Meet the investor: Simon Murdoch, Episode 1 Ventures
The former Amazon VP, angel investor and partner at Episode 1 explains why, when it comes to investing, he looks for a great founder and a big market
Firm: Episode 1 Ventures
Name: Simon Murdoch
Where are you based?
What kind of investor are you?
Episode 1 Ventures invests in seed and Series A rounds of up to £2m in software-driven businesses with the potential to transform industries. We’ve been entrepreneurs ourselves so provide a frank and fast approach to investing and we like to play a very hands-on supportive role in growing the businesses we back.
What kind of deals do you finance?
We are building a portfolio of companies that are using software technology to disrupt their chosen marketplaces. It is a diverse group across a range of industries, but with two common themes – a great founder and a big market.
We also like to invest once a company has launched their product and has some clients we can reference. Revenues are usually from zero to £50,000 per month when we first invest.
What kind of person do you invest in?
We look for entrepreneurs with relevant experience ambitious to change their sector. We like to see that they can hire world-class talent and delegate to them effectively, and that they really know the customer and understand the problem. We also like entrepreneurs that are data-driven.
Above all we like people with passion and ambition that can execute at speed and overcome significant hurdles along the way.
How do you source prospects?
We have a very extensive network and we get a large number of referrals from angels, entrepreneurs and CEOs. We're also out meeting founders at events on a regular basis and we get invited to co-invest with other VC firms and angel groups.
What is your ideal investment?
We like companies that are generating early revenues and executing on a clear and affordable customer acquisition strategy. We love SaaS and other subscription models as well as marketplaces. And we look for a huge potential market – we like companies with a market of over £500m in the UK.
What are your USPs?
We have experience of start-ups from the inside and we know that fundraising can be a major headache for early-stage businesses – it can take four to six months to raise 12 months of money.
We've focused on providing a ‘frank and fast’ approach so entrepreneurs know where they stand and we turn the deals around in six to eight weeks. We also bring extensive entrepreneurial ‘know-how’ and a passion for building businesses so we enjoy playing an active and supportive role for our founders. We're proud of the fact that our founders recommend us to other entrepreneurs for this reason.
What are the hot sectors?
There are lots of hot sectors right now that are getting attention but they’re also very crowded so we prefer to stay open-minded. We've invested in e-commerce, property tech, media, health, food, travel and enterprise tech to name a few.
We do expect the property sector to undergo significant disruption and eMoov is already demonstrating that people no longer need traditional high street agents to get an above market price for their home.
The automotive industry is another huge sector ripe for change and we invested in Carwow, a company that is revolutionising the way people buy new cars. Carwow uses the reverse marketplace model to remove the need for buyers to negotiate with car sellers and it’s delivering very substantial savings for consumers.
Three things a company should be able to offer an investor?
They need to show they have a world-class CEO and team, product/market fit and a massive, usually global, market.
What is the cardinal sin when looking for investment?
Entrepreneurs need to be persuasive to raise money, to hire a great team and to make sales for their business. We particularly notice if they don’t listen well or aren’t good with people.
What continuing involvement do you like in an investment?
We like to play as active a role as possible, at least until our companies have secured one or more later financing rounds. We see every investment as a partnership. Indeed, we share our office with a number of our portfolio companies so we work very closely with them.
What has been your best performing investment to date?
As an angel investor I backed Zoopla, LoveFilm, Betfair, ScanSafe, Shutl, Natural Motion and Shazam, all of which worked out very well. As a firm we're only 18 months old so it's still early days but virtually all of our portfolio companies are looking extremely promising.
Carwow is thundering ahead as is ClusterHQ – both have already gone on to raise large Series A rounds. Online estate agent eMoov is now scaling fast and has enormous potential given the size of the estate agency sector and the fees that traditional agents charge. Simply Cook's food discovery service is also proving extremely popular and is at the right price point to go mass market. All of these have the potential to become billion dollar businesses.