Alexander Selegenev has 15 years of experience in investment banking and venture capital. He currently is Executive Director at TMT Investments, a vc firm investing in high-growth, internet-based companies across a variety of sectors. He led the company’s IPO process. In addition to investing and portfolio management activities, Selegenev is also responsible for the overall management of the firm, including capital raising, regulatory, corporate governance, financial reporting, investor relations, PR, employee and advisor relations, treasury and other corporate functions.
Alex answered our questions about the firm, its strategy and shared with us meaningful thoughts about his activity.
FinSMEs: Can you introduce us to TMT Investments? What does it serve to do?
Alex: TMT Investments PLC is an investing company focused on earlier-stage, high-growth, internet-based companies across a variety of B2B and B2C sectors. Founded in 2010, TMT has invested in approximately 40 companies to date, many of which are based in Silicon Valley. The company’s objective is to generate an attractive rate of return for shareholders – predominantly through capital appreciation. The company is traded on the AIM market of the London Stock Exchange.
FinSMEs: What’s TMT Investments’ overall strategy?
Alex: Our overall strategy is to identify and invest in promising startups, helping them grow into great businesses. Among other strategic goals, TMT seeks to identify companies that have outstanding founders, proven revenue traction, and high growth potential.
FinSMEs: What are the advantages of this strategy?
Alex: We believe that for the type of earlier-stage, fast-growing startups we target – which operate in extremely competitive and fast-changing environments – an outstanding founder’s ability to grow their startup into a viable and sustainable business is probably the single most important part of the “magic formula” for success. For that reason, we rarely want to become even a significant minority shareholder in our investees, let alone a controlling one. This targeting of founder-driven startups is also why we’ve decided not to invest in startups where founders own less than 50% of the company. Effectively, this means that to invest successfully in our target space, we must be as good at people reading and recognizing those outstanding founders as we are at analyzing products, markets, and tech trends.
In addition, our team is comprised of serial entrepreneurs who have collectively launched dozens of Internet, media and software startups, building them up from scratch into successful multi-million businesses. We have been at the coalface of running startups and have invested in many successful startups. So, when we say “we bring more than money to the table” we’re telling the truth – we have a deep well of knowledge based on experience to leverage.
FinSMEs: Let’s talk about startups…What do you like to see in entrepreneurs?
Alex: We like entrepreneurs who can clearly answer this question: “How do you plan to scale your business?” Entrepreneur pitching any VC should demonstrate a rich understanding of their main growth drivers, and how precisely they would apply new resources – the money, people, connections, etc. that we might assist them in acquiring – to spur their growth.
For example, at our initial meeting with the CEO of ScentBird, she communicated such a deep knowledge about their growth and their plan for scaling – and with such clarity – that we were really able to make our decision to invest within just a few minutes. We want to see that entrepreneurs have done their homework, and show up ready with stats and a detailed view of the space they’re in, their competitive marketplace, and where we fit into that picture.
FinSMEs: What don’t you like?
Alex: Well, honesty on the part of the entrepreneur is something else we do like to see – but sometimes don’t. Whatever your true opinions are, go ahead and let them be known and help us understand them. Certainly don’t second guess yourself and try and tailor your answers to fit what you think we want to hear.
What we don’t like is hearing something other than simple and straightforward answers to the questions we ask. When we ask about your revenue so far, go ahead and tell us if you’ve only been selling for three months and it isn’t there yet. We need those numbers, and if, instead, you start telling us about projected revenue or something else, you didn’t answer the question we need answered and we’re not seeing the straight forwardness we want in our relationship. Too often we’ll see e-commerce startups, in particular, making this mistake in initial meetings, failing to provide clarity between sales numbers and actual revenue. We do need a clear understanding to move forward with an entrepreneur properly, and it’s much preferred to have it easily provided.
FinSMEs: Do they make mistakes when pitching? Can you talk about some examples?
Alex: It’s far too common than it should be that an entrepreneur will speak only about their product, while neglecting the larger story of how they grow and plan to scale. Of course, we understand that for the entrepreneur their product is their baby – it might be progressing as intended and they’re proud of that. But not many startups see any kind of success unless they really know how to grow. We need to hear that persuasive story about how you’ll scale. We need to be sure you know that story by heart, complete with all the details that make it plausible and real, so that we can believe it too. And like with any storytelling, it’s also a big mistake to be boring. Don’t be afraid to show some passion. Prove you can sell. An entrepreneur is a salesperson – you need to sell us on your story and inspire, just as you need to with your own team, your distribution channels, the press, and your customers.
FinSMEs: What do you think about growth models? Is it sometimes better to slow growth or always keep on accelerating/scaling as quickly as possible?
Alex: Growth is most often great, but strategically throttling growth can make sense for startups in certain circumstances. Growing pains that startups run into include the risk of running out of money, or similarly, engaging in growth that is too expensive to sustain as they scale. A startup may foresee cost-efficiencies due to reliance on economy-of-scale that just don’t pan out in practice. When this is true, it can be absolutely the prudent move to downshift growth, work to discover new and more efficient growth drivers, and then re-approach using a fresh business model with better potential. Entrepreneurs are all about invention – and reinventing the business is often part of the job early on. Then, when the way forward is open, they can put the growth pedal all the way down.
FinSMEs: Tech trends and sectors – what do you like right now and recommend for the future?
Alex: We currently see a lot of potential in the following areas: SaaS tools for businesses, cloud solutions, mobile software applications, social-discovery shopping, and advertising technologies.
So many technologies these days are “mobile” or “in the cloud”, but some entrepreneurs manage to come up with extra-exciting solutions in those areas. E-commerce, in general, – and “social shopping”, in particular – have been developing at an amazing pace. Following our recent successful investments in Wanelo, Le Tote, and ScentBird, we are particularly excited about the rapid growth of “discovery shopping” models, especially those that are subscription-based. We’re also convinced there will always be demand for new solutions that help businesses increase productivity, and our successful investments in SaaS-based Wrike and Pipedrive keep us on the lookout for new developments in those areas, especially when it comes to SMEs. Although the digital advertising space is tricky at the moment, some companies (such as our investee company Virool) are doing a great job on capitalizing on the industry’s impressive potential. Overall, what draws our focus to particular technology areas is the attractive underlying growth rate each is currently experiencing (or that we believe will be experienced in the future).
FinSMEs
11/11/2015