Lough Shore Investments is up and running, less than twelve months after I left NYSE Euronext in April 2010. We seeded our first tech start up in October 2010 and hired the first full-time team member at the start of November. Watch this space, we’ll be announcing the first round of investments in the coming months.
Ultimately, in the grand scheme of things, Lough Shore Investments is a small investment shop, at least for now; we do, however, have a plan (a strategic direction, if you will) to make it that little bit extra special. We hope by 2021, this plan will help make it one of the leading firms in the sector.
The business model will be closer to what is now being termed a ‘SuperAngel’ fund than VC or Private Equity, particularly because the focus will be on partnering with founders and management teams – getting involved in running the business, at least at a board level.
Our biggest unique asset is not capital, but a solid understanding of the key hurdles to growing a business from early stage, through the ceilings (or “killing fields”) at £1M, £5M, £10M revenue and so on to exit. This is the “journey” people like Steve Jobs often refer to, and first time around it’s much, much easier with a guide. There are no prizes for reinventing the wheel, or blowing up a few good businesses to get the opportunity to learn the basics.
We make no bones about this, our model is to work with founders and management teams who have great ambition for their businesses, but most critically who realise they have a lot to learn and are seeking guidance. At least for now, the term ‘SuperAngel’ is probably a bit flattering given our investment capital, but this is something we’re growing into.
In the month or so since our website holding page went live, a lot of people have asked about the mission statement:
“Lough Shore Investment’s mission is to invest in high potential management teams and partner with them to build great businesses. Our goal is to bring ten great companies to exit or IPO by 2025.”
This mission reflects three aspects of my personal business philosophy.
First, a belief that great businesses always begin with top class people and that the first ten people in a new business (or probably more correctly, the core ten in the first twenty-five) are the single biggest determinant in the company’s medium to long term success. Aside from transforming the probability of success, high quality people also tend to be a lot more fun to work with.
Second, it should be a win-win for the investor and the founding team (including staff). A great company will make it possible to buy in at the right level, following this investment through to a point at which the emerging company comes to dominate their marketplace. Keeping the investors, founders, management teams and staff aligned (and all feeling deep ownership for their business) is core to maximizing the probability of success.
Finally, I have rang the opening bell on the floor of the New York Stock Exchange (NYSE) once before, as CEO of Wombat Financial Software, on March 7th 2008, at the closing of its acquisition by NYSE (here’s the video to prove it!). I believe it should be the ambition of any CEO to ring that opening bell having brought his or her company to a successful IPO. Personal gratification aside, the key to any IPO is what it actually symbolises.
Very often entrepreneurs see an exit or IPO as the end of the road, an opportunity to cash out (and it often is). However, the IPO process is really about raising capital and tapping the resource allocation machine within the global markets. In reality a good IPO is much more akin to a ‘graduation’ to the big stage, an essential step in the journey to long term sustainability or even becoming a ‘Blue Chip’. An IPO is effectively the global markets signing off that your business has passed all the tests required to enter into the select club of public limited companies – the firm is credible and the investing public know what they’re buying in to.
This goal and these principals are at the heart of Lough Shore Investments, we’re excited to get started and we’re asking you to join us along the way – let the journey begin!
Danny Moore – January 17th, 2011.