James Mulvany – Angel Investors Should Invest in What They Know

Dec 15, 2020

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James Mulvany is a successful entrepreneur, and over the past 10 years, has built multiple internet companies (including Podcast.co & Radio.co) plus a property portfolio and has made a range of angel investments in startups! Having actually never had a job in his life, he started his first business when leaving school.

“Business is never plain sailing. You have your ups and downs, you have good years and bad years, just like any job.”

James Mulvany

Worst investment ever

About a year after launching Radio.co and experiencing a great first year, James started thinking of ways to invest the profit he made.

James had been very much engaged with the local area’s startup scene, and he figured he could invest in one. So he started going to various angel pitching events.

Joining an angel investors syndicate

The more James attended the pitching events, the more his angel investment network expanded. One of the things that were quite common in the angel circus was the idea of having a syndicate. A syndicate is made of five or six investors who invest together.

James found himself involved in a syndicate with some top-notch guys interested in making a few investments. The other members of the syndicate saw James as the lead to any IT related investment. They looked up to him to decide whether to invest in IT-related companies or not.

Picking a startup

They found a few good pitches, and one concept for an augmented reality computer game stood out. At the time, there was so much hype around these gaming goggles. James’ syndicate saw this as an opportunity to make massive returns on their angel investment at that early stage. The team invested around £25,000 each. James was 29 years old at the time, so this was a considerable investment for him.

The problems start trickling in

The concept James and his team invested in was good, but a couple of months into it, the startup realized that augmented reality wasn’t necessarily going to work out. They wanted to pivot to a regular computer game.

As if that was not enough, one of the startup guys fell out with the other two guys. He moved to another country, and no one could get in touch with him. The two other partners tried to get him to resign as a director of the company and forfeit his shareholding, but he just went off the radar.

Unfortunately, the main director became quite ill and at this point, the problems were just too many to handle. The startup ran out of money, and they had very little to show for the money the investors had put in. James was left with a loss of £25,000.

Lessons learned

Invest in an industry you understand

If you’re going to make an angel investment, it needs to be in an industry where you’re entirely convinced that your money is in good hands. Be sure that the business owners do not need any mentoring or hand-holding from you. So it’s very much, just like a hands-off investment. If you’re going to make a hands-on investment, it needs to be something that you understand for sure.

Be careful of investing in new shiny things

Most novel ideas tend to be volatile. If you are going to invest in new cutting-edge ideas, be prepared to lose.

Stay together

If you want to be successful, you need to stay together. You don’t need to be amazing because the amazing guys crash and burn, and they quit. So keep the team together and treat each other well, and you will succeed.

Andrew’s takeaways

If the company starts to pivot, stop the business

If you end up chasing the revenue, you’ve lost what you originally planned to do, and you are likely going to let your investors down.

There’s a difference between starting a new business and a never before seen business

Investing in completely new things brings on a considerable level of risk. It will occasionally be successful, but it brings in a lot more risk.

Actionable advice

Don’t go into something you don’t understand. If you go into something you’re not 100% sure about, make sure you’re prepared for the possibility of losing.

No. 1 goal for the next 12 months

James just launched a platform called Matchmaker.fm a matchmaking service for podcasters and guests. The platform recently hit 13,000 users. James’ number one goal, therefore, is to get 100,000 users over the next year.