Investor Talk: Index Ventures and The Accelerator Group’s Robin Klein
The Index Ventures and The Accelerator Group investor takes our questions
Having begun his business career in the entrepreneurial camp, Robin Klein has crossed the floor to become one of Britain’s most respected technology investors.
As founder of The Accelerator Group, venture partner in Index Ventures and a key investor in Seedcamp, he has built up a portfolio which includes blue-chip brands such as LoveFilm, Wonga, Zoopla and Moshi Monsters.
Drawing on his vast experience of the tech scene, Robin guides us through the latest changes in his space, and tells us why the government’s start-up agenda is bang on the money…
Much of your recent activity has been based around Index Ventures, which is investing in a plethora of tech spaces. Can you talk us through the company’s core investment philosophy?
Well we invest in all stages – seed, venture and growth. We focus on technology and we invest anything from £50,000 to millions, depending on the stage that company has reached.
Generally our approach is to invest in people first, and markets and models second. We generally believe that, if we pick the right entrepreneur, we can work with them to find the right business opportunity.
What sectors are you particularly focusing on at the moment?
As I say we focus more on entrepreneurs than on sectors, so I wouldn’t like to pinpoint one. Clearly cloud computing, mobile and e-commerce will all play a crucial role in the months ahead, given all the publicity they’ve received recently.
You must have a particularly informed view of the e-commerce market, given that one of the companies you founded, Innovations, conducted the first consumer e-commerce transaction back in 1995. What is your view of the market at present?
It’s still growing significantly, and it’s outgrowing the high street by a significant margin. Consumers are very comfortable buying all sorts of products online; we’re always seeing customers buying products we previously thought they wouldn’t. It was once thought that customers wouldn’t buy luxury products online, for example, but that’s been proved wrong.
I’d also say that e-commerce has continued to innovate. It’s not simply about providing a catalogue and shopping market, but there’s all sorts of new models – hence our investment in StylistPick, which is a recommendation tool and a kind of club too. Things like StylistPick provide a new model, a new approach, and real reward for investors who like to move ahead of the curve.
Is it becoming easier for tech start-ups to get investment?
In some ways yes, because the supply of capital has increased, while the angel network has expanded and become more accessible. But in other ways it’s tougher, because there are more start-ups so each entrepreneur has greater competition for investment.
What would be your top tips for entrepreneurs looking for investment?
I guess it’s about bringing the proposition down to its core, and not getting side-tracked by details which are irrelevant at any early stage. You have to be clear and concise, right up-front, and then developing the ‘how’.
The other thing is a lot of start-ups look very similar at first glance, so it’s important to flag up the essential differentiators – what makes your different? What’s its secret sauce?
Do you think investors are sometimes too ambitious in their business plans?
That can be the case, yes. I’d never discourage someone from being ambitious, but realism comes from a cold-hearted assessment of the market, and whether there’s a real need.
What do you make of the government’s attempts to promote start-up investment, with initiatives such as the Seed Enterprise Investment Scheme?
The government’s changes will be a help. My impression is this government really ‘gets’ the whole start-up community, and how it works, and they see its potential for driving the economy. I don’t believe in direct government intervention, but I do believe in them creating a supportive environment.
You were recently asked by the UK government for ideas to stimulate the growth of technology entrepreneurialism, and encourage investment. Can you give us some insight into what you suggested?
Well we discussed various things, like reducing the tax bill for entrepreneurs, and making it easier for non-EU entrepreneurs to get visas, which can be a real problem.
I’ve also written a paper designed to encourage executives to join early-stage companies, by giving them similar tax treatment to the founders. Once a start-up gets going, it often needs the experience of a more seasoned exec, and the tax system should reflect this.
Ultimately, however, the government has already done most of what people have asked – in fact the latest Enterprise Investment Scheme proposals could not have been better. From April, gains on investments in start-up Britain will be tax-free.
You founded The Accelerator Group with your son, Saul, and you’re both instrumental in Seedcamp. How does his approach to investment differ from yours?
We actually have a similar philosophy, which we’ve developed over time. We both believe in backing people, and we strongly believe in building brands and putting customers at the centre of the product; designing products and services around customer needs. But clearly we bring different skills and experiences.
Finally, what chance does the UK have of producing the next Google or Facebook?
There’s no doubt that the UK tech scene, in fact the entire European tech scene, is dynamic. There’s a lot of talent, the markets are truly global, there’s plenty of capital around and great companies being created all the time. Whether we go on to create platforms on the scale of Google and Facebook, I’m not sure.