the nominee construction, which abstracts away the complexities of being a direct shareholder and transfers the administration and enforcement of the collective rights of smaller shareholders in mixture to Seedrs. The nominee construction permits skilled due diligence of shareholder agreements and efficient ongoing illustration of buyers’ pursuits. With out it, small shareholders might be taken benefit of or diluted out, particularly throughout later funding rounds. On this regard, I think about Seedrs to be a completely fledged service providing somewhat than a one-time portal to match founders with buyers.

How has your earlier skilled expertise ready you to construct a profitable funding portfolio on this asset class?

Throughout my 25-year profession I’ve labored in a spread of corporations – massive, small and startup. Most of the time, I used to be additionally in a position to personal shares in these corporations, which educated me to an excellent extent concerning the huge potential advantages of being an equity-owner. Being chargeable for the revenue and lack of a enterprise inside a big company uncovered me to the fundamental actuality of getting to run a worthwhile unit. The varied roles I held in gross sales taught me the fundamental cornerstones of any viable enterprise. These are broad learnings, however ones that apply on to investing in corporations of any measurement.

What are among the key elements or metrics you search for when investing in personal companies on Seedrs?

Seedrs performs due diligence on corporations to make sure they’re legit and firm particulars are represented pretty. Nonetheless, this isn’t the identical as saying such corporations are essentially good investments. There isn’t any well being warning on a pitch as to what an expert investor would possibly think about a very good funding. There are a broad vary of various kinds of companies and business income fashions offered – which makes it trickier to evaluate.

I make investments small quantities of cash throughout a broad vary of start-ups and search corporations which might be scalable and have the potential of offering over 10x returns. I additionally take note of firm valuation. The upper the preliminary valuation, the decrease the potential positive aspects. Excessive valuation additionally tends to have a disproportionate affect on the draw back – for instance, if the corporate performs reasonably to poorly you’re extremely unlikely to see any sort of capital return.

My very own investments usually are not all the time strictly rational – all of us are inclined to carry our preferences and biases to the desk, and put money into issues we imagine in. I have a tendency to focus on whether or not the pitch narrative is concrete, and the energy of the staff. I usually make investments the place there’s an progressive edge or a sound social and/or an environmental upside.

What’s the sector you mostly put money into and why?

As a result of my background within the banking and funds business I are inclined to navigate in the direction of fintech, particularly ones oriented round a “market”, with low unit value scalability and enterprise fashions which might be comparatively straightforward to understand. A number of examples embody Assetz Capital or Landbay. Some of these enterprise match extra simply inside my very own funding framework.

As a seasoned Seedrs investor, you’ve witnessed various modifications to the platform roll out through the years. Which have been essentially the most invaluable to you and why?

I just like the format of the Seedrs pitch pages – it’s information-rich permitting you to shortly verify key facets of the proposition, and the movies are a very good addition. The web site has additionally been very well-designed and is simple to make use of, which is essential when managing a rising portfolio.

One other spotlight is the boards, which permit buyers to work together with corporations and different shareholders. I make some extent of reviewing the updates and discussion board exercise when deciding whether or not to train pre-emption or reinvest in subsequent rounds. 

The Secondary Market was additionally an essential milestone. Seedrs’ foresight in designing its platform from the outset round a share nominee construction has enabled it to cheaply implement a performance for secondary gross sales. This space was ripe for innovation given the scale and scope of illiquid small firm share capital. Their current announcement of partnership with Capdesk is a sign of the potential highway forward – which very properly could result in a brand new form of inventory alternate.

How has the present financial local weather impacted your funding choices proper now, and going ahead?

Personally it has not had a lot affect on me to this point as I attempt to keep away from centering my long-term technique on short-term occasions. Some companies will inevitably endure from the repercussions of the pandemic, and others will capitalise on it. An general recession may additionally helpfully cut back frothy valuations and refocus entrepreneurs efforts on profitability somewhat than expenditure.

What piece(s) of recommendation would you give to buyers who’re new to this asset class?

Each investor ought to spend time self educating. You possibly can all the time begin by investing small quantities, and construct and be taught as you go alongside. 

Enterprise capital investing does usually require extra time to grasp returns, so it could take time to recognise which investments are seeing returns and which aren’t. Secondary markets could help in permitting earlier exit, however due to the longer time frames, it’s safer to speculate modest quantities over time. Buyers ought to think about a 10-20 yr funding horizon, and unfold threat throughout many various kinds of enterprise at totally different progress levels. I might hazard that almost all investor errors fall into the classes of investing an excessive amount of, too shortly, at mispriced valuations.

What retains you busy whenever you’re not investing in startups?

I like spending time open air, each right here within the UK and after I journey. I like dingy crusing close to the south coast and inland water-skiing after I’m in a position to.

What’s one of the best life hack you possibly can advocate for conserving sane throughout lockdown?

The present state of the world might be overwhelming. Strive switching the information off and listening to a podcast occasionally.

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