Meet the Syndicate Member: Stuart Billingham

How do you know if you’LL make a good startup investor? 

For many people, investing in startups can seem like a dark art, fraught with risks and uncertainty. Startups are notoriously risky investment propositions, and with approximately 100 million new businesses starting every year, the likelihood that you will happen across the next Uber or Deliveroo can seem outlandishly far out. 

Thankfully, startup investing doesn’t have to be scary, if you know where to look and how to focus your efforts. 

At Dot Matrix Group, we bring together startups and investors and empower businesses to grow through strategic investments. The members of the DMG Syndicate come from a wide variety of backgrounds, ranging from corporate finance and traditional investing to marketing, entrepreneurship and even education. 

For the first in this series of ‘Meet the Syndicate Member’ we recently had the chance to sit down with Stuart Billingham, one of our Syndicate Members and investors, to discuss how he came to start investing in startups, and why he thinks the opportunity is huge for investors looking to break into the space. 

Introduction 

Stuart Billingham

Stuart Billingham is the Managing Director and the Head OF EMEA Regulatory & Compliance Solution Sales at IHS Markit, a global business insights and information provider with revenue exceeding £3 billion. Stuart started his career in the late 1990s, early 2000s. 

“All my education was done in an unorthodox way. For instance, I did the London Stock Exchange apprenticeship scheme at 16. I realised I should have gone to college but I did it in the evenings. Then I did my Masters in Hong Kong.”

Stuart has worked for the last two decades in credit derivative trading and automation. He has now grown his expertise and developed more data and technology to monetize in other ways. Today, he’s expanded his knowledge base and looks for investment opportunities that fit his background and expertise. 

“I’m very involved in regulation technology (RegTech) at the moment. Cyber-security is also becoming really important. We have really important software that identifies how open your firewalls are to disruption.” 

Why become an investor?

Stuart is currently a member of a few different investment funds. He believes it’s important to gather insights (and identify opportunities), from multiple different sources, and he believes in working closely with the people that run the business. 

“The traditional VC model is a 2 and 20 model, meaning a 2% annual management fee with a 20% incentive for profits above a certain predefined threshold. DMG doesn’t operate like that. When you invest in a FinTech company, you don’t just buy into the business, you buy into the people running it. Part of the reason I invest through DMG is because of its connection to the startup community 9others. It’s the connectivity and the trust that Matthew has developed through that network which sets DMG apart. He’s incentivized to bring good companies to the table, so I think they’re really onto something by bringing DMG together with the 9others side.”

DMG Portfolio: Why invest in Coconut?

Coconut

In one of DMG’s most recent offerings, Stuart made an investment in the FinTech startup Coconut

“I met Sam O’Connor and I feel that he has a very interesting background and his background was very interesting to me. I’m involved in RegTech in the B2B space, but with his background in B2C from PwC that made it a really interesting proposition to me. They were also going for a real niche. I see a lot of startups that are looking to boil the ocean, and I get why they do that, but the problem with that is that you become really broad. I knew that he knew the tax area. He created the trust and credibility by having built a business in the past and having sold it. The danger area for Coconut is the competition.”

For Stuart, the decision to invest in Coconut was nuanced. “It had a lot to do with meeting the founder Sam, assessing the idea and analysing the business model. I struggled a bit with the valuation, but that is the problem with a lot of FinTech businesses right now. The problem with tech firms is how they get to their valuations. If you’re looking at cash flow or EBITDA, it’s hard to keep things on the same par with the expectations around how quickly they will grow and scale.”

What are the challenges to investing in startups? 

For Stuart, the key to successful startup investing comes down to developing a sense of realistic valuations, understanding competition, and assessing the ability of a team to bring a product to market quickly and efficiently. 

“Speed to market is a huge challenge. Trust and credibility on the enterprise side is also huge. Big banks are consolidating their preferred vendor lists, so startups are having trouble getting on preferred vendor lists. Hiring and getting the right talent is hard. You only have limited resources and getting the right people can be really tough. You’re asking people to take a huge risk.”

What do you look for / what’s a turn off etc?

The two main things that Stuart looks at when assessing a startup opportunity are the founders and management structure. Ultimately, he looks to understand what space they are in and what the scope of the opportunity is.  If he sees people going for big trends like Cloud, that’s a good thing. Ultimately, he’s looking at the opportunity landscape to make sure the management have done the due diligence on the company.

