CONVO: How does a tech investor get started?

LAURENCE: I didn’t know what to do when I finished my degree, so I took a turn into accountancy. Then I put my hand up to go to America. I thought I’d love working abroad, and where better than San Francisco? I advised on a few venture capital deals, and a few private equity deals from an accounting point of view. In particular, there was one business I found interesting; it was privately owned, but it really was struggling. Some private equity venture capitalists came in and it went from struggling to growing from $10 million to $50 million in one year. I thought: “Wow, how did they see that opportunity?” That really intrigued me. I came back to the UK and I was fortunate enough to land a role at 3i Ventures, which was the biggest VC firm in the UK and Europe. I ended up running 3i Cambridge for many years, and had a great run with companies like Cambridge Silicon Radio, which was the Bluetooth market leader. Then came the opportunity in Highland. We had the intent of raising our own capital, and we raised our first fund in 2012. NewVoiceMedia was the second or third investment from the fund.

C: Does a longer tenure in technology help you spot patterns that can influence your investing?

L: I’m the old guard, I agree! But it’s a relevant point. The greatest pattern is about distribution of computing power; out to the edge, back to the middle. Whether that’s mainframe, PC, or now cloud, that’s the yin-yang that goes on and on. And the other pattern is recognizing the current bottleneck in technology. Ideas like AI and machine learning were worked through academically in the 1960s — but you couldn’t implement them. Now, with advances in silicon, you’ve got storage that’s pretty much free, and processing power that just keeps getting better. Some concepts around mobility in the late ’90s really didn’t come to fruition until the late noughties, and that’s just straight silicon development.

C: Are we approaching a tech bubble? Is there too much money in play and not enough good ideas?

L: I don’t think there is a tech bubble like in 2000. People really did suspend reality in 1999 in the run-up to it. When you had reports from VCs talking about the value of an eyeball with no monetary value associated with it, you knew you were in trouble. I don’t see that now. The years 2007-2008 were a financial heart attack. The difference this time is that no-one’s really figured out what happens when you have trillions and trillions of dollars in quantitative easing pumped into the economy, which we’ve had since 2008. It was supposed to re-inflate the economy, but it hasn’t. I’d say it’s a frothy market, but I wouldn’t say it’s a tech bubble. There is plenty of opportunity out there, and there are plenty of great companies to be built, and there is plenty of cash in the system.

C: How important is customer experience in your decision to invest?

L: Before you invest, you always do your reference calls. We are pretty good at finding the links into folks in the ecosystem to hear how good customer support is and how well customer success is managed. But, often, when we first invest, it doesn’t exist. The customer success or customer experience team has yet to be built.

C: How should companies improve the ways they present to investors?

L: Find a good entry point. For example, with NVM, the introduction came from someone I’ve known for years, so I’m always going to take that introduction very, very seriously. So, finding the right route in is important. In decks for growth investors, you want your team to be seen right away. It’s amazing how many people don’t even talk about the team, or if they do it’s in the appendix. Given the importance of the team, you need it to be high in the deck. And teams include the board, not just the founders. And the other thing is, you need to get to the punchlines quick when you’re presenting. You need to showcase what’s happening to ARR, growth rate, cash burn, LTV/CAC, gross margin, number of customers, churn — the key aspects you want to hang your hat on, good or bad.