Jonathan Fitchew is one of the North West’s best known entrepreneurs.
He made his name – and his money – as one half of Pareto Law before leaving after the death of his co-founder and good friend Andy Sawer.
The 61-year-old is now the group CEO of Apprentify Group, which recently acquired digital marketing apprenticeship provider, The Juice Academy.
His other business interests include Netcom Training; Venn Digital and Next Connex but he’s also one of the growing number of angel investors.
An angel investor is defined as someone who invests their own money in a small business in exchange for a minority stake.
Fitchew estimates he’s invested a ‘significant six figure sum’ in more than 10 businesses over the years and has a few words of advice for anyone thinking about following suit.
“Only invest if you are absolutely sure you don’t need that money for anything in the future because the chances are you’re not going to get it back,” he said.
“The mindset of an angel investor should be go into things knowing that the price is twice as high as it should be because of the ego of the individual who has set up the business.
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“They always think it’s the greatest thing on the planet so they have an unrealistic expectation of what it’s worth.
“They have a second unrealistic expectation of what it’s going to become. If you half the price you pay and double or quadruple the time it takes for the business to get anywhere, you might get one in 10 that work.”
The entrepreneur said some angel investors have described the process as being like a drug.
“Is it a drug?” asked Fitchew. “Some people play golf, some people angel invest and some people do both.
“There are people who get their buzz from going to an angel investing event, having dinner, seeing various presentations, getting involved in a Q&A and getting under the bonnet of someone else’s business. It’s exciting.
“I went to one recently where a fascinating young woman has built this product that works out the index of child exploitation in the labour market in all these various countries around the world. Who would have thought you could turn that into a business but we’re all bothered by child exploitation. If you’re entrepreneurial it fascinates your mind.”
Fitchew said one of the biggest mistakes angel investors can make is to throw money at too many things.
“I find a lot of business people put all the effort into one business and it makes a great deal of money,” he said.
“They lose their head, take that pot of money and invest in the craziest businesses they really shouldn’t be investing in under the guise of being an angel investor.
“So many businesses don’t go anywhere no matter how inspired it is. I think you’ve got to keep to your lane. I always back people rather than the business.
“Angel investment often gets mixed up with EIS (Enterprise Investment Scheme). EIS tends to be attached to younger businesses and startup businesses. Some mature businesses raise money through EIS.”
Fitchew said the key message from angel investing is that most don’t work.
“Things don’t tend to go the way you want them to,” he explained. “I invested in one called Atlantic Healthcare that was delivering new products for gastro problems that went into administration.
“I lost about £60k but you don’t lose the whole £60k because you get tax relief on the money that went in.”
Fitchew has also invested via peer-to-peer platforms, including in the highly rated what3words.
Co-founded in London in 2013 by Chris Sheldrick, what3words uses a system which covers the entire world in a grid, each section of which has a unique three-word address.
“I thought it was a fantastic business,” he said. “Deliveroo can never find my house so I thought it was a great idea. I only invested a few grand.”
He also invested in GoHenry, which is a pre-paid debit card for young people aged between six-18 to help them manage their money.
One of Fitchew’s favourite investments has been in a dating app called JigTalk, which later rebranded as Jigsaw. It’s a personality-based online dating application whereby the user’s faces are covered with jigsaw pieces.
“You can’t see their faces until you’ve asked a certain number of questions,” said Fitchew. “The idea is that once you’ve asked eight questions it’s gone beyond what somebody looks like.
“I really look forward to getting my monthly email updates from the co-founder Alex Durrant.”
Fitchew is also a member of Manchester Business Angels. “That particular group is more interested in tech investing,” explained Fitchew.
He said one option new angels might want to consider to ‘spread the risk’ is co-investing with like-minded people.
Fitchew said most people’s understanding of investing comes from the BBC show Dragons’ Den.
“I think what they’re doing is angel investment but for me it’s a bit of a weird programme,” he said. “You wonder how many of those deals actually get through due diligence and happen but it makes good TV.”
Fitchew has one final piece of advice for wannabe angel investors.
“If you’re an entrepreneur the only sure fire way you’ve got in this world of protecting yourself is to do it for yourself,” he said.
“But if you’ve got to the stage where you don’t need to do that, but you still want to be connected, either philanthropically or because you want to make some money, it’s a great way to be in the startup community. This is the century of the startups after all.”