“The other real challenge is that founders can be emotionally tied to their companies. That’s good and bad because they’re ‘all in’ and they’re sweating blood to making things happen, but they can be somewhat blind to opportunities.”

Unseen opportunities and the future of startup investing

Stuart feels that some of the biggest opportunities for emerging technology companies will revolve around blockchain, peer to peer technology, insuretech, and healthtech. That being said, he doesn’t think new startups have to completely reinvent the wheel to be massively successful. 

“One of my mentors was the founder of IHS Markit, Kevin Gould, and we used to brainstorm ideas. We used to say, you don’t have to have the idea that no one has thought of, you can just look at processes that are being done but just do them better.”

Considering becoming an angel investor? 

If Stuart has one piece of advice for new investors interested in dipping their toes in the water of startup investment, it is this: don’t put all your eggs in one basket. 

“Don’t invest your life savings. The rate at which many of these firms collapse is shocking, so you have to keep that in mind when you make any investment. Also, invest in something that you’re passionate about. You can build up and start with something small. Try to go for non-dilution rights if you can. People sometimes invest in a certain number of shares, and then when people invest at Series A and B. Look for non-diluting rights if possible. Also tax incentives like EIS in the United Kingdom is really helpful and has been very successful in supporting startups in the UK.”

DMG Syndicate Invests in Stay One Degree

A Stay One Degree home at Lake Como, Argegno - available  here

A Stay One Degree home at Lake Como, Argegno - available here

Dot Matrix Group is pleased to announce its latest syndicate investment in Stay One Degree, a network and members club that connects travellers with some of the world’s most incredible homes.

A Provence, Luberon Area home on Stay One Degree, available  here

A Provence, Luberon Area home on Stay One Degree, available here

This investment in Stay One Degree marks DMG’s eighth investment overall and its third as a growing syndicate - our largest ever investment. Stay One Degree was started in Hong Kong by ex-banking colleagues Tom Bennett and Jorge Munoz in 2017 after Tom rented out his second home in Spain and it didn’t go well - as the property was completely trashed by the renters. If he was going to rent out the property again then trusting who was in there was the most important part. Surely other homeowners have this challenge too?

What is the Stay One Degree difference?

With Stay One Degree Tom and Jorge have created a social network with trust at the centre. Properties can be browsed by members but only rented if the buyer and the homeowner are ‘One Degree’ connections with each other. The homes are handpicked and members are vetted before they can book to ensure the homeowner is comfortable renting out their home to them. Members benefit from preferential rates, exclusive rewards and local guides / concierge services.

Why did DMG invest in Stay One Degree?

The peer-to-peer property rental market has exploded in recent years with AirBnb. But with this growth, users are finding a lack of curated choice and trust is becoming more important, particularly in the luxury sector. Many owners of high end homes simply don’t want to risk renting out their place to people they cannot trust. A well-vetted and exclusive membership community can unlock the properties, experiences and connections that are difficult to access. This ease of booking and trust gives homeowners additional income and buyers a more interesting holiday and access to others in the network.

2,500 Homes, 15,000 Members

We have observed the team’s execution since the beginning - they have on-boarded over 2,500 homes and over 15,000 members, have signed partnerships to give members some fantastic perks and the team are unlocking many more homes that aren’t currently rented out. Feedback from members is very good - renting through Stay One Degree is typically a high value and fairly infrequent purchase however many members have come back again and again.

A Koh Samui, Taling Ngam home on Stay One Degree, available  here

A Koh Samui, Taling Ngam home on Stay One Degree, available here

Added to that is the fact that Kash has known Tom for 20 years since their Citi days so knows that Tom has what it takes to build a successful company and cater very well for this market.
Tom Bennett, Co-founder at Stay One Degree said, “Jorge and I are delighted to have DMG onboard - there’s a lot of crossover in our networks and we’re looking forward to helping them find their next holiday destination! What’s more, all our investors from the DMG Syndicate get access to our Platinum Club so can benefit from special partner experiences such as supercar driving days, access to members’ clubs around the world and special offers on our platform”.

Your next holiday?

You can apply to join the Stay One Degree network and/or list your home here

Join the DMG Syndicate

You can also join the DMG Syndicate and see our next investment opportunity here.



DMG Invests in Coconut (again)

Dot Matrix Group invests (again) in  Coconut

Dot Matrix Group invests (again) in Coconut

‘See how much tax you owe’

Often when meeting with startup founders it’s not immediately obvious to me what the really big, worth-doing-something-about pain point actually is. Making something a little bit better, a bit more convenient doesn’t really cut it. If people are a bit ‘meh’ you need to work harder at it.

So how is Coconut changing the game? Well, it integrates banking and accounting services. An easy to use banking app that allows their users (mainly freelancers) to see how much tax they are expected to owe in advance. I don’t know anyone who relishes preparing and filing their tax return and I’m sure I’m not the only one who leaves it until the last minute. Freelancers can do the work they love then invoice their clients in-app, incur expenses with the Coconut card and the Coconut app sorts it all out and shows how much tax is owed (at anytime, not just at the end of the tax year). The very real, big pain point is the anxiety of not saving enough, or saving too much, for tax as well as the admin headache that build up throughout the year. This is definitely a 100x solution.

Coconut founders Sam O'Connor and Adam Goodall

Coconut founders Sam O'Connor and Adam Goodall

Why again?

We invested in early 2017 when they were pre-product launch and have seen the team grow with some great additions - all contributing to a successful launch and growth in 2018 with a group of very engaged users. Adam, Ali and the tech team’s ability to focus on delivering a world class product with the right features, the right notifications and the right support is great to see. Limited Company functionality is now live and because adding manual transactions and depositing cash is important to freelancers it’s coming soon.

Ultimately the name of the game for us is to identify and back the founders that execute well - and we believe that Sam and Adam are doing just that. As well as us as DMG founders, a number of DMG Syndicate Members became investors after seeing that execution and have supported Coconut in this round.

The Vision

Of course Sam has been working hard too - his ability to bring onboard new talent, other investors and win recognition (and prize money) is great to see. The world of work is changing fast. Freelancers are ignored, underserved and have, to date, had to use technology which is just not built for them. More people than ever before are freelancing full time and the gig and side-hustle economy needs Coconut too.

Sam presenting to the Coconut Community

Sam presenting to the Coconut Community

The Community

A huge part of Coconut’s success and their future is the community of freelancers that love the product and get involved in shaping its future. The in-app chat, the Coconut Bite Facebook Group and community events with beers and pizza (above) are helping the Coconut team understand more about their users and help communicate how Coconut is developing.

Find out more

We’re delighted that we’ve been able to invest again in Coconut and are excited about using the app and helping out.

To download the Coconut app click here for iOS and click here for Android.

To find out more about the DMG Syndicate click here and Matthew will be in touch.

The Sunday Times: Q&A with angel investors Matthew Stafford and Kash Aslam


Originally published in The Sunday Times, here.

Matthew Stafford and Kash Aslam: ‘Two or more co-founders are able to navigate problems much better’

Matthew Stafford and Kash Aslam: ‘Two or more co-founders are able to navigate problems much better’

Every week The Sunday Times talks to a business angel, one of the early-stage investors who collectively inject £1.5bn a year into British start-up companies.

Matthew Stafford and Kash Aslam co-founded Dot Matrix Group (DMG), an angel investor syndicate, two years ago. It has backed Century, an artificial intelligence business, and Coconut, a bank account for freelancers and the self-employed. Their typical initial investment is £50,000.

Stafford, 42, founded 9others, an entrepreneur network, in 2011. Aslam, 39, has worked in mergers and acquisitions for Citigroup, Blackstone and Anglo American.

Patience is our virtue

We give people the time to execute their ideas. Sometimes we take two years to invest while we watch a business grow and learn.

Network effect

We know some smart people who want to get involved, contribute and learn from these companies. It makes us more meaningful to a start-up. We are a more powerful proposition with a team of investors behind us.

Don’t spray and pray

We see accelerator programmes tied to big companies where the start-up has got the money and there’s no link back, no expertise offered. It doesn’t work. Many corporates invest in start-ups only because they want to be seen to be doing it.

Target practice

In the early stages, it’s not about hitting the targets you set yourself. If that was the case, you would just set lower targets. It’s more about character, determination and learning to adapt.

Two’s company

Two or more co-founders are able to navigate problems much better. Sole founders find that harder.

Wish we saw more…

Start-ups that focus on executing rather than raising cash all the time. It is so important to spend money wisely.

Wish we saw fewer…

Founders who think they know everything already. Sometimes you see a real sense of entitlement. Raising money from other funds doesn’t necessarily mean you’re successful and does not mean we will want to invest.

We're Growing the DMG Syndicate

Yeah, but why?

When a startup pitches us and finishes going through what they're doing one of the most effective questions to ask is, "Yeah, but why?". What they say in the next few seconds is crucial to figuring out a number of things: can we help them do this? Is this a mission we can get behind? And, will they keep going when things get tough?

Answering that, "Yeah, but why?" question is something we do many times in person with potential syndicate members (or SMs as we've started calling them) and it comes down to something pretty simple, as most of the best answers do.

We believe in the power of our collective skills & networks

What we can achieve together is far more than we could alone. DMG SMs are people who want to contribute, learn and invest.

Contribute

People who have experiences dealing with what the best growing startups will have to deal with in the future - those who can bring a fresh lens to subjects such as hiring, firing, commercial contracts and legal agreements.

We ask, are you keen to be helpful like this?

Learn

SMs learn from each other. We will share 5-7 investment opportunities to SMs over the next 12 months and we discuss each one in detail over a dedicated Slack deal channel. What SMs get is a short DMG Investment Memo on the opportunity and it’s after reading the memo that discussions amongst SMs begin. The discussion and Q&A that happens amongst SMs augments DMG’s thinking in DD and helps SMs make their investment decision based not only on their own views but what other SMs can bring to the opportunity.

All this is good for our grey matter - learning is a life-long habit to be enjoyed.

Invest

We’re all doing this for a return. As DMG founders we invest personally in every opportunity we show the syndicate. Once we’ve discussed the opportunity a subset of SMs also invest.

And now we can contribute further, learn from that, contribute again.

Investing is a fascinating business - there's a huge opportunity to seek outsized returns through patience and the right contributions. In fact there’s never been a better time to contribute, learn and invest.

Interested?

Get in touch here.

Time to LiveSmart

Dot Matrix Group is delighted to announce its investment in LiveSmart, a digital behavioural change health tech startup based in London.

LiveSmart provides health testing and lifestyle coaching services, delivered digitally

Founded in 2016, by CEO Alex Heaton, LiveSmart focuses on the corporate health and well-being market. After taking a blood test and a survey of the lifestyle of the user, the results are reviewed by a GP and a dietitian and results are made available in an easy to use app and one to one personal coaching is provided to the person by a dietitian on areas to improve, helping to reduce the risk of chronic diseases such as Type 2 diabetes. The product integrates to access other health tracking data from providers such as FitBit.

We love the B2B focus of the product

LiveSmart kit

A testing kit can be sent to the user's home, or a nurse can visit to take the sample

The product is largely sold B2B with employers providing this as a perk for their employees. DMG believes that over the next decade, employers will be increasingly motivated to provide preventative health monitoring services to look after their employees. We also believe that user demand for their health data is set to increase strongly and there will be increasing awareness of seeking lifestyle improvements to avoid chronic diseases. This service will help fulfill that need faster than the NHS will be able to keep pace. These factors add to our view that this emerging market segment will provide a degree of ‘stickiness’, particularly as its corporate contracts are typically multi-year agreements.

Strong traction with key partners and customers

LiveSmart has an exclusive distribution agreement with AXA, one of the top 4 health insurers in the UK to sell their product under the Realise brand. We see this as a great add on to a company health insurance policy, and underpinned by research from Imperial College, they are proving that their product provides a significant improvement to the health scores of users. Employers are also able to access aggregated data to see the wellbeing progress of their employees which can lead to better productivity and potentially lower health insurance premiums in the future. They have already secured multi-year agreements with key corporate customers.

LiveSmart is demonstrating excellence in execution

LiveSmart dashboard

Results can be accessed online or via the app

Having tracked them since 2016, DMG has seen LiveSmart continue its product development, whilst growing and developing commercial partnerships with a range of corporates, both in the UK and abroad. It is providing a service at a price point that is 3-5 times cheaper than the equivalent service from incumbent providers such as Bupa, and has developed a pipeline of contracted revenue from which to build from. Having tried the product ourselves, we can testify that the product has helped us to improve our lifestyles too!

Alex is really pleased with our interactions with them so far - including already leveraging the Dot Matrix Group network to create some exciting potential international expansion opportunities for LiveSmart. 

We look forward to working with Alex and his team to help LiveSmart grow and add value with the network and expertise of DMG’s Syndicate Members.