Meet the investor: Simon Menashy, MMC Ventures
Investment director at the high-growth fund behind Base79 and Gousto, Menashy talks 'hot sectors' and why you should NEVER lie to investors
Firm: MMC Ventures
Name: Simon Menashy
Where are you based?
Our office is in a small square just behind Kensington High Street – great for nice space, independent coffee shops and Whole Foods, not so useful for events in Shoreditch! I also spend a lot of time in flexible working spaces around town.
What kind of investor are you?
I place a lot of value on being straight with people and simple to deal with. As a fund we’re incredibly selective, but once we’ve made a decision then I’m very supportive of my teams (as well as a big cheerleader). It’s not just about strategy, fundraising, key hires and the monthly board cycle – when you are trying to scale a business, just having a challenging outside perspective and someone to act as a sounding board can be super helpful.
What kind of deals do you finance?
We look for impressive teams who are building innovative businesses that are built to scale fast. Primarily we are looking for tech-enabled businesses that use software, internet and data to disrupt large markets, transform supply chains, create new customer experiences or reduce the cost to sell or serve. This approach takes us across sectors from fashion and travel, to fintech and digital media.
What kind of person do you invest in?
We back teams more than individuals. Sometimes that’s a handful of strong, passionate entrepreneurs – the founder or founders plus some early hires. For slightly larger businesses, it’s a more rounded management team created through a couple of years of bringing in key senior people.
In either case we're looking for talent, a team with a vision and, more importantly, the ability to get other people excited about that vison. This also needs to be balanced by openness to challenge and iteration – ultimately we look for people that we want to work with for the next five years.
How do you source prospects?
By the numbers, it’s mostly inbound – we try to be visible and accessible in the market, and we see about 1,500 approaches each year. But if you look at the companies we actually invest in, we have usually built a relationship with the business over a much longer period of time. We tend to connect with the best entrepreneurs through our network – maybe an investor, portfolio executive or one of our alumni, really any people whose opinion we value. Those sorts of introductions give a company a big head start.
What is your ideal investment?
A team and a mission that I can get passionate about and want to get involved in. I like to see an ambitious plan, but also one that the team is demonstrating that they can execute against. The market has to be large and genuinely addressable, and I prefer to see companies that could truly become category leaders over time – generating exceptional returns as a result.
What are your USPs?
I think MMC is best known for our network, level of activity in the market and our experience over 15 years. But our real USP is more subtle than that. A great VC understands that building a big technology business is about the relationship between using technology in a new or disruptive way, balanced by a strong business model that can deliver both growth and profitability. And a great VC also understands that being a successful entrepreneur requires grit and struggle, and has the patience (and capital) to see an investment through the ups and downs.
At MMC, we spend all of our time thinking about that intersection of tech and business and supporting teams on the journey through it is what we are about.
What are the hot sectors?
We are ‘hot’ on any sector where technology is being used to solve a problem in an incredibly powerful way. Our approach is to stay on top of trends and hype, but actually deploy our funds once tangible businesses – with a credible business model – start to emerge. So you’ll see us paying attention to really ‘hot’ areas like 3D printing, drones, Internet of Things and block chain tech, but commercially the market just isn’t there yet. In sectors like food distribution and parts of fintech, where start-ups are delivering real value to customers, MMC is actively investing and helping to lead the way.
Three things a company should be able to offer an investor?
- Ambition – the team needs to be committed to a fast-growth journey to a really large, scalable business that can deliver venture-type returns.
- Partnership – treating your VC as a partner, not just a funder who you report to from time to time. To me this means creating success and thinking ahead together but also being open about your challenges and honest when things don’t go so well.
- An open mind – an ability to think through new ideas and change direction, a willingness to be challenged, and an enthusiasm for healthy, data-driven debate about your business.
What is the cardinal sin when looking for investment?
The cardinal sin is lying about something to your potential investors. I don’t think that happens very often, but we do see minor versions of it quite a lot – things like hiding bad news, over-selective facts and figures, ‘deliberately misleading’ charts and misrepresenting what others have said or promised. There’s a line between putting forward the best face of your business and presenting a different face entirely.
What continuing involvement do you like in an investment?
When I back a team I expect to be working with them for at least three to five years. Generally we would expect to serve on the board and be included in key strategic decisions. In practice, I speak to my CEOs at least once a week and I am especially engaged in hiring into important roles, challenging the numbers and other strategic moments like fundraising.
We also try to bring in expertise from MMC’s wider network, such as product specialists or our Syndicate of private investors who can offer industry-specific insight and introductions.
What has been your best performing investment to date?
It was great to support my team in the £50m sale of Base79; the online multi-channel network business, last year. It was a great result for the founders and our investors, which is always the goal.
Personally though, it’s been great to see how far and fast online recipe box subscription business Gousto (featured second place in the Startups 100 2015 index) has grown in quite a short period of time, both commercially and in valuation. I first met the two co-founders Timo Schmidt and James Carter back in 2012, when they were just starting out; their business is now seeing 900% year-on-year growth. The team’s ability to scale and execute has been truly staggering.