Onwards: From startup to VC to starting again
As of 29th April 2016 I’ll be leaving Potential VC to start my own venture in the mental health & fitness space.
245 days spent as a VC and it’ll be 134 days since I liquidated my first company, but I’m going again. There are not many 24 year lads from Stoke who get the opportunity to be a founder, then VC, then a founder again. So I thought I’d share the story so far and what I’ve learnt along the way.
Sitting on the other side of the table has been an incredible experience. At first I felt like I had absolutely no right to be there, or to even pass judgement on somebody else’s company (their life’s work in many cases). I felt like an imposter. Yet as the month’s passed my confidence grew and so did my reputation.
All the while, the team — Doug, YC, YeeMun and I — played around with different investment models. Essentially trying to find our product-market-fit. We went back and forward with the idea of a fund, quickly realising that we didn’t have the smart suits or slick tongues to raise a real VC fund, we just aren’t cut from that cloth. An SEIS fund wasn’t worth the hassle, razor thin margins and painful fees from startups just didn’t feel right.
We stumbled into a cute model, a unique version where we invest, add value but are only incentivised on the upside. Rather than just de-risking our investment by taking cash out of the startup (like many do), we received additional advisory shares over 2 years for our support. Getting rid of a lot of the legal nonsense; no board seats, no investor directors and no unnecessary board reporting; we kept it simple.
I’m very proud to say that the team are now on track to do 12–15 deals this year. The Potential portfolio is only getting stronger. I hope that after the announcement of Jinn’s Series A people will start to notice that Potential’s and Doug’s portfolio include some REAL companies with some serious backing. Jinn join the list of Admedo, Tapdaq, Cashkaro and Moltin who’ve all captured millions of dollars in funding recently.
Working with startups, has given me the chance to work with all different types of people. Entrepreneurs are truly amazing; they can be incredibly smart, yet incredibly stupid in the same breath. I’ve been lucky enough to work closely with founders who I genuinely believe will change the world. Of course, I’ve also had the pain of pitches from founders looking for just £150k to spend on the middle-class dole.
Those 100s of meetings confirmed to me the skew in this industry. The 10% of founders that amazed me will make up for the 90% which baffled me. For every 9 bad meetings, there’s 1 good one.
Syndicating deals for startups meant working alongside angels, VCs and accelerators. Whether it’s looking for deal flow, co-investing or making introductions — there is no doubt — this is a relationships based industry. Reputation, credibility and (ultimately) returns are the only currency here. There’s a lot to be said for UK venture, but one thing’s for certain — people do business with people that they know and like. It can feel like an old boys club at times, but that’s the game and you have to play it.
Throughout all of this, one thing never changed, I’m a founder. Every time I said “I’m an early stage VC” — I said it with a coy smile on my face, I felt undercover and behind enemy lines. It was that imposter syndrome and that constant pang of anxiety which pulled me towards mental health.
One viral article and one in The Guardian later, I de-facto became one of the few people championing this subject in startups. Now i’ve been given the opportunity to run full pelt at it and make a real difference.
I’m in the ideation stage, doing blatant customer development — so if you’re in a startup and have felt the struggle — please reach out. I want to understand what the existing ‘solutions’ are, where people turn and what they’re doing to maintain sanity in this insane environment.
To all the people I’ve worked with during my time at Potential VC — thank you.
Onto the next one.
James.