# Why some investors are going the extra mile Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-11-08 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: Discover the Secret to Successful Early Stage Tech Investing with 'Mammalian' Investment Meta Description: Discover the key to successful early stage tech investing: 'mammalian' investment. Find out how adding domain expertise can boost your chances of URL: https://financedigest.com/why-some-investors-are-going-the-extra-milehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd081117-8-1736843295425-compressed.jpg) By **Dan Somers,** Managing Partner, Boundary Capital (www.boundarycapital.com) Investing in early stage technology businesses is a risky business. If you get it right investing in a disruptive business like WhatsApp or Alibaba can generate huge exits: a whopping $22Bn and $25Bn respectively (Sequoia Capital turned $60 million into $3 billion thanks to WhatsApp).  However, there are so many ways it can go wrong: too early for the market, too late, inappropriate management team, product market-fit, IP etc. The odds of making it are smaller than the odds of failure. Conventionally you also need a lot of cash: Many of these success stories take a lot of funding, and arguably some of the biggest VCs in the world, especially in Silicon Valley, have the funding clout to help ‘make’ the [market even if the product](https://www.financedigest.com/bagasse-tableware-products-market-will-top-us-3-75-bn-by-2031-as-consumers-proclivity-for-eco-friendly-and-single-use-product-purchase-grows.html "Bagasse Tableware Products Market will top US$ 3.75 Bn by 2031 as Consumers’ Proclivity for Eco-Friendly and Single-Use Product Purchase Grows") is not the best or unique. Uber is now on its 16th funding round, absorbing $12Bn. Whilst this is extreme, VentureSource Dow Jones shows that the average rounds is c. 4 whatever the economic cycle. Whilst many accept this as the status quo and choose to invest elsewhere, there are many [entrepreneurs and angels who succeed time and time again and returns are typically very concentrated on a minority of very successful investments](https://www.financedigest.com/the-investment-gap-for-women-entrepreneurs.html "The Investment Gap for Women Entrepreneurs"). Only 10% of all angel [investments generate](https://www.financedigest.com/investing-in-real-estate-how-to-generate-passive-income.html "Investing in Real Estate: How to generate passive income") 90% of the returns. So, are these serial successful investors outliers or is there a special something they are able to bring? Well, many of the more consistently [successful VCs](https://www.ft.com/content/01d383bc-ffd6-11e5-ac98-3c15a1aa2e62?mhq5j=e2) get cited because they have experienced investors, sometimes entrepreneurs themselves, and often with a focus and supporting processes. So, could this be the secret to successful early stage investment and should investors be prepared to [invest more than just their money](https://www.financedigest.com/8-best-passive-investing-ideas-which-can-help-you-make-money-in-2022.html "8 Best Passive Investing Ideas Which Can Help You Make Money In 2022")? Enter stage right a new style of early stage [tech investing:‘mammalian’ investing](https://www.financedigest.com/should-you-invest-in-nfts-or-their-future-practical-uses-in-tech.html "Should You Invest in NFTs, or Their Future Practical Uses in Tech?"). Mammalian investment finds and embeds an appropriate [executive into a start-up to support and nurture the management team](https://www.financedigest.com/zivver-expands-leadership-team-names-three-new-c-level-executives-2.html "Zivver Expands Leadership Team, Names Three New C-level Executives"). The [executive is appointedto the board](https://www.financedigest.com/x-google-executive-to-join-numerous-board.html "x-Google executive to join Numerous board"), e.g. as [executive chairman](https://www.financedigest.com/wagamama-owner-restaurant-group-names-former-cadbury-executive-ken-hanna-chairman.html "Wagamama-owner Restaurant Group names former Cadbury executive Ken Hanna chairman"). Crucially they [invest alongside the VC on the same terms](https://www.financedigest.com/how-to-invest-in-gold-and-other-precious-metals-for-long-term-profit.html "How to invest in gold and other precious metals for long-term profit"). The whole process, if done right, ticks a lot of different boxes: It adds domain expertise to a business to provide support as the business pivots. It allows the business to ‘hire’ people it could never otherwise afford to pay. It reduces the cash burn because the expert is investing themselves and making contacts which otherwise would cost a lot in [sales and marketing](https://www.financedigest.com/synthetic-quartz-market-sales-is-driven-by-increasing-growth-in-manufacturing-and-construction-sectors.html "Synthetic Quartz Market Sales Is Driven By Increasing Growth In Manufacturing And Construction Sectors"). It also provides [operational due diligence to the investor as the executive will spend some time](https://www.financedigest.com/coca-cola-hbc-flags-one-time-195-million-hit-from-russian-operations.html "Coca-Cola HBC flags one-time 5 million hit from Russian operations") with the entrepreneur before recommending investment (and investing themselves). Finally, it aligns everyone’s interests, a crucial aspect particularly for a business pivoting to establish its business model. Mammalian investment is generically similar to the concept of ‘Venture Partner’programs, where VCs sometimes find individuals to add value to a portfolio company but the differences are also stark:Venture Partner programmes are not mandatory, there is no process to help screen the investments, and often it is a privilege for the Venture [Partners more than a need](https://www.financedigest.com/when-you-need-an-it-partner-not-just-a-helpline.html "When you need an IT partner, not just a helpline") or process to develop the investee companies. This approach has been adopted and developed by early [stage investment company Boundary Capital in its AngelPlus EIS Fund](https://www.financedigest.com/debt-strategies-for-funding-early-stage-companies.html "Debt Strategies for Funding Early Stage Companies"). They call their value-added co-investors ‘Venturers’. One of Boundary’s [key assets is the network](https://www.financedigest.com/networking-is-key-to-forming-business-ideas-as-a-college-student.html "Networking Is Key To Forming Business Ideas As A College Student") of 300+ screened Venturers from different sectors which helps to be able to find the right match. Boundary [Capital](https://www.financedigest.com/the-risks-and-rewards-of-investing-in-venture-capital.html "The Risks and Rewards of Investing in Venture Capital") always appoints a director alongside the Venturer to maintain investor perspective and governance as it is often the case and almost expected for the Venturer to go ‘native’ partially in terms of helping the investee company. As an example, Desktop Genetics is a genome-editing software company. Its technology helps research scientists to dramatically speed up their research and application for [gene therapy](https://www.financedigest.com/the-cancer-gene-therapy-market-to-ride-on-procedure-simulations.html "The Cancer Gene Therapy Market to ride on procedure simulations") using CRISPR technology. The business was founded by 3 entrepreneurs who met at and through Cambridge University. Whilst they had a good idea, the business [model and routes to market](https://www.financedigest.com/the-next-decade-to-see-the-humanized-liver-mice-model-market-detonate-innovation.html "The Next Decade To See The Humanized Liver Mice Model Market Detonate Innovation") were unclear. Boundary worked with them to appoint a Venturer Dr Darrin Disley, who is a highly successful serial entrepreneur in [life sciences](https://www.financedigest.com/crowdsourcing-of-data-to-drive-the-life-science-market.html "Crowdsourcing of data to drive the Life Science Market") (and currently the CEO of a fast-growing life sciences company Horizon Discovery plc). Darrin helped mentor them even before Boundary’s first investment, and took on the role of executive chairman. He helped them to shape the proposition, introduce them to customers and [partners and guide them on the other aspects of business development](https://www.financedigest.com/sommet-education-partners-with-kingdom-of-saudi-arabias-tourism-development-fund.html "Sommet Education partners with Kingdom of Saudi Arabia’s Tourism Development Fund"). As the model matured, Boundary led a follow-on investment round, bringing in other experienced and value-adding investors and strategic partners (e.g. Illumina who are a potential partner and acquirer co-invested). The business is poised to be one of the pre-eminent CRISPR [software](https://www.financedigest.com/how-to-choose-the-right-software-architecture-for-your-business.html "How to choose the right software architecture for your business") businesses in Europe. The entrepreneurs themselves really like the model as much as investors as it means they get real help and it engenders a strong sense of [trust](https://www.financedigest.com/markets-slammed-with-noise-investors-trust-tone-to-set-the-record-straight.html "Markets Slammed With Noise, Investors Trust Tone to Set the Record Straight") and alignment between founders and investors, something which sadly is not always the case. Riley Doyle, the CEO of Desktop Genetics said: “We had a few sources of capital we could have turned to. What attracted us to Boundary was the alignment of the Venturer with the money and our business. Helpful informal advice and contacts have been [valuable too along the way.”](https://www.financedigest.com/valuable-ways-to-get-your-children-ready-for-college-life.html "Valuable Ways to Get Your Children Ready for College Life") Other businesses who have looked to Boundary Capital with its Venturer [model are a former professional kick boxer and entrepreneur Alex Oviawewho founded Precision Sports Technology](https://www.financedigest.com/research-and-technological-innovations-to-bolster-developments-in-animal-model-market.html "Research and Technological Innovations to Bolster Developments in Animal Model Market") (PST), creators of a wearable technology that alerts professional and amateur sportspeople to potential injuries whilst they train. Their Venturer, Mark Warrilow has relationships within premier rugby clubs, county cricket teams and professional [sports bodies](https://www.financedigest.com/quidditch-becomes-quadball-as-sports-bodies-change-name.html "Quidditch becomes quadball as sport’s bodies change name"). Carbon fibre high performance automotive [wheel manufacturer](https://www.financedigest.com/opportunity-assessment-of-rail-wheel-and-axle-market-reveals-lucrative-prospects-for-manufacturers.html "Opportunity Assessment of Rail Wheel And Axle Market Reveals Lucrative Prospects for Manufacturers") (Dymag), life science Alzheimer’s therapy (Polyblok) and portable X-ray devices (Image Scan) are also choosing this model of investment with success. Although nurturing the Venturer network and process can be intensive, the returns are strong both in terms of portfolio returns (25% IRR to date) and a much lower failure [rate than other comparable early stage tech investors](https://www.financedigest.com/investors-trim-bets-for-peak-bank-of-england-rate.html "Investors trim bets for peak Bank of England rate") (only one ‘cheap’ failure out of 14 companies). And of course, because Boundary Capital’s AngelPlus Fund is SEIS and EIS-compliant, investors get even more benefit from the downside protection and boosted upside gains due to the [tax breaks](https://www.financedigest.com/irish-corporate-tax-boom-breaks-more-records-in-november.html "Irish corporate tax boom breaks more records in November"). Instead of investing in technology companies using a ‘spray and pray’ approach to investing,there are alternative approaches to technology investing which [investors can consider to mitigate risk](https://www.financedigest.com/p2p-investors-polled-on-their-thoughts-and-opinions-on-risks-vs-rewards.html "P2P Investors Polled on Their Thoughts and Opinions on Risks vs Rewards") and promote the chances of upside. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---