I have been coming to Engage Invest Exploit (EIE), the technology investor showcase that takes place in Edinburgh every year, since the very beginning, when it was a small event with only around 150 people in a hall. It’s now so popular that people come from all over the world to attend. There is a reason I come back each year – everything about the event is extremely well done, especially the way they coach the companies.
I mainly attend EIE to meet new people. Over the years I have met companies and angel investors, and today we’re doing business together. It’s a great place to get a sense of what is going on in Scotland and the UK and get a glimpse of the future. IBM has had a large presence in Scotland for many years – mainly manufacturing and hardware in the beginning, and now more software. Visibility here helps people understand IBM’s business and spreads the word about our own ability to be innovative.
IBM doesn’t generally make direct investments – instead I personally get involved in building relationships with angel investors and traditional venture capitalists (VCs), to learn where money is going in the market, and why.
We in turn share insights about the technology needs of global enterprises, which then helps VCs support their companies and create investment strategy. We meet with their portfolio companies, and if they are a good fit with IBM, we can explore ways to partner on various business activity. We also support mergers and acquisitions, so there is a lot of business generated from these relationships that extends beyond an equity stake.
Even though IBM doesn’t invest directly, I know that investors are looking for start-ups with products that really work, talented teams with an expert understanding of their customers, and ambition to grow quickly and achieve critical mass. We look for companies who want to become global businesses – we want to partner with companies who share our same global ambition. I’d say this is true of most investors.
I become enthusiastic when the founding team is made up of talented and credible people, experts in their field. You get a sense of excitement from certain people and it’s hard to put your finger on it – it’s often just a gut feeling.
In my experience, start-ups in the UK are just as innovative as those in the US. The main difference is the style of investment. Early rounds tend to be smaller this side of the Atlantic, and the start-ups tend to have a different view of scaling up. There is a sense of “do anything” to reach scale and grow across US tech ecosystems. Sometimes this is great, and other times it causes issues as they reach levels of scale. Their goals are lofty. This is not always the case, but I notice a different definition of growth in Europe. The ambition tends to be just as strong but the approach between the US and the UK can differ.
For example, at EIE a few years ago, a European company told us during their pitch that they would create 1,000 units of their product. I jumped up out of my seat to say: “Why not a million?” Their answer was that they didn’t have the capacity to do that yet. And I said: “You’re pitching in front of 300 investors – so tell us what you need!” This was their opportunity.
In terms of my tips for a successful pitch at EIE, I’d say a lot of companies spend too much time on the set-up, talking about the problem that they’re trying to solve. The consequence is they don’t leave enough time to explain what they’re doing to solve the problem. I should never have to ask someone pitching: “What exactly is it that you do?”
I do think it helps that there are now some very successful tech companies, like Skyscanner, coming out of Edinburgh, so that start-ups have real examples of what can be achieved if they think big.
- Deborah Magid is director of software strategy at IBM Venture Capital Group and an investor panellist at EIE 2019