The investing philosophy of a VC will determine whether they will invest in a company or not. But what are the VCs themselves looking for? Swoop went to find out
Investors invest because they want to make money, but aside from that, where the funds go can be a very personal decision.
Moscar finds and grows the best startups into industry-defining companies. Founded by two former school friends who connected after pursuing their own entrepreneurial careers, Moscar takes young businesses through an important early stage of their funding journey.
This week, Swoop talked to Tim Marchant, Co-Founder and Managing Partner at Moscar.
Tell us about Moscar
What makes us a bit different is the point at which we invest and how we invest. We’re very experienced in the stage in-between Seed and Series-A. We feel that the risk-reward at this growth point suits our skill set.
We try to get all our businesses to Series-A and then lighten our position from there.
Founder, sector, ideas… which is the most important?
Definitely ideas last. Ideas can easily be validated by a combination of revenue and gross profit. I feel you can only validate ideas if you are an expert in that particular field.
Sector is second most important, but we are very sector agnostic, so it’s only relevant to us to keep diversifying. You don’t know whether one sector is going to do better or worse than another over the next 15 years, no one does.
It’s all about the founder and that encompasses a whole raft of things, but the most important is execution. You can sell beers online and make millions if you execute it correctly. Ideas are irrelevant if they are executed badly.
“You can sell beers online and make millions if you execute it correctly. Ideas are irrelevant if they are executed badly”
What do you look for in a founder?
I look for a founder’s ability to know where they need help coupled with the ability to ask for that help. We look for a founder who wants to surround themselves with people who are better than them in specific areas.
Secondly, they must hold up well to a tough interview question as this can be a big factor for larger VCs.
Many entrepreneurs have previously failed in the past. How do you assess that they have learnt from this or that they’re ready to face this risk?
I’m not ageist, but I do weigh experience quite a lot. If you’re 40 and putting 20 years’ experience and personal capital into a business, you will not let it fail. If you’re 22, your opportunity cost of failure is so low compared to the 40-year-old. We like to invest in people with a higher opportunity cost of failure and those who have bootstrapped. I think the UK has many things right compared to the US, but the one thing we do wrong in comparison to the US is our discounting of people who’ve failed or become bankrupt.
“The one thing the UK does wrong in comparison to the US is our discounting of people who’ve failed or become bankrupt”
What would you tell your younger self?
I think I would link this to the previous question – “Try a load of stuff and don’t worry about failure. You can still be sensible with this risk by insuring yourself with studying and other things”.
Did you ever miss out on a business that went on to be very successful?
Companies can do really well even if they didn’t fit our criteria at the time for various reasons. So, I don’t get hung up on that unless I made the wrong choice with the information I had. You can only do things with what you’ve got at the time. I still want companies we don’t invest in to do really well.
Which of your portfolio businesses is most exciting to you right now?
Probably Diamond Whites Aligners, the founder has immense drive with a great ability to execute. He’s not perfect but he knows weaknesses and hires people in those areas.
Which two people would you bring to a dinner party?
Elon Musk – but just to caveat, with someone like Elon Musk, he can be fascinating but that doesn’t mean you have to subscribe to all of their views! I would just have to filter out 15 percent of what he says. The other person would need to be fun and ask interesting questions, so I’m going to bring Ricky Gervais!
What’s your favourite podcast?
Not really a podcast, but I love Blinkist
What would you like Santa to bring you?
Ehmm.. An all variant encompassing COVID vaccine.
Swoop helps SMEs get ready to approach their panel of over 250 VCs, including Moscar. Sign up now to get in touch with an expert on preparing your business for funding, or check your options for equity funding here.