Peter Cowley, serial entrepreneur and Invested Investor met Meganne Houghton-Berry, the current UK Business Angel Association Angel of the Year, and found out more about her experience and her reasons for becoming an angel investor. Meganne is an active angel investor, board director and start-up mentor and has over 25 years’ experience in tech and consumer marketing and now invests across a wide range of industry sectors.
She has a portfolio of over 25 companies in a range of industries from waterless toilets to online tutoring to a California craft brewery. She has had four exits, including Ten Lifestyle and Ciel Medical. Meganne has been profiled in a number of UK media for her work in social impact investing.
She sits on the board of Third Space Learning and the Advisory board of Angel Academe, is a Specialist Mentor for the Princes Trust and an active member of several UK and US based angel networks.
Why/How did you become an investor?
I began my career in the PC industry, just as it was emerging as the challenger technology to mainframe computing. Very exciting times, and a great exposure to the challenges and opportunities of start-ups. A number of years later, a colleague who knew I enjoyed consulting for start-ups, suggested I attend an angel investing group meeting. That particular group didn’t suit me – mostly biotech investments at that time – but that did start me down the path.
What do you invest in and at what stage?
I invest across a broad range of sectors, mostly in the first seed round (i.e. after friends and family). I invest both in the UK and the US, and have a bias on investing in businesses with a woman on the founding team. I also look for businesses with a positive social impact, but they need to have clear sustainable business models and exit potential for investors.
What are the challenges you faced when you become an investor?
The hardest thing to learn is that you can’t invest in everything, and that you do need to be selective and trust your instincts. Early on I’d fall in love with the idea, and not focus as much as I should have on the entrepreneur. It’s hard to say ‘no’ to an enthusiastic, passionate entrepreneur, but it is important for me to be able to have a relationship with all my portfolio companies, so even if the company might be a good investment, if I don’t have the time or bandwidth I will pass.
Please give top three factors that influence your decision to invest.
The entrepreneur/founding team is the main thing I focus on – they absolutely must have integrity, be knowledgeable in their industry, passionate about the problem they are solving, and humble in knowing they don’t know everything. The team must be committed to putting in the hard work and making the personal sacrifices that come with starting a great business.
How do you view your relationship with your investees? What is a good relationship?
I often refer to the investor/investee relationship as a bit of a ‘marriage’. Typically you will be on the journey together for over 5 years, and there needs to be trust and great communication. Communication is probably the one thing I spend the most time talking to the team about early on. It is crucial they understand they cannot just take investor money and not continue the engagement. Most angels invest because they enjoy being part of the journey, and will be aware/experienced in the ups and downs a business faces. Never hide the bad news – be up front and honest at all times.
If you could offer an early investor one piece of business advice, what would it be?
Before you begin angel investing, make sure you understand what is important to you and what is motivating you to invest. Some angels are only interested in deals that have very large potential upsides. My portfolio is more rounded – some are ones I hope to see big returns from, but others I invest in because of the social impact they are making or ones likely to sell early and quickly.