“Timing and a bit of luck”, with David Mansell of NEM Ventures

Credible founders — While great ideas are important, most startup founders will have to change their business models at one point or another. I believe it’s the quality of the founders that contribute to the success of the company. They must be adaptable to change, passionate, and able to see the ‘big picture’. As part […]

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Credible founders — While great ideas are important, most startup founders will have to change their business models at one point or another. I believe it’s the quality of the founders that contribute to the success of the company. They must be adaptable to change, passionate, and able to see the ‘big picture’.

As part of my series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing David Mansell, Co-founder and Director of NEM Ventures. Mansell is a Director and Co-founder of NEM Ventures, the venture capital and investments arm of the NEM blockchain ecosystem. David has more than 20 years in project and operational environments at a senior and strategic level, with a strong focus on driving delivery, creative solutions and leveraging his deep commercial network worldwide. With broad experience in the origination and execution of investment between private and public entities, David has identified new business opportunities, researched market conditions and developments, and managed personnel across business sectors. He has worked at both local and national government level, including as a Senior Data Analyst for the Foreign and Commonwealth Office, and most recently with UK-based De La Rue — the largest commercial banknote printer in the world. David has also worked extensively in the energy supply sector as Portfolio Director of Bristol Energy, where he managed a team of consultants, implemented their governance structure and delivered a business plan for cabinet approval and subsequent launch. He previously worked as a Project Director of Energy World Group, an independent company responsible for the development, design, engineering, and construction of power stations for natural gas and hydro power.

Thank you so much for joining us, David! What is your “backstory”?

Growing up near Stonehenge in the UK, I was always drawn to the bright lights and excitement of the city. I eventually moved to London to work for a global risk and strategic consulting firm that specialised in the political and commercial arena. After that, I spent some time working in government, where I was involved in both heavy data analysis and investigation work. Throughout my career, I’ve done a lot of business turnaround and transformation, in addition to work in the startup sector.

Most recently, my career has been focused on public and private financing. This is what brought me to NEM Ventures, the venture capital and investment arm of the NEM ecosystem. We strategically invest in meaningful, high-growth projects that promote the growth of the NEM blockchain.

Can you share a story of your most successful Angel or VC investment? What was its lesson?

I was involved in a very successful investment for a subscription model healthy snacks business, that eventually took an exit to private equity.

At first, it appeared to be a niche product, but it hit a repeatable model of subscription. The operations structure was so slick, which kept the unit costs very low — so when it started scaling, those unit economics really benefited the software model and the company as a whole.

Additionally, this investment was the perfect market/product fit. It came at a time when users were becoming increasingly aware of their health, and in particular the importance of healthy snacks at work. It appealed to people who were time poor and didn’t want to eat unhealthy snacks bought for ease — suddenly it had moved from a niche to a far broader market than first imagined.

What I learned was that even if you may not be a consumer of the product yourself, and even if it may seem overly niche, if the team is strong and the cost structure is lean, there is potential to scale the business and create a successful brand. A lot is about how you deal with growth, and in this case it was organic and exponential.

Can you share a story of an Angel or VC funding failure of yours? What was its lesson?

I made an investment in a project that had great momentum going into it, and within 18 months was valued at 15x what was put in. However, the early success made the founder somewhat reckless, and he didn’t take the opportunity to get more funding as he was too aggressive in valuation. As a result, when cash burn became stronger he couldn’t maintain valuation, causing the company to go bust soon after.

In this case, the founder ran the company too aggressively. He actively pitched that they had delivered 15x in 18 months and would continue to grow by 10x in the next few years. He didn’t want to issue equity and made the decision to run the business leveraged. As the funding markets work in cycles, they then became much tighter, and the founder wouldn’t drop valuation, causing the inevitable cash crunch.

I have always liked the analogy that compares company founders to baseball players — you should look for founders who may have a low batting average, but a high home run percentage.

Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?

In this field of work, there are plenty of investments that you won’t get right, both in regards to the ones you choose to invest in and ones that you miss. You really can’t regret things because you can’t get everything right. I view investments as an opportunity cost — if you don’t do one thing, you will put your money somewhere else.

There are plenty of successful investments that I have not moved towards, so in my opinion it’s about what you want to do at that point in time. What is worth pointing out here is that most investments, as above, once made are essentially locked in and illiquid for an extended period of time.

How have you used your success to bring goodness to the world?

I have historically done this in a couple of ways, through my time and professional network. In this role, you develop a pretty strong commercial and business network. I’ve connected with people in my network to provide guidance and to help people get started in their careers. I’ve also committed a fair amount of my own time to charities. I’ve travelled to areas that have suffered natural disasters to help when I can, although with the recent addition of a child to my family those extended trips abroad have taken a back seat at present. I’m particularly passionate about climate change initiatives, and the NEM Ventures team has invested in a number of social impact projects that aim to reduce carbon emissions. It’s great to be at a point in my life where my personal ethos is in line with my professional work!

What are your “5 things I need to see before making a VC investment” and why. Please share a story or an example for each.

Credible founders — While great ideas are important, most startup founders will have to change their business models at one point or another. I believe it’s the quality of the founders that contribute to the success of the company. They must be adaptable to change, passionate, and able to see the ‘big picture’.

Product/Market fit — In orderto bring a successful project or company to fruition, it’s important to evaluate the product/market fit and determine whether there is a genuine demand for what you are delivering. Ask yourself whether the prospective user will get value from the end product, and whether this fills an existing gap within the market. This interest can be gauged by market surveys or word of mouth.

Scalability — It’s crucial to put forward an idea that has the potential to scale. This gives investors a vision that they can really get behind, altogether making the project more investable. It is important to include market research into your business plan — with a focus on growth potential and long term vision.

Timing and a bit of luck — It’s true — success can be dependant on some favourable market dynamics! Although Tesla, for example, could claim they saw diesel emissions scandal, it’s impossible for them to know the timing of it. This opened up the market to their electric cars in a really emotive way.

Relevant Documents — While this one may not be as exciting as the others, it’s true! A pitch deck backed up with a model where assumptions are explained and credible not only gives comfort to your investors that the numbers are sound, but shows that you are organised. It’s all about the details and about proving to investors that you have a plan they can get on board with.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

I envision a decentralised world, with less government control and more power back in the hands of the citizens. Often when we talk about decentralisation, we forget to ask the question: ‘where does the individual sit in the whole thing?’ In my opinion, that’s what it should all come down to. There are fundamental elements in Western democracy around voting, for example, where there are questions and scandals, and we are still using paper records with volunteers counting the votes. I think that as a whole we can do better than that, and blockchain technology offers the means to provide a more secure and transparent alternative to current inefficiencies in voting and beyond.

Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this.

Satoshi Nakamoto, which is the is the pseudonym given to the person (or persons) who created and developed Bitcoin, the world’s first digital currency. They have completely changed the finance game and created an entirely new method of interaction — in a more trustworthy, transparent, peer-to-peer manner. Their work has sparked the growth of the blockchain/crypto ecosystem, which is and will continue to do great work. I suspect Satoshi may be able to give me a few tips on how the world will work in the future!

Thank you for all of these great insights!

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