The E-Club and Informatics Ventures this week hosted well-known serial angel investor Paul Atkinson of Par Equity as part of the excellent iVTuesday series of events. A large number of people turned out to hear an excellent account of how a would-be astronomer came to be one of Scotland’s leading entrepreneurs.
Foregoing an academic career, Paul started his business career at Mullard in Southampton who were at that time manufacturing the first chips for CD players. Moving on to work in sales with Millipore and within the IT recruitment industry, he then travelled to Scotland to start his own business, seeking funding in the traditional way – by borrowing from his dad!
He learned his first lesson as an entrepreneur - "how to lose money quickly” - from a combination of poor diligence and the lack of good legal advice. Yet, whilst this initial venture might have been unsuccessful, he had still some good tales to tell for years to come involving beach parties on the gulf of Persia with Qatar royalty and a Russian VIP!
His fortunes changed however following a fateful meeting in 1995 when he was introduced to Gordon Adam. Together, they co-founded Direct Resources, selling the business in 1999 for £3.4 million (before eventually buying it back five years later). In 2000, Paul then sold another business, RecruitmentScotland.com, for £9 million, proving the truth in the adage that “timing is everything in business” - just 6 months later the dot.com bubble burst.
From that point forwards, Paul went on to establish and invest in a number of IT companies, including Head Resourcingwhich was launched in 2001 and was recently ranked as the fastest growing IT recruitment company in 2013.
Paul went on to share a few lessons and experiences with the audience. Of the 21 companies he invested in before the formation of Par Equity in 2008, the rate of return was 34%, with a third of the companies going under. He made the important but often-forgotten point that a good businessman does not necessarily make a good investor. An investor should know his or her own limitations, and he spoke convincingly about the fact that the strength of the Par Equity syndicate comes as a result of the experience that each member of the team brings to the group as a whole. It’s also clear that investors gain confidence by seeing the Par Equity partners invest alongside them.
Par Equity targets the investment market in the UK, with particular praise being given for the Scottish Co-investment Fund in supporting angel investors in Scotland. Paul also highlighted how lucky we are in Scotland with an abundance of angel investors, suggesting the strength of the angel network perhaps may not induce VC’s to invest in Scotland. Unlike Barry Sealey of Archangel Informal Investment, Par Equity actively does court co-investment with VC’s.
Key lessons Paul has learned are:
- Don’t get into a deal unless you know how to get out of it.
- Judge people by the company they keep.
- When in doubt, do the right thing or do nothing!
When asked during the Q&A session how to improve investment in Scotland, his reply was that Scotland already punches way above its weight in terms of attracting investment. But he left us with a fascinating final suggestion: what difference might we see if the Scottish government was to mirror the policy of US states and spend 25% of its budget investing in Scottish companies?
What are your thoughts? I’d love to hear from you in the comments section below.