The World of Angel Investing: Mike Edwards

Our very own CEO, Mike Edwards was recently interviewed about his story and role as an Angel Investor within the Vancouver startup community. Below is the interview by guest blogger and CEO of Globify.meAlex Mason.  

Who is Mike Edwards?

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I sat down with Mike Edwards , CEO of LX Ventures and veteran entrepreneur, to get a better understanding of how and why he became an Angel Investor.  Edwards is a successful serial entrepreneur, proven Angel Investor with multiple exits to top names, and is one of the most recognized Angel Investors in Canada. I have provided a full bio at the end of the article for those interested in the details.Despite Mike’s profile in the tech world and his countless obligations, our short interview felt like a casual walk down memory lane, as Mike reminisced about his past challenges and successes  with a humble demeanor. Over the last 20 years Edwards has worked on various entrepreneurial projects before unsuccessfully retiring. Following his failed retirement, some traveling and a lot of thinking, he returned to the entrepreneurial scene as an investor. He has definitely seen the good and the bad of entrepreneurship.Mike Edwards fell into entrepreneurship over twenty years ago when he was a mountain bike racer. He was competing as a pro, but wasn’t ranked high enough to make the necessary income to support his family. So, he thought he would stick to what he knew and get a license to import bikes from France into North America. After doing a bunch of due diligence, he put an argument together for following through with his venture. He then tapped out all of his resources and credit to get his venture moving. After begging and borrowing money from his friends and family, it turned out that he couldn’t sell the bikes in North America because, “the bikes sucked”. After all of his work, he realized that he had talked to everyone except for the people who were actually going to buy the bikes. Mike said it very clearly,  “The bikes weren’t good enough to do the normal distribution which is from me- the assembler, to the wholesaler, to the retailer. So I was hooped.”

What does an entrepreneur do when stuck between a rock and a hard place?

“I had all this money that I owed to friends and family. Bikes that wouldn’t sell. The lucky thing for me, which has to do with entrepreneurship, is turning bad luck into good luck. The lucky thing was that it was 1997 and there was the internet. So there was a way for me to sell bikes one by one to customers. So I built websites, I built blogs, I talked about the bikes, I engaged with customers one by one and sold all the bikes off. I learned a bunch about the internet and a ton about business. It all comes back to your force of personality and twisting will to work in your favor.”

What was your most memorable experience from that venture?

“In the early days, my bikes were in California and I could not afford to keep the warehouse in California. I needed to sell them one by one so I got my last line of credit and I arranged for them to be shipped up to Blaine, Washington which is right across the [Canadian] border. On a nice crisp morning the transport truck showed up at 7am full of my bikes and I was alone. The truck driver doesn’t help out. So for the next 14 hours I unloaded bikes and stacked them. During that time a huge hail storm came through. I had 100 bikes out and the heavens opened up. I was as  exhausted as you could be and this guy wasn’t waiting around. It was a moment that tested my resolve and tested my soul.”

Why are you so interested in start-ups?

“I like the high growth early stage company space. I think that there is a distinction. You are looking for early stage companies that have the potential to be high growth. You want to find them early in the cycle so that they are still affordable. Growth becomes very expensive very quickly, so you have to find them early. I think that it is kind of a misnomer. Start-up people talk about start-ups, but we are not really after start-ups, we are after high growth early stage companies. It's incredibly exciting, to go from initial product launch to the first customers to many customers. You figure out distribution channels and you figure out problems with scaling. Those are what become exciting and interesting challenges and problems.”

What motivated you to become an investor?

“I was retired and it was time to go back and start doing something. Retirement is over rated. My biggest mistake is retirement, my biggest failure is retirement, I suck at retirement.  I was trying to determine what to do when I came back- it was late 2009 early 2010. I was thinking about and researching something mobile, something app related. So I went to Europe to figure out what that would be. After thinking about it, I realized that I was more motivated to become an early stage investor and explore more of a portfolio approach instead of a one entity approach.”

What was the biggest thing you learned when you became an investor?

"Biggest learning is being a judge of character. You need to make decisions early in the cycle based on personality. You have to learn to recognize personality traits that are reflective of success and that are the success traits that you are looking for in entrepreneurs. You have to figure out that correlation very quickly, and it is difficult to know what those correlations are and those data points are, so having to figure that out is the hardest part."

Is being a good investor trial and error? Or can it be learned?

"That is a lot of the experiment here [at Launch Academy]. Figuring out what can be taught in a peer to peer environment. Being motivated by your peers... is it nature versus nurture? Do you have it? I would say now after investing for a little while, you actually end up by default becoming more metric focused. At some point early in the cycle, you fall in love with the entrepreneur. You say this guy or girl rocks and I want to be part of it. Sometimes it works and sometimes it doesn’t. But now, especially now, because it is so efficient to build something that can get a proof of concept, it is easy to be an entrepreneur now v.s. what it was 10 years ago. I would argue on the other side of the coin, that it is also becoming harder because barriers to entry are much higher. I raised money in 1999, 2001, and 2004 on a concept. You would be hard pressed to raise money on a concept now... you shouldn’t be able to raise money on a concept now. That is why demo days are so important."

Which of your current projects are you most excited about?

Right now I am most excited about LX Ventures (see next paragraph for details). I think that it is a really interesting opportunity to explore the bridge between private and public markets. As an entrepreneur, you are looking for opportunities that have historical imbalances. Historically, we have never had so few publicly traded technology companies on the Canadian exchanges, and exchanges worldwide. The exchanges for tech companies have historically low liquidity and low valuations. Knowing this, you are looking at opportunities with a high beta. When the switch flips and early stage technology companies are rewarded in the markets, and there is liquidity and the multiples are consistent or equal to what is going on in the private markets, that will be massive. So if you are early in the cycle, that is where you can make the money. I want to be amongst the first people that are exploring that imbalance. If I am right, I will be rewarded. If I am early, I'll get killed.”

About LX Ventures

LX Ventures (TSXV: LXV) is a start-up technology incubator based in Vancouver, BC. The Company gives investors the opportunity to access leading early stage technology projects founded by innovative and proven entrepreneurs within the sector. This unique vehicle gives innovative new technology companies access to capital and distribution. It gives investors liquidity and access to the investment strategies of proven early stage tech investors. It is among the first Companies of its kind that seeks to be a bridge to investors who want exposure to the start-up technology sector where companies like Facebook, LinkedIn, Instagram and many others, have created wealth for shareholders in the private equity sector.

About Mike Edwards

Mike Edwards is a lifelong entrepreneur with over 20 years of experience and a wealth of knowledge in the technology industry. He was named the 2012 BC Angel Investor of the year – a title that aptly describes him and his track record of 50 investments since 2010!

He has a keen eye for great entrepreneurs, which is evident from his investments in Punch'd (sold to Google in July 2011), Artsicle, Summify (sold to Twitter in January 2012), LaunchRock, Lover.ly, Skyscraper, Dave McClure's 500 Startups venture capital fund, and many more.

Currently, Edwards holds the position of CEO and co-founder of LX Ventures. He is sharing his wealth of knowledge and his network in order to support early stage companies as the Executive Director of GrowLab, Western Canada's preeminent startup accelerator, and  co-founder of Launch Academy, a pre-accelerator program that helps entrepreneurs execute on their ideas and business plans.