Why I Became an Angel Investor

Most people invest in things they will never touch, run by fund managers they will never meet, doing work they could not describe if you put a gun to their head. That is what a fund is. You hand over the money, somebody charges you for the privilege of allocating it, and every quarter a number appears on a screen. Up. Down. You had no say in either.

Angel investing is the opposite of that. You meet the founder. You read the science. You decide.

I want to be precise about why I do it, because the reasons that get trotted out in most articles on this subject — returns, excitement, “giving back” — are either wrong or lazy. There are three reasons that hold up. Here they are.

One: Somebody has to go first

Every company you admire was, at one point, two or three brilliant (and usually young) people with an idea and no money.

That gap — between the idea working on a bench and the idea working in the world — is where good technology goes to die. Institutional capital will not touch it. Venture funds have minimum cheque sizes and mandates that make pre-seed uneconomic for them; grant bodies move at the speed of committees with a million bureaucratic hoops to jump through; banks want assets to secure against, and a founding team has none. So the ideas that deserve to exist often sit in a drawer, not because they were wrong, but because nobody was willing to be first.

The angel is the person willing to be first.

Now don’t get me wrong — this is not charity. It is the single highest-leverage moment in the entire life of a company, and it is the only moment at which a private individual with a modest cheque can materially alter what happens next. A hundred million pounds arriving at Series C changes a company’s trajectory. A five-figure cheque arriving at pre-seed changes whether there is a company at all — therefore the matter is of an existential nature.

And the capital is the smaller half of it. Founders at this stage are not short of enthusiasm. They are short of people who will tell them the truth. Being the first outside investor buys you a seat at the table where you can say that assumption is wrong, that customers will not pay for a particular product or feature, or that you are about to sign something you will regret. Do that once, properly, and you have earned your entry price before the company has sold anything.

Two: You get to pick who you back — and what they stand for

This is the part that most institutional investing cannot give you at any price.

When you buy a fund, you buy everything in it. You buy the companies you admire and the ones you would cross the street to avoid, bundled together and sold to you as diversification. You have no vote on ethos. You have no vote on anything.

As an angel, you have exactly one vote, and it counts for everything: yes or no.

I use mine on companies whose work sits close to something I actually care about. Food security is the clearest example. It is easy to treat that as an abstraction from a comfortable seat in Riyadh or London. It is not an abstraction. It is arithmetic about protein, land and water, and the arithmetic is not going the right way.

Which brings me to Algiplex.

Algiplex is a UK company working on the productivity and resilience of commercial algae farms. Their approach is unusual and, I think, correct: rather than engineering the algae itself, they engineer the microbial ecosystem around it — evolving symbiotic microbial communities, selecting the best variants, and deploying them as plug-and-play modules that keep physical separation while still delivering the benefit. In lab trials they have reported productivity gains of up to 8.5 times, alongside protection against the contamination events that wipe out crops.

Now understand why that matters, because the connection to food security is one or two steps removed and that is precisely the point.

Spirulina is between 55 and 70 per cent protein by dry weight. Per unit of land it yields roughly twenty times the protein of soybeans, forty times that of corn, and over two hundred times that of beef. It uses about a quarter of the water that soy protein needs and two per cent of what beef protein needs. It does not require fertile land — it will tolerate saline conditions that would kill a conventional crop. The FAO has documented cases in Mexico, Togo and China where roughly ten grams a day produced rapid recovery in malnourished children. Those are the FAO’s figures, not a marketing brochure’s. Did I also mention that it can become a cash crop for farmers in these countries too?

So the technology exists. The nutrition works. Why has it not eaten the world?

Because algae farms are biologically unstable. Crops crash. Contamination arrives, the pond turns, and months of production disappear in a week. That instability is what keeps yields down, costs up, and the product priced as a wellness supplement for the affluent rather than a protein source for the people who need protein most. Fix the resilience and you fix the unit economics. Fix the unit economics and the protein becomes cheap. Cheap protein grown on land nobody wants, using water nobody is fighting over, is not a lifestyle product. It is infrastructure.

That is the chain. Microbial modules, then stable farms, then affordable biomass, then feed and food, then people who could not previously afford the protein. Two steps, maybe three. Unglamorous every one of them.

The unglamorous step is usually the one that decides the outcome.

Three: Thirty years has to be worth something

I have spent nearly three decades building and assessing physical systems — planning them, financing them, tearing apart other people’s business cases in due diligence, and watching what happens when a beautiful design meets an operating environment that does not care.

That experience has one recurring lesson. Things do not fail in the laboratory. They fail at scale, in the field, in the rain, when the operator is tired, assets are not maintained, and the maintenance budget has been cut. The gap between “it works” and “it works reliably, repeatably, at cost, for years” is where almost all the value and almost all the risk actually live.

The unglamorous step is usually the one that decides the outcome.

That is not a transferable insight. That is the insight, and it applies to an algae farm exactly as it applies to a metro system.

So when I look at an early-stage company, I am not trying to out-guess a specialist on the science. I am asking the questions I have spent thirty years learning to ask. What breaks first? What does this cost when you have built a hundred of them rather than one? Who operates it, and what happens when they get it wrong? What is the failure mode nobody has modelled? Founders rarely resent those questions. They have usually been waiting for someone to ask them.

Angel investing is the only vehicle I know of that converts a career’s worth of pattern recognition into an actual position. Deploy it into sectors you understand, at the stage where judgement is worth more than capital, and you are no longer a passive allocator. You are useful.

The part nobody puts in the headline

Be clear-eyed. The most credible UK dataset we have — Robert Wiltbank’s study for NESTA and the British Business Angels Association, covering 1,080 investments by 158 angels — found an overall return of 2.2 times capital over an average of 3.6 years. That is the good news. The bad news sits in the same report: fifty-six per cent of exits failed to return the capital invested, and nine per cent of investments generated nearly eighty per cent of all the positive cash flow.

Read that again. More than half of everything you back will lose money, and your entire result will be decided by one or two positions. This is not an asset class. It is a portfolio of lottery tickets where diligence improves your odds and nothing guarantees them. Invest what you can lose, and mean it. There are however some safeguards and tax relief, especially for EIS-registered startups.

I invest anyway in spite of the risks. Not despite that distribution — because of what the winners do when they land. For me, this is an asymmetric bet that has a high chance of failure, but the upside and positive impacts if successful makes it worth my time, effort and money.

You cannot buy that exposure through a platform. You have to choose it, one founder at a time, and be willing to be wrong in public.

Choose well. Then be useful.

Sources

1. Algiplex — company website, algiplex.co.uk (technology description and reported lab productivity figures).
2. Habib, M.A.B., Parvin, M., Huntington, T.C. and Hasan, M.R. (2008), A Review on Culture, Production and Use of Spirulina as Food for Humans and Feeds for Domestic Animals and Fish, FAO Fisheries and Aquaculture Circular No. 1034 (protein content, land and water comparisons, malnutrition case studies).
3. Wiltbank, R.E. (2009), Siding with the Angels: Business angel investing — promising outcomes and effective strategies, NESTA / British Business Angels Association (returns, holding period, loss rate).