Meet the investor: Konstantin Sidorov
11 March 2022
Konstantin Sidorov, a long-time angel investor and the Founder and Chief Exec of the London Technology Club (LTC), talks to us about his experience as an entrepreneur and an investor.
Konstantin was an early investor in companies such as Spotify and Lyft, and went on to set up the LTC as a platform predominantly for high net worth individuals (plus some VCs and institutions). Konstantin and the LTC have a particular focus on AI, fintech and the mobility sectors. Together with London Technology Club members, Konstantin has invested in the likes of Airbnb, DiDi, Agronomics, PicsArt, Klarna, Rollick, and Reflektion.
Q: As an entrepreneur, what was your experience of business angels? In what ways did they give you support and what could they have done better?
A: I have enjoyed some excellent experiences with business angels, and endured some disappointing ones. Like all areas of business, you have some people that are effective and others that promise but don’t deliver. It’s important as a startup to spend time nurturing business angel relationships and getting to know their motives, character and how they are looking to assist you. That takes time. So firstly, those business angels that aren’t investing the time to get to know founders, the company and working out how they can best assist (especially with more than just capital) I’d be wary of. I believe I have built long term relationships with people that can often outlast one company. Those are the types of business angels I worked with in my early days and they have remained friends, colleagues and trusted partners.
Q: How have you found the switch to being an investor?
A: First and foremost I have always been interested in technology, with my businesses and now as an investor. So it’s been very natural to have my focus in technology companies. I apply similar principles as an investor as I do as a business owner. I look for founder track records, defendable IP, clear revenue generation, solid financial projections rooted in realistic assumptions etc.
Q: Your expertise is in IT and technology – are you ever tempted to invest in other sectors?
A: I do have just one investment outside of IT and technology. However, my priority and focus is technology, which spans most sectors nowadays... It’s hard to think of a sector that hasn’t been disrupted by technology and the types of members of the club, our VC partners and network are all likeminded tech pioneers and enthusiasts so nearly all discussions are about technology!
Q: You have been an early-stage investor in some incredibly successful companies but presumably there have been failures too; what lessons have you learned from these extremes?
A: It is almost impossible not to have failures, failures are part of progress. Its ensuring that you avoid similar pitfalls in the future and that the learnings are captured and shared to help others also. My advice to founders is to always be transparent with investors as the earlier the challenges, the quicker many of them can be overcome. It’s worse to hear about something too late to try to help do something about it.
Q: Do you have many investments which don’t hit the headlines but give you personal satisfaction?
A: Good question. Many investments don’t hit the headlines. The aim of investing is to provide capital to a business in order to accelerate its objectives, so there is always personal satisfaction when I or LTC members invest in a company that then demonstrates strong ROI from the capital it was provided. Whether that’s hiring good people, new product offerings or launching marketing campaigns. It’s still a business based on people and relationships, so personal satisfaction is gained from progressing and deepening relationships with founders, VCs and our members.
Q: What inspired you to found London Technology Club?
A: A member said to me that venture capital investing is an access class not an asset class which is true. The challenges I faced as an investor in London I saw others were also facing therefore the club started informally as friends sharing ideas and opportunities. I quickly realised there was a demand for people to come together, co-invest together, share ideas, experiences and expertise. London is the capital of member’s clubs but there wasn’t one for tech investing. So it organically grew from friends to friends-of-friends to now about 90 members including many top VCs and trusted institutions.
Q: Do you work with other groups or networks?
A: We do, we want to be elite not elitist. We are, for example, expanding to Dubai and collaborating with our partner Global Ventures there. We have had a long-standing relationship with the likes of the Milken Institute, many leading VCs and world top banks. We are based above the iconic wine club 67 Pall Mall which is a partner that adds a lot of value for our members… We are focused on ensuring we create the conditions for first-class investing- so groups, networks and partners that are likeminded and enhance our offering are always welcomed.
Q: How do you feel when start-ups move beyond the early stage realm? Do you worry about the speed and scope of their growth when corporates get involved?
A: Startups need to think about how corporates can accelerate their business not just provide capital. The ideal mix is strategic capital that fulfils multiple purposes… for example new business opportunities, relationship building for future rounds etc. We want speed and scale.. corporates can often facilitate that as much as private investors. Each company journey is different and so often getting corporates involved can help.
Q: What advice would you give to companies seeking angel backing?
A: Plan early as it takes time, look to find a position of strength based on business fundamentals: product-market fit, strong team, defendable IP/ moat, look for strategic partnerships early that can accelerate the business etc. Be transparent. Get out there and develop relationships so that when it comes to the ask for capital, it’s not a cold call, it’s the next step in an existing relationship.
Q: What advice do you have for first-time angel investors?
A: It’s important to work out firstly your appetite for risk, secondly your investing fundamentals… then always go back to those for a disciplined approach. It’s being open minded to trust your gut instincts, vision but also a healthy mix with realism and core investment rigour. Try to be involved in the companies where you invest and help them. Angel investors have always had the challenge that most companies at the start of their journey are unproven and based on a vision or a novel solution to a problem. Often it’s a leap of faith in the idea, the founder, the technology… something angel investors have to get comfortable with in order to enjoy investing!
Q: EIS or preferred shares?
A: Depends on the opportunity but prob deferred shares
Q: Angels or VCs?
A: VCs but I am biased as our focus is scale ups and most of our deal flow is linked to our VCs
Q: Save the planet or find the final frontier?
A: Save the planet but final frontier can often be applied to saving the planet
Q: Several small rounds or one big investment?
A: Horses for courses, impossible to say! Whatever works best to maximise the outcome.
Q: Unproven with potential or seasoned entrepreneur?
A: Our typical sweet spot is seasoned entrepreneur but we’ve backed unproven with potential also!
The value of your investment may go down as well as up and, therefore, your capital is at risk. Investments in venture capital funds and projects are particularly risky and you may lose all your invested capital so you will need to ensure that you are able to afford this loss. Investments should only be made by investors who understand the risks. London Technology Limited (FRN: 821696) is an appointed representative of Red Sky Capital Solutions LLP (FRN: 530676) which is authorised and regulated by the UK Financial Conduct Authority.