Following the unprecedented success of our last Three Things podcast episode with former MADE.com CEO, Nicola Thompson, we were joined by the brilliant Adam Balon this month for yet another All Together exclusive. In his first podcast appearance ever, we went beyond the legendary innocent story to focus on what has come after for Adam, including the lessons he learned from co-founding one of the UK’s leading FMCG drinks brands and how they have moulded the tenets of his new venture with JamJar Investments.
Listen to the podcast episode on Spotify, Apple, or other platforms as one of the most successful entrepreneurs of his generation takes us through the new norms of entrepreneurship and investment, before offering his Three Things advice for the founders of today.
The Genesis of JamJar
The end of Adam Balon’s tenure at innocent marked the beginning of an exciting new chapter. He and his fellow co-founders did not know what the future held, but while they searched for the next project to focus their energies on, they found themselves intrigued by the diverse pitches pouring in from hopeful entrepreneurs.
Adam Balon’s CV//
2013-Present // Co-founder – JamJar Investments
1999-2013 // Co-founder – innocent Drinks
1996-1998 // Marketing Manager – Virgin Cola
1994-1996 // Business Analyst – McKinsey & Company
“We started being approached by people looking for investment”, Adam revealed, “and we enjoyed those conversations quite a lot, so we thought we would set it up while we thought of our next business idea.”
What began as something small to keep their minds stimulated eventually snowballed into an investment initiative with promise and potential. “It was actually strangely unfulfilling for the first couple of years”, admitted Adam, “because we didn’t know how to play the role of investors, but once we started getting into a pattern, the enjoyment started to come.”
And yet, that enjoyment was stifled by the realisation that their ability to benefit the businesses they worked with, and to do right by their own team, was limited by the amount of capital available. “We just didn’t have enough capital to do justice to what we thought we could achieve in the area”, Adam explained. Fuelled by this ambition, the decision was made to grow JamJar into a fully-fledged investment fund, carving a niche for themselves in the competitive world of venture capital.
Rewriting the Rules: A Different Kind of Investment Approach
JamJar was never going to be your traditional, run of the mill fund. Adam, Richard, and Jon were determined to be different, to be better, to really look after the businesses and the teams they backed. They focus predominantly on consumer businesses because that’s what they know, but that isn’t just the widely held perception of consumer. “It can be anything”, Adam shared. “It can be a service, an app, a financial service; it doesn’t matter…it’s solving a consumer problem through a brand that gives people moments of delight that unlocks the magic.”
JamJar are staunch on this mentality. If they are to invest, they must be convinced that the investees truly know what their product achieves: what problem does it solve? How does it solve that problem in a better way than what’s already out there? And is that problem something people genuinely care about?
Once those questions are answered, Adam claims “JamJar will invest on the back of an idea on a piece of paper, but only if the entrepreneurial team has experience in that area.” The team is a crucial aspect in JamJar’s investment approach, but a lack of experience does not automatically perturb Adam and his co-founders from pledging capital to a cause. If a team can demonstrate its capability in other ways, JamJar may still be inclined to invest.
“One of the things we test for as early as we can is whether we can have substantive conversations with the people in the team”, Adam explained. “We need to know if they’re going to be honest about what they know and what they don’t, and if that door is closed, it’s a big red flag.”
In fact, Adam has previously described the fund as a “highly incentivised HR consultancy”, which perfectly underscores their focus on people and their potential. The idea and the team come before all else, even – or perhaps especially – over the blind pursuit of the next ‘unicorn’ or ‘decacorn’ that so many funds are slave to.
JamJar is a more modest fund than the other players in the venture capital community, which leaves it unburdened by the pressure to generate colossal returns. That enables them to adopt a broader and more human-centric focus, which Adam believes is unique, as they approach each investment with a level of empathy that few, if indeed any, other funds can match.
“If we can be disciplined enough to not be too didactic about it,” he explained, “we have more empathy with the position founders are in because we’ve been there ourselves. The battle between head and heart, the complexity of managing big teams, all of those things are things we’ve lived and breathed.”
This team-focused approach is the defining characteristic of JamJar’s investment philosophy, and it could be argued that they were ahead of the curve in that respect, given how the investment landscape has evolved over the last few years.
The Current Funding Climate
The common perception of the current fundraising environment is a bleak one indeed. Confidence has drained from the markets, business valuations have halved, and investors are holding their cash much closer to their chests. But Adam believes the problem isn’t as daunting as it seems on the surface. “There’s definitely still enough funding out there”, he explained, “but it’s just behaving in a very different way to how it has done for the last ten years.”
“A lot of people drifted in from the B2B, SaaS areas during that period”, he continued, “but now they’re retrenching to their core because that’s what you do in a downturn. And that means there’s fewer players in this space, so deals are taking longer to do.” This might seem like a simple case of supply and demand – with less competition, investors can afford to take more time to forge better deals – but it’s also because they are treading more carefully than before.
“There was a time when anything that sounded like a good deal was being completed in around two weeks. People were getting cheques for 5-10 million in no time at all, so no one was really doing the due diligence”, Adam claimed. But current conditions have heralded a significant change in that respect; due diligence has risen to the top of investors’ priorities, and they are no longer swayed by verbose presentations and brash confidence. Instead, they demand solid proof that a plan will work, and they’re willing to wait until they get it.
Interestingly, these changes have not necessarily made fundraising more difficult, but rather shifted investors’ favour towards a different kind of founder… “It isn’t a terrible time for founders”, Adam stated, “and for a certain type, it’s actually a much better time. Those who truly understand how they can back up what they say in their pitches – who were probably slightly drowned out in the last decade – now have a significant advantage.”
Adam’s Three Things
So, what kind of founder do you need to be to be successful in your fundraising efforts? What qualities are investors looking for? Find out below in Adam’s Three Things – three pieces of actionable advice you can use to secure investment in your business, today.
Prove the value
“You can have loads of slides and justification, but fundamentally, if your idea isn’t better, easier, or cheaper, it isn’t going to work for people”, Adam clarified. “Don’t just wave your hands and say it’s better than the competition; investors want to know why, and people often skip that step because they’re so excited about their idea.” This is about showing you have a veritable understanding of what it is that you’re offering and how it impacts the market. Think objectively, do your research, and ultimately prove your idea is worth the investment.
Frugality is key
“Show that you can do a lot with a little”, Adam advised. “Previously, the returns have been there for people who haven’t been particularly frugal because the money was out there and it solved a lot of problems. But that isn’t the case anymore, so you need to find ways of conserving capital…Think through how you can get stuff for cheap, for free; find the shortcuts because that is what will give you and your investors your returns.” Adam also highlighted that this advice is always valid, not just in times of economic modesty, because it will help you retain more of your business.
Be honest about what you know and what you don’t
“Blind confidence doesn’t cut much ice at the moment”, Adam declared. “You need to be transparent and have the confidence to admit what you don’t know. If you don’t know something, that’s fine, but you must demonstrate either how you’re going to work it out or why it doesn’t matter. That’s big brownie points for us and probably for lots of other investors.” This is particularly significant now that deals are taking longer to complete. With due diligence rising to the fore, you will be tested by investors, so doing the work to be able to convince them that you will solve the issues you