Tiny actions, compounded over time, can create massive outcomes. A decade angel investing.
Angel investing involves many tiny actions.
Sigmund Freud once said, “one day, in retrospect, the years of struggle will strike you as the most beautiful”. Angel investing is playing the ‘long game’ and can often feel like a constant struggle. The mark-downs generally happen before the exits and the most lucrative exits often take in excess of ten years. But, after a decade, I am beginning to appreciate the ‘beauty’ that Herr Freud described. And that beauty is not just financial upside, it’s human connectivity, friendships, and playing a small role in building category defining businesses.
Investor vs. Borrower Mindset
One of the best blogs I read this year was from entrepreneur and investor, Naval Ravikant where he outlines our ability to cultivate an ‘Investor vs. Borrower Mindset’ using “uphill decisions”.
- Investor: Long-term thinker who delays gratification and sacrifices short-term pleasure for long term reward.
- Borrower: Short-term thinker unwilling to delay gratification; experiences short term pleasure with long-term cost.
I liked this framework for a number of reasons, but mainly because it helped me reflect on some of the life choices I’ve made both in business and personally that were challenging.
The investor-mindset individual makes an ‘investment’ and that investment compounds with a positive rate of return into the future. However, the person with a borrower-mindset takes out a ‘loan’, but has to ‘pay’ for it later, with interest. This can take the form of a financial loan, but could just as easily be applied to health and wellness related decisions, or relationship decisions, both personal and professional.
The person with an investment mindset is ‘worth’ much more at a date in the future and their future self ‘cashes in’ on that value.
‘Uphill decisions’ are the choices we make that take the more difficult path in the short term. The path with more short-term pain is typically the one with the largest potential for compounded long-term gain.
The best of life comes from investing, from making the decisions now to enjoy rewards of the compounding later. Many things that feels good now will feel bad later, and many things that feel bad now will feel good later.
This applies not just investing money but also to time decisions (procrastination), relationship decisions (the friends you keep and your chosen partner/spouse), and health decisions (what we eat, drink, and if we take exercise or get sufficient sleep). As Warren Buffet once said, “you will never get a better return on life than when you truly invest in yourself”. So choosing how you invest your time is critical to achieve a ‘compounding effect’.
I bring this up as I think its appropriate for life in general, but in particular, for angel investing. The time invested in meeting founders, mentoring teams, connecting members of the ecosystem and, generally speaking, embracing serendipity, has a compounding effect. The more you give, the more you get, so to speak. But it takes time, which, now that I am on the other side of 50 years old, is increasingly my most precious asset.
Thankfully, having invested both money (I’ve invested half the proceeds from selling my start-up a decade ago) and time (I’ve met over 8000 founders and invested in >250 startups), I have earned not only financial returns, but social returns in the form of friendships with founders, mentors, and investors. My ulterior motivation (I say with a glint in my eye) is that after investing a large portion of my working life backing the next generation of startups, that I have a robust social calendar in the future!
Now on to my investment activity in 2024.
2024: My investment year in review.
I think I may be somewhat odd, especially in the United Kingdom, because I decided a decade ago to reinvest half my wealth into startups, primarily those who are building fintech businesses in the UK. Five years ago I started writing an annual letter to share my journey with others. My hope was that by being transparent, it would encourage people to have an “investor-mindset’ and back the next generation of entrepreneurs in the UK. I’ve now invested in >200 startups as an angel and a further 50 via my time as MD at Techstars — London.
If interested, here are my previous letters from 2023, 2021, 2020. Last year I became an ‘evergreen’ angel — meaning that my successful exits were funding my new investments. This took me a decade.
In 2024 I invested in 24 startups
17 were new investments and 7 were follow-on investments. I also have 4 other companies where I have committed to invest but the rounds will close in January.
I invest primarily in series pre-seed and seed fintech companies, but the companies are a diverse bunch, covering a whole range of financial services (as well as a number that, frankly, were not fintech, but as an angel I sometimes give myself permission to invest ‘off piste’ when the founder and opportunity are just too exciting to pass on!)
Embedded Finance: Some of my investments in the Embedded Finance vertical included renewable energy financing partner Cloover, embedded b2b working capital finance platform Bourn.ai, “friendly fintech robot builder’ FinXone, cloud compute spending and financing platform Cloud Capital and Europe’s leading embedded finance partner, Railsr.
Reg-tech and Decision Analytics: Some of my investments including anti-financial crime platform Fincrime Dynamics, trade compliance platform iCustoms.ai, and the AI operating system for private equity, Capsa.ai
— iCustoms.ai helps UK based companies simplify customs and trade compliance and was was awarded the Best Logistics System by the International Chamber of Commerce in 2024. It also won the Innovation in Trade Award by the Chartered Institute of Export and International Trade. Simply put, iCustoms is now a leader in helping UK companies increase their exports via trade compliance.
Payments: Some of my investment focussed on payments such as bulk payments powered by open banking platform, Crezco, payments for vertical SaaS, Fung Payments, and remittance-powered card partner, Seva Money.
- Crezco is helps SME’s make, collect, and embed payments, including international payments….and Crezco are excellent at this. In fact, Xero has now integrated Crezco’s account-to-account payment API making it the first cloud accounting software in the UK to offer on-platform fill payments using Open Banking.
DeFi Infrastructure: DeFi and crypto saw a resurgence in 2024 and I continued to back enterprise grade wallet-as-as-service provider DFNS and made a new investment in digital asset market maker, Lo-Tech.
Lending: I continued to back lenders such as ‘fast and flexible funder’, OutFund and SME and mortgage bank, Atom Bank.
Other/financial infrastructure: I also invested in ‘surgical code assistant’ for legacy financial service environments, Tweezr, the MENA focussed transportation financing platform, GoCab, and AI-powered CRM platform, Salesdesk.
Investor Mindset behaviours
So I will leave you with some of my goals for 2025 where I will try to ‘take my own medicine’ so to speak! I’d argue that these are all ‘Investor Mindset behaviours’ that most of us should try to embrace so feel free to adopt any you see fit!
- Set goals.
- Eat healthy.
- Quit a bad habit.
- Learn a new skill.
- Ask for feedback.
- Start a new routine.
- Continue to learn how to be a better investor.
- Stop procrastinating.
- Review of finances.
- Embrace serendipity.
- Focus on the positive.
- Leave my comfort zone.
- Exercise more.
- Start being more organised.
- Be a better mentor.
- Be a better friend/son/brother.
- Focus one day at a time.
