Tom Teichman - SPARK Ventures

Tom Teichman is the ultimate entrepreneurs’ entrepreneur. The former investment banker was the first investor in MAID (the supplier of online research for business), lastminute.com, System C, ARC, Argonaut and mergermarket.com, and now chairs SPARK Ventures. And he brought all of these to stock market IPO’s or trade sales. The total value was over £1 billion at exit.

For more than two decades Teichman has been investing successfully in technology companies and during that time his core ideals have never changed. “My principle is to treat people the way I would want to be treated,” he says. “It has served me well and I always try and apply it.”

It has ensured Teichman a place as one of the UK’s elite investors.

SPARK Ventures, the largest quoted early-stage venture capital company in Europe, has a portfolio that includes Brent Hoberman’s newest online venture mydeco.com, notonthehighstreet.com, which acts as a portal for thousands of small specialist retailing businesses and Kobalt Music Group which has become the world’s largest independent music publishing group.

Teichman is still driven by the prospect of finding and then backing new ideas from great people. “If the idea is very good and most importantly, the people are really great, it will work and we have a chance to make money,” he says. “Every team that I believed in at the start that has been successful, has been there at the end at exit, whether a sale or a float. Changing teams midway, rarely works well.”

The pattern of instinctively backing people has changed little since Teichman’s first investment in online businesses, before the Internet existed, in 1985. Then, as now, it was the person or team at the helm of the investee business who made all the difference.

MAID, run by the precociously young Dan Wagner, was way ahead of its time. It tapped into the potential of online in the mid-1980s, before anyone else was experimenting with businesses in that arena. The brilliance of the 21-year old Wagner captivated Teichman. Teichman was his first backer. “I believed in the person,” he says. “He was very bright and was a great salesman and entrepreneur always finding new solutions to problems of the day. ”

MAID went on to successfully float first on the London Stock Exchange in 1994 and then on NASDAQ in 1995.

Buoyed by his success, Teichman realised he could leave the world of investment banking and make a career out of backing other ventures. He set up NewMedia Investors in 1996, as the precursor to SPARK Ventures, and started to see the new wave of entrepreneurs who were setting up technology and internet businesses. NMI raised capital for Worth Global Style Network, lastminute.com, ARC and World Telecom and saw them all float or get sold at very significant uplifts. He also backed the very successful mergermarket.com as start up in 1999 that was sold to the FT for £120 million in 2007.

SPARK has been successful because its approach is slightly different to other venture capital firms, which tend to be dominated by former accountants and bankers.

 “SPARK is different because a lot of us have been entrepreneurs and we have got hands-on difficult growth company experience going back many years, and the team here have worked together for 10 years” explains Teichman. The CEO of SPARK, Andrew Carruthers, and the MD, Jay Patel, have been working with Tom since 1997, back in NMI days. "So our experience is far more than financial. It includes strategy, sales, marketing, hiring, M&A. When you get people from the world of banking they have rarely been in the thick of growing a real business with all the huge problems that involves. It gives SPARK a different view.”

And Teichman himself gives SPARK a very individual approach. He has a combination of skills that set him apart from other investors: he brings to the table an investment banker's ability to understand how the City works, and how to raise money, and an entrepreneur's grasp of the essence of a deal.

His ability to spot a good idea – and good people – has not wavered. Teichman says that every business, every day has issues that the founder has to deal with: people they have to convince; companies they have to sell to; colleagues and funders they have to persuade. “It is continuous battles,” he explains. And that is why Teichman believes it takes a unique set of qualities to be a successful entrepreneur.

He says he normally instinctively knows within the first 30 minutes or so of meeting people whether he wants to invest.  “It is all about the people,” he says. “It is their wiliness, their commitment, their sales skills and speed of thinking and ingenuity. They have made the difference every time. Will they be very okay in front of brokers and institutions in an IPO in five years?”

So convinced was he in the lastminute.com concept and in Brent Hoberman’s and Martha Lane-Fox’s ability to execute it, that he led an investment round of $500,000 in the company immediately. “With lastminute it took just 10 minutes. It was an electric idea, the team were magically sparky with great balance and wit and they were not asking a stupid price,” he says. “The downside was limited and the upside would be huge.” He went on to advise them on their IPO and then be lead backer of their new venture mydeco.com, 10 years later.

This might sounds like a leap of faith, but Teichman’s investment banking caution has not left him and he has backed stunningly successful ventures – and sometimes of course, those that are less successful. “As a banker you are used to spreading your risks – or they used to,” he explains. “When I have started to rationalise investment decisions too much, that has proved to be the wrong thing to do. I have almost always regretted that. And I have regretted not piling more money into something if it looks like it’s going to be incredibly successful. So I made much less on the successful ones than we could have.”