How a startup can benefit from a hybrid investment strategy

 
Alex Stephany
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JustPark hooks drivers up with parking space owners

Different kinds of investors bring different kinds of value to the table. Striking the right balance between them is vital for any young business.

At JustPark, I’ve now had exposure to four different types of investor: a corporate investor, an angel investor, a venture capital firm, and currently the crowd – the thousands of people who have invested in our record-breaking equity crowdfunding campaign, now live on Crowdcube. Each type of investor can play their part – and raising money from a combination of them can be more powerful still.
Here’s my experience to date.

CORPORATE INVESTOR

We secured a strategic investment from BMW i Ventures – the venture capital arm of BMW – in 2011. Taking strategic investment from a major company allows a startup to benefit from the “halo effect” of its corporate investor.
Moreover, this type of partnership offers the opportunity to collaborate on new business – in our case, the world’s first in-car parking app that lets a driver find, book and pay for parking directly from their dashboard.

ANGELS

It’s difficult to calculate the number of business angels in Britain, given that many invest privately. But the UK Business Angel Association estimates that there are 18,000 around the country, investing around £850m a year.
Back in 2011, we took some seed capital investment from Hugh Chappell, a well-known angel investor who co-founded TrustedReviews and was an early employee at Apple in the UK.
Angels can sometimes invest quickly and advise the company using their own personal business experience, frequently becoming valued mentors to the firm as it continues to grow.

VENTURE CAPITALISTS

But companies of growing maturity can often also benefit from working with a venture capital firm. We are fortunate enough to work with one of the very best: Index Ventures. Index is arguably Europe’s leading VC firm, with a superb track record in getting companies to IPO. They also have particular experience when it comes to working with marketplace businesses like Just-Eat, Farfetch, Funding Circle and BlaBlaCar.

THE CROWD

This brings us to the final ingredient of our investor mix: the 2,820 (and counting) members of the public who have recently invested in JustPark via Crowdcube. Together, our crowd of investors will form a loud, proud army of evangelists banging the JustPark drum as they go about their lives.
They are a cross-section of society, brought together by a shared enthusiasm for making parking pain-free. This was illustrated beautifully at our investor evening the other week, when I heard a seasoned investor running a £15bn private equity fund discussing the opportunity with a junior local council employee investing in a startup for the first time.
Index Ventures will formally become shareholders when our crowdfunding round closes tomorrow. We expect this innovative hybrid of venture capital plus crowd, bringing together the expertise of a VC with thousands of brand evangelists, to be imitated by other startups.
Already, we have been contacted by mature companies that are interested in pursuing a similar hybrid investment strategy. It’s early days, but I believe we were right to try something new: running a startup means taking very calculated risks to achieve the best results, and raising funds is no exception.

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