Last year saw the demise of iconic retailers Top Shop and Debenhams. That both were purchased by online-only retailers is telling.
It’s clear our shopping habits have changed forever. We shop online at any time and from anywhere.
This might seem to have nothing to do with early-stage investing, but to assume that would be to miss the bigger picture.
The ubiquity of online shopping is not limited to consumer goods; it is a vital of the process for all types of buyers for all types of products. Whether you’re buying business software, a new car, or equity in a business, the online channel is a crucial part of the journey.
All buying cycles start with the online channel
A Google study confirmed that 92% of people begin their buying journey online. This is regardless of the context or the product.
There is a persistent belief in the early-stage investing space that High Net Worths don’t like to do things online. However, studies show this is not the case. PWC found that 98% use the internet for up to three hours every, single day.
And so, to choose not to offer an online channel for deal discovery and evaluation, is to deny investors something they’ve come to expect.
But what about loyalty?
Some may feel this is not a problem as they have loyal long-term investors. I suspect the directors of Debenhams may have felt the same despite the reality of digital-first players eroding their customer base.
There are Asos equivalents in the early-stage investment market, for example, digital-first investment clubs like Envestors Private Investment Club, Chorus or Angels Den. They are delivering the always-on, self-service access to deals that today’s investors want.
Amazon has led the way in retail with their mastery of consumer data. They capture data from every interaction with their customers and when combined with trend data they can help customers discover and evaluate products and ultimately make a purchasing decision.
Do angel networks, reliant on face-to-face meetings, have the same ability to judge what their investors are interested in?
Undoubtedly personal relationships are of vital importance in early-stage investing. However, networks can use data to strengthen their existing client relationships.
Online platforms allow the collection of data on investor interests. This includes interests they express directly plus those you can infer from their behaviour online. Combining macro and individual level data can be invaluable in catering to an investor’s needs.
Data analysis might identify that an investor has started to browse deals relating to cleantech, though they have not openly expressed an interest in this space. This gives you an opportunity, for example, to connect them with knowledgeable, experienced cleantech investors or to invite them to relevant events.
The lesson from retail is that the traditional can very quickly be replaced by the new. And this is not new for the sake of it. Displacement happens when a superior product or service is offered.
The reality for early-stage investing is that investors and companies raising finance now expect a digital-first experience. This means that investment clubs must evolve alongside their investors if they hope to keep them engaged.