A number of investors on Seedrs have built diversified portfolios on Seedrs throughout the years, evaluating new investment opportunities as they come along, in every sector from food and beverage to property. Seedrs provides a platform for investors to back the businesses they believe in, and share in their growth. Now, you can get to know the people behind the portfolios.
We sat down with Senior Account Manager and avid part-time investor Martin Tippmann, to find out how he fell into the world of private equity investing, and what makes a growth opportunity the right one.
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How did you first become interested in private equity investing and what drew you to Seedrs as an option to do so?
It didn’t take long to realize that the highest multiples are already made well before a company IPOs on a public stock exchange.
Around the time I started becoming interested in private equity investing, I was becoming increasingly aware of just how broken the crowdfunding environment was in Germany – in fact it’s still quite fragmented today. In Germany, companies just could issue unsecured junior debt in the form of participating loans, and based on grossly exaggerated valuations, without issuing stock. These opportunities were riddled with loopholes that could easily leave investors by the wayside if the companies in question ever made it onto a significant growth path.
Seedrs enables me to grow alongside the companies I invest in. I’m offered preemption rights, which I often exercise, and I make diligent use of the Secondary Market. So, instead of making one investment decision and never getting the chance to invest again or reap the rewards, I have the freedom on Seedrs to liquidate early, or continue to support these companies as they go on to raise further funds.
Approximately how many investments have you made on Seedrs?
I’ve invested in about 350 Seedrs-funded companies in the last six years, with up to a dozen individual investments into each of my most sought-after portfolio companies. At first, my approach was to invest just a little bit into everything, and then follow the discussion forum and flow of news updates for those companies as they went on to grow. It was throughout this journey that I discovered the types of businesses I’m most interested in supporting, and applying that knowledge to the development of my portfolio as a whole.
What was one of the first investments you made on the platform?
I honestly had to look this up just now, but strangely enough, it had to have been a musical production. However, it wasn’t so much that specific opportunity that drew me to Seedrs, but rather the novelty of private equity investing in general.
How has your previous professional experience prepared you to build a successful investment portfolio in this asset class?
Part of my work is in the marketing field, so I have acquired an eye for well-designed projects and pitch decks, which makes it easier to identify businesses that can hit the operational touchpoints, and market them. That, paired with my experience in investing on the regular stock exchange, peer-to-peer loans and crypto finance really shaped the specialisation that I now have in the fintech, proptech and insurtech spaces.
What are some of the key factors or metrics you look for when investing in private businesses on Seedrs?
The way Seedrs structures each campaign page makes it easy to identify the key metrics that are important to keep in mind when evaluating new investment opportunities. The strength of a company’s team, the clarity and soundness of its vision, it’s growth metrics and of course, its valuation are all criteria I assess before making a decision.
What has been one of the highlights of your Seedrs portfolio? This can be an investment that has performed well, or a business with a mission you find of particular interest.
The first that comes to mind is Landbay, the mortgage marketplace lender, which was one of my earlier investments. I’ve gone on to invest many more times as they raised follow-on rounds. Not only was their growth trajectory particularly impressive, their communication with investors, whether that be on the discussion forum or through financial reports, was both cohesive and consistent.
As a seasoned Seedrs investor, you’ve witnessed a number of changes to the platform roll out over the years. Which have been the most valuable to you and why?
This is a no-brainer, it would have to be the launch of the Secondary Market – especially with the fixed price model it’s adopted as of late. Now, if you’ve done the right background research, it’s possible to get one step ahead of a good opportunity, when it’s at a good price, and has already grown since its last share price was set. In other words, you can effectively buy a company’s stock in the present, at a price from the past.
What businesses currently live on the platform (or recently closed) do you find the most interesting and why?
I’m a big fan of Smarterly, the investment platform that helps people invest or save directly from payroll. In my opinion, they’re tracking exactly the right market, with the right approach and product, at the right time. They have a very strong, brand-centric marketing approach and a well assorted team of industry experts helping bring an innovative proposition to market.
There has recently been a trend towards investing in companies with a sustainability or philanthropic element to their business models. Is this something you think about when building your portfolio and if so, how do you identify the right opportunities?
I personally believe that philanthropy and investing don’t match – that’s what donations are for. Sustainability on the other hand, should be seen as a bonus factor for an investment case that has already met the metrics and criteria that define a strong growth opportunity. While sustainability can tick the final box for an otherwise sound investment, you should always remain cautious not to let your investment decisions be clouded by emotional factors.
Certain investors may be hesitant to invest in this asset class during difficult times such as the Covid-19 crisis. How has the current economic climate impacted your investment decisions right now, and going forward?
Think of it this way – with every crisis comes opportunity. For example, while VC’s are hesitant to invest at this time, many companies will be lowering their valuations, or offering better convertible terms in order to secure the funding they need to bridge them through to larger rounds. This is an opportunity you can absolutely take advantage of, and benefit from, when the recovery inevitably comes.
What advice would you give to investors who are new to this asset class?
Don’t invest big sums right away simply because everything feels new and exciting. Even if you’ve invested just a small sum in a business that interests you and meets your criteria, there is always the option to invest in preemption rounds, or on the Secondary Market. That way, as your investment appetite grows over time, and you learn the ropes, you can continue to follow the right businesses and support them.
It’s important to take the time to learn, by always requesting pitch decks and doing your own research, but you should also listen to your instincts. If you’re on the fence, try pitching the investment opportunity you’re interested in to a friend, colleague or family member, and see how it lands. You have access to far more resources than you think.
What keeps you busy when you’re not investing in startups?
I really enjoy investing on the stock market and the wild, wild west that is crypto markets. I’m currently participating in a little investment mastermind group, in which like-minded individuals discuss investment opportunities, and life in general. If I’m not playing with my three-year-old son, I enjoy playing a video game, or sitting back in front of a good film or series.
What’s the best life hack you can recommend for keeping sane during lockdown?
I’m still permitted to go to the office, so the lockdown hasn’t changed my life in the same way it has others. However, coming from somewhat of a self-proclaimed couch potato, there’s nothing more fulfilling than finally reading that book that’s been sitting on your bedside table, finishing a game you started, or taking a long walk to clear your head.
