Investor interview: RLC Ventures

We chatted to Reece Chowdry, award-winning founder of RLC Ventures, about what made him start his own VC firm, what he looks for in an investment opportunity and his thoughts on tax relief and equity crowdfunding.

1. Could you tell us about RLC Ventures?

RLC Ventures is an award-winning venture capital firm with a thematic approach in high-growth potential, pre-seed and seed stage companies in five verticals: Proptech, Fintech, Enterprise, AI and Social Impact. To align our investments with the values held by our founders, we commit to the “Venture Impact Pledge” by donating a portion of our exit profits to a cause of the founder’s choice. We are the first VC in the industry to do this. Our awards include best newcomer to the angel ecosystem by UKBAA, and we have been nominated for European Seed Fund of the Year. And RLC Ventures has featured on major media outlets such as Channel 4 News and The Sunday Times.

2. What led you to set up your own VC firm?

From a young age, I have been interested in investing in early-stage companies. I made my first tech investment when I was 13, purchasing Apple stocks before Apple became ‘cool’ again. From an operational point of view, I just loved the jigsaw puzzle of business and from the age of 15, every summer, I would work in small businesses run by friends and family – from retail companies in Scotland to tech companies in Silicon Valley. It gave me a fantastic grounding in business.

I started my career as a Management Consultant at EY where I chartered as a Management Accountant. I helped large businesses in financial services transform their digital propositions. This gave me greater insight into the inefficiency and lack of innovation in large companies, particularly banks, which made me more passionate about solving this inefficiency. It also made me realise that my skills and passion were best suited to the Venture world.  

3. What do you look for in a new investment opportunity?

We look for three things in a new investment opportunity: team, market, and product. We look at how committed you are as founders and whether you have the correct experience – and we have various tests for this during our due diligence process.

We love propositions which attack large markets and problems. For example, the buy-to-let property market is worth around £34bn and the bridging market is worth more than £4bn. The problem is that hundreds of thousands of landlords in the UK are unable to expand due to difficulties in accessing finance since lenders fail to consider their individual circumstances, and due to conservative mortgage rules/buy-to-let criteria. Furthermore, savers in the UK are getting historically low rates of return due to a prolonged low-interest rate environment.

The idea or the product must be able to rapidly scale and have high barriers to entry. Regulation is a barrier in LandlordInvest’s case. Since LandlordInvest is fully FCA authorised, it puts it ahead of many other firms in its industry. Also, by diversifying into two products, the buy-to-let and bridging loans, LandlordInvest can scale widely and rapidly.

We look for three things in a new #investment opportunity: team, market, and product. We look at how committed you are as #founders and whether you have the correct experience – and we have various tests for this during our due diligence process @RLCVentures

4. What do you look for in the team behind the business and how does this affect your investment decision?

When looking at a team behind a business, we establish how dedicated they are, their level of technical knowledge of the market, execution experience, whether they have an understanding of their own weaknesses and the challenges they will face, and what their vision for the business is. We carefully evaluate each aspect to establish whether investing in the business is viable because essentially you are investing in a team that will realise their vision. The journey to success is mutual and supporting a team that fulfils all these aspects is the most exciting experience.

5. How did you come by LandlordInvest and why did you invest?

We met the founders Filip and Nik in 2016 and were blown away by their knowledge and experience in the property market. Filip, the CEO and co-founder, and Nik, the CFO and co-founder, managed billions in assets at a family office and both are very experienced in the lending and property market. We noticed that the team had a diverse background with a combination of technical knowledge, determination and vision. Filip was technical and completely dedicated – he had worked for two years without a salary and wrote an FCA application himself – saving the business thousands in expenses.  

The teams’ experience comes from banking and private investment, managing multi-billion-dollar asset management for a family office, publishing, business systems and data analysis, and they were entering a market that was still ripe and with plenty of space for change.

At the time LandlordInvest was just an idea – we simply backed the team and got to know them through rigorous interviews and psychometric testing, which is still the basis of our investment thesis to date.  

6. What are your thoughts on the current investment landscape of P2P lending?

The P2P lending market has many firms with different business models, which makes it difficult for investors to choose and compare. The FCA, which is currently shaping the legal framework for the P2P industry, has proposed regulations that are addressing this issue. There is also a variation between different firms’ management teams in terms of experience and one of the biggest challenges for them is to keep a balance between borrowers and investors. That is why it is important for the management team to have a diverse background with solid experience to better achieve and maintain this balance.

7. What attracts you to co-funding a crowdfunding round?

I am passionate about becoming involved in ideas that I believe will become successful. Crowdfunding is an easy chance to invest for anyone wishing to become part of a start-up journey. In our case, it is a chance to get everyone involved in an idea that we believe in – friends, family, business partners and others.

8. What do you think the benefits of equity crowdfunding are?

The main benefits are access to capital, PR and growth in a user base. Furthermore, when a start-up is exposed to the crowd, there will be more for the entrepreneurs to learn from feedback, comments and suggestions. Investors also get the chance to receive high returns should the start-up become a success and there are also tax incentives such as the EIS and SEIS, which benefits both start-ups and investors.

9. What impact do you think S/EIS has on the UK investment scene?

The tax breaks are a big advantage for an investor, but it can attract the wrong type of investor if they are just trying to mitigate their tax bill, for example. However, like a lot of businesses, LandlordInvest would not have got funding without SEIS/EIS. It creates greater awareness of investment opportunities in early-stage businesses and an increase in risk appetite from investors which has brought more money into the small business community.

10. And finally, do you offer advice and support to the businesses you back post-investment and if so, what do you do?

Yes, we offer different types of advice and support to businesses post-investment. We offer Product testing, which is ensuring whether the product is viable and scalable. We offer marketing strategy to ensure a product can be branded to a high quality. We offer board advisory by sitting on the board to provide advice and support to companies that we invested in. Together we have 100 years of experience across our mentorship network and all our mentors are experts within their domain, for example, founders of fintech companies. Other support includes forming JV partnerships, recruitment, financial support and opening doors to larger funds to help with a series A round if required.

You can find out more about RLC Ventures-backed business, LandlordInvest, by visiting the pitch page.

Investments of this nature carry risks to your capital. Please invest aware.

Reece Chowdry

Guest author: Reece Chowdry Founder & CEO at RLC Ventures

Reece Chowdhry is the award-winning founder of RLC Ventures which invests in seed-stage businesses. Reece has invested in 21 start-ups and has become a board advisor of five companies, such as LandlordInvest.

Reece has been awarded top 5 UK’s Asian Tech Investors, became the youngest ever investor to be profiled in The Sunday Times and is a mentor to the Mayor of London’s Business Start-up Entrepreneur’s Programme London and Partners. His firm has won a number of awards including Winner of the 2018 UKBAA Best Entrant to Angel Ecosystem - One To Watch and been nominated for “European Seed Fund of the Year" Investor Allstars Awards 2018.