Former financial advisor Michael Whitfield explains how being an IFA led him to becoming chairman of an investment fund, and why investing in high-tech startups appeals to his sense of innovation, adventure and disruption.
When he became an IFA in the 1980s, Michael Whitfield would likely have thought you mad if you’d suggested his future lay in technology and angel investing. But now decades later he’s chairman of Velocity Capital Advisors, which runs an EIS fund encouraging investment in high-growth tech startups.
He keeps a diverse team that’s passionate about the power of “brilliant innovative tech startups” to drive the UK economy forward and create jobs. Whitfield also draws on his own life experience to offer advice and support to the Velocity portfolio. He also puts his money where his mouth is and invests.
Although it seems like light years away, it was his skills as an IFA that set Whitfield’s course. His valued advice meant many of his early clients stayed on board. He offered ongoing financial guidance and looked on as a number built businesses, becoming MDs and FDs, and in the 1990s he found himself at Alexander Forbes advising C-suite executives and their companies.
Just as the dot-com bubble was bursting in the late 1990s, Whitfield became restless. Having climbed the ladder to European MD, he decided to jump off the top into the unknown. He was pushed by something that had been bugging him for a couple of years.
“It was an itch that I started scratching in 1998 and by 2000 I just had to do it,” he says. “I was spending my time carrying out reconciliation on spreadsheets and was sure technology could help. So I had this idea to turn benefits administration from an offline into an online process. I was in my early 40s and thought: ‘If I don’t do this now I never will.’
Having worked with lots of entrepreneurs, now it was Whitfield’s turn to give it a shot. So, with the dot-com slump well under way, he decided to swim against the economic tide and launch a technology business. “My colleagues at Alexander Forbes thought I was barking mad!” he recalls.
However, it seemed that Whitfield had hit on something. As he says about the high-growth tech startups he now invests in, which are traditionally viewed as high risk: “If you have a brilliant idea that can disrupt an existing market, or you see a gap in the market that makes people’s lives a lot easier, backed with passion, leadership skills and financial knowhow, no matter what the prevailing wind, then you’re likely to succeed.” And these are just the criteria Velocity uses when selecting companies for its portfolio.
It turned out that, as Whitfield suspected, a lot of people had the same itch to scratch, but in his wildest dreams he didn’t think it would be millions of them across 10 countries – and his company, Thomsons Online Benefits, provided the solution with Darwin software.
“I learnt so much from growing my business in my front room with my co-founder Chris Bruce, from those early days at Alexander Forbes, through to when I sold it to Mercer in 2016,” he says. “After the sale, people kept saying “good luck in your retirement”, which really annoyed me – I certainly didn’t feel like an old bloke, ready to put my feet up with my slippers on! I neither wanted to retire, nor work for an American corporate, but I felt I had lots of knowledge to give back.”
During the growth phases of Thomsons, Whitfield was exposed to a number of different investors. There were those who just put money in and did nothing. Then there were those who invested, said they’d do something, but never did. Very occasionally he came across an investor would actually give him invaluable hands on help with this business.
“That’s what I decided I wanted to be,” he says. “So I’ve been investing in companies in the tech space from early stage to around five years old. I apply my skills to help them grow, swapping my CEO role for being a supportive mentor and business advisor.”
Whitfield met the senior team at Velocity through an old Thomsons contact. Used to the stuffiness of fund managers, he was immediately impressed with their passion, spirit and off-the-wall quirkiness. They were unlike any of the people he’d previously met running SEIS or EIS type investments.
“Velocity appeals to my sense of innovation and adventure,” he says. “There is zero defensiveness, zero arrogance, and a great deal of humility. And we have a lot of fun too! I would never have been chairman of a boring, staid investment business. We are passionate about choosing the right businesses to invest in. We look for those that are disruptive, have great leaders, have the opportunity to scale, and can globalise. As an investor, I think being exposed to disruptive new businesses is crucial to give yourself the best chance of a strong return and it’s an amazing experience.”
What gives Whitfield enormous pleasure is the current high level of innovative businesses that he’s seeing day in, day out in the UK. As far as he’s concerned, you can forget Brexit and the vanilla politicians who run the country, because in the trenches there are people, both young and old, coming up with rip-roaring ideas.
“We’ve moved from being a nation of shopkeepers to being innovative disruptive business makers – which I find incredibly exciting!” he says. “If this innovative entrepreneurial spirit is nurtured and invested in, we’ll benefit hugely as a nation.”