Sunday 02 March 2014 10:37 pm

The Rainmaker

Annabel Palmer talks to serial entrepreneur and renowned investor Robin Klein about his career’s many successes – and one missed opportunity

ENTREPRENEURS often complain that access to capital is an insurmountable barrier to getting their business off the ground. But Robin Klein – the entrepreneur and venture capitalist – thinks they’re lucky. “There has never been a better time to be an entrepreneur in this country. There is a huge amount of early stage capital available for the right businesses and founders. What’s more, entrepreneurship is at last being recognised as a key, primary, strategic vector for government.”

LAND OF OPPORTUNITY
And Klein is speaking from experience – when he moved to the UK from Johannesburg in 1976, the climate was a little different. He left South Africa because he saw Britain as a land of opportunity. “I had studied here during my engineering degree, and I loved it. Once my children were born, I knew I had to move here.”

But trying to build his first company, an electrical appliance manufacturing business, was a battle. None of the support networks which can now be accessed at a mouse’s click existed back then. “I remember going to the Yellow Pages to find suitable suppliers of the most mundane things,” he says. “There was no one to ask for help.” Today, a new incubator space crops up in the city almost weekly, and regular seminars, meetings, and social events give entrepreneurs a far more developed support infrastructure.

So the changes that do need to happen are at the margin. The Entrepreneur’s Visa is a step in the right direction, but we need more liberalisation, Klein thinks. Entrepreneurs’ Relief (a capital gains tax relief available to taxpayers who make a qualifying business disposal) has been positive, but should be widened so that the teams within startups can get similar tax breaks on their options.

THE RIGHT VISION
Klein began his investment career in earnest in 1998, when he co-founded The Accelerator Group (TAG) with his son Saul. Through TAG, Klein has invested in heavyweights including Wonga and Zoopla. Saul has since founded Seedcamp, the micro-seed fund which invests in startup companies, with TAG’s backing. It’s an unusual partnership, but one that works. “I’m an engineer and Saul is an English graduate, so we have very different ways of looking at things. But we share common principals and approaches. We both have empathy for the founders of new companies, and an understanding of the hoops they have to jump through.”

In 2010, Klein joined Index Ventures as a venture partner, and his drive to support and help build the European technology startup ecosystem shows no sign of abating. But what inspired him initially to pursue a career in early-stage investing? “For me, it was a very personal thing. I have always loved the internet. And I saw, in my early career, where it was going.” The company Innovations, of which Klein was chairman and chief executive during the 1990s, was responsible for Britain’s first e-commerce transaction.

CLOSE SHAVE
The World Wide Web turned 25 last week, and over the course of its short history has seen various highs, and one catastrophic low. And while Klein emerged unscathed from the dot-com bust of the early-2000s, he was lucky. “I could easily have burnt out. But I was very fortunate to have invested in Lastminute.com. I’ve often said that, if it wasn’t for that company, I probably would have packed up and gone elsewhere.”

Nonetheless, he thinks the phenomenal rise of technology witnessed in the past few years is a very different beast. In his view, the fundamentals remain very strong, and the move from offline to online is continuing apace at both consumer and business level. With Facebook’s $19bn deal (just one year after Google reportedly made a $1bn offer) to buy WhatsApp pushing the value of total tech deals this year to over $50bn, some are asking whether we’re seeing another bubble. “Certainly, I think markets get overexcited sometimes. Maybe valuations are too high. But this doesn’t change the fundamentals. We are now seeing great tech companies being created all across Europe.”

EYE FOR OPPORTUNITY
Klein’s portfolio of thriving startups demonstrates his eye for potential, even in the early days. But it’s the founding team that’s the biggest indicator of whether the business will be a success, he tells me. “I look for people with a mission, who understand that it’s all about creating great products that customers will love and use extensively.”

Each company in his portfolio has shared that common characteristic. “But, importantly, they were flexible and open. As an entrepreneur, things will never go the way you plan.” Mind Candy’s first product, so Klein says, was a “complete dud. And we as investors were very worried that the company would have to close its doors. But Michael [Acton Smith, the founder] recognised that the product needed to change, reinvented it, and we went with him.” Mind Candy’s flagship game Moshi Monsters has over 80m users around the world today. Its revenues rose to £46.9m in 2012.

Klein also looks for early signs within social media that customers are responding positively to a new product or service. “Take Transferwise. It’s a pretty unexciting, functional business – a fund transfer service. But watch what people say about it – how thrilled they are to save money on foreign exchange and how willing they are to tell other people about it. For me, those are exciting businesses.”

LEARNING CURVE
It’s a question the man who made countless tech successes possible must get asked constantly, but what advice would he give to budding entrepreneurs? “Focus less on funding, and more on the fundamentals. On the web, if you’ve got an idea, you can build a prototype for very little. Do that, get the product out, and get the right feedback from your consumers. If you do that, you will look very different to a potential funder. I give high marks to someone who has achieved a lot with very little – because they’re likely to apply that same degree of initiative and scrappiness when they then come to build the business.”

But for the many early-stage companies that Klein has helped grow into game-changing global businesses, there is inevitably the odd missed opportunity. “Pinterest,” he says. “I just didn’t have the vision to see what it could become.”

CV ROBIN KLEIN
Company name: The Accelerator Group (TAG). Klein now runs Index Seed (Index Ventures’ seed fund) in partnership with TAG

Founded: 1998 (TAG)

Job title: Co-founder, TAG. Venture partner, Index Ventures

Age: 66

Born: Johannesburg

Lives: London

Studied: Engineering MSc at the University of Witwatersrand in Johannesburg

Drinking: Diet Coke

Reading: Japanese

Reading: An Officer and a Spy, by Robert Harris

Favourite Business Book: Return to the Little Kingdom, by Mike Moritz

First ambition: To own and run my own business