How much do you invest as a angel investor?
This
year I’ve invested nearly £1m on Dragons’ Den alone. I have also put
£5m into Red Letter Days and £8m into my own group. I like investing
cash for equity and I reckon I have put around £30m into my portfolio
of 28 businesses. And there’s no debt in any of those businesses apart
from a few director’s loans owed to me. My best investment from
Dragons’ Den has to be Levi Roots and his Reggae Reggae sauce – two
years ago he had nothing and now he’s a millionaire.
How have you reacted to the recession?
I’ve
spent more time in my businesses as a result of the downturn, which has
had an extremely positive effect so far. I know a lot more about them
than I did before, even though I used to get daily updates and reports.
I’m a reporting fanatic – I have a set of indicators to alert me to
which businesses need attention, but still I dropped everything and got
more involved to make sure there weren’t opportunities being missed.
My
telecoms group will see profits between 10pc and 15pc higher this year
– BlackBerrys and mobile phones are not luxury items, so there’s still
good demand.
Red Letter Days has surprised me – this is the
first time in nearly eight years it has made a profit. People are
deciding to pamper themselves because things are so tough. But my
recruitment services have suffered because companies are cutting their
budgets and trying to do their own recruitment if they can.
Have you learnt any crucial financial lessons through making mistakes?
I’ve
certainly learnt there’s nothing more important than cash – cash flow
issues are one of the biggest causes of company failures. I lost my
computer business when I was 29 because I gave credit to firms I didn’t
investigate. I lost my house and had to move back in with my parents
and then I lived in an office for six months. I started working with
Siemens and a few years later I had built up enough money to start up
Phones International. Now I have a great finance team across my group
who focus on making sure we are not exposed. If a new customer gives us
an order and wants credit, we go over them with a fine-tooth comb. You
have to make sure the money will be collectable.
How did your childhood experience influence your attitude to money?
My
father was an air conditioning engineer and we lived in a three-bedroom
terraced house in Langley before moving to a four-bedroom house in
Maidenhead, where my parents still live.
There wasn’t a huge
amount of money in our house and I grew up appreciating the simple
things in life. It was only as I entered my teens that I started to
look at how hard my father worked for relatively little return and
began to feel I wanted to earn much more than him. He now works for me
looking after my property portfolio – the mechanical services, air
conditioning and buildings.
Now that you are better off, are you happier?
I’ve
read a lot of people answer this saying no, and that money doesn’t make
you happier, but I disagree. I’ve been in the situation where I didn’t
have enough money and I really felt it. Having it has led to the
happiest moments in my life – as soon as I could afford to, I told my
mother she didn’t have to work anymore. I said I would give her more
each year than she was currently earning so she didn’t have to work
past the age of 70. That was a really satisfying thing to do.
Your children will one day inherit from you. What are your thoughts about that?
I
have set up a trust fund designed to keep them incentivised to work –
they won’t automatically inherit large sums. If they want to start a
business, then as soon as they begin earning more than £50,000 in
today’s money, the fund will double their pay, and if any of them want
to go into the charity sector, they will be rewarded even more. I have
put a lot of thought into this and I’m not saying I have it 100pc
right, but I’m quite pleased with it.
What is your relationship like with the other Dragons off air; ultimately you are competitors?
When
we’re in the Den we are competitors – there’s bound to be some
arguments when you put such strong egos in a room together! Ultimately
we all get on really well and some of my favourite times are when the
cameras stop rolling in the Den and we have a laugh together. Theo and
I are particularly close; we have made several joint investments and
co-own Red Letter Days. Our different approaches are really beneficial
for the businesses we work with. Duncan and I haven’t always seen eye
to eye but last series we got on very well but who knows what will
happen when we start filming series seven later this year!
Are you cautious with money or liberal?
I’m
a bit of both – I can certainly splash out and spend on nice cars and a
big house, but I’m very cautious about my investing and everyday
expenditure. We’ve just moved house, for example, and I got three
quotes for our new curtains and played one supplier against another to
get the best price. Just because I’m a millionaire, I don’t want to be
taken for a ride.
What new house have you bought?
I’m now
living on a beautiful 200-acre estate with an eight-acre lake. It’s the
sort of lake you only find in parks and I never thought for one minute
I might end up owning one. I bought the estate last year because I’d
been looking for something nicer in this area for years. Prices have
fallen so it’s a good opportunity to snap up bargains, even at the top
end of the market. It cost me £12m and we are improving it so when I’m
finished it will probably be worth £20m.
Do you try to conceal how much you earn to make others feel more comfortable?
I
have seen celebrities whose friends change as they become more
successful, but my friends haven’t changed over 30 years. I’ve still
got some of the friends I had when I was 14 and I see them regularly
with their families. They accept me as I am and I don’t need to conceal
anything.
What has been your best buy?
I
have recently bought a company on the market called eXpansys.com, a
quoted business on AIM. I’ve never bought listed companies before this,
but I purchased around 20pc a couple of years ago and now I’ve
increased that to around 81pc for £3m. They’ve been through trouble
recently and were losing a couple of hundred thousand pounds a month,
but they are in my market and I believed I could help. I’ve been
working on turning them around and I honestly think it could turn out
to be my best-ever buy.
On a more personal level, it would have
to be the day I bought my dad a Rolex watch for £20,000. I’m very close
to both my parents and dad had always wanted a nice watch. The pleasure
I derived from giving it was indescribable.
And your worst buy?
Over
the 10 years leading up to 2001, I invested about £150,000 in shares,
mostly in technology stocks before the dotcom crash. I’ve still got
some, but they are only worth half what I paid. I stopped putting money
into shares in 2002.
How do you prefer to pay for things, cash, card or cheque?
I
prefer to use card. I carry a couple of hundred pounds in cash for
small things, but I’m a card user if I can be. I have an Amex Centurion
Black and a First Direct Visa. The Centurion has no limit and I’ve even
bought cars on that. I always clear the statement at the end of the
month.
How do you tip? Are you an easy tipper or do they have to work hard with you?
Without
question they have to work for it – I will not tip if service is poor.
I don’t mind if someone accidentally spills something, but if they give
me bad attitude I’ll go as far as asking for a free meal. You’d be
surprised how often the attitude can be amiss, even though they might
know who I am.
What’s been your greatest extravagance?
Hiring
Necker Island from Richard Branson for a week exclusively. It cost
£250,000 and I took around 30 friends there on my 40th birthday three
years ago. It was wonderful to tell them where we would be going and
watch them almost fall over in surprise.
This interview originally ran in our new sister publication Angels for leading advice on raising money for your business as well hints, tips and comment from leading entrepreneurs and investors sign up for an annual subscription to the monthly magazine for FREE today by clicking HERE
Peter Jones will be launching Small Business Week on October 19. To find out more, visit www.sbw09.co.uk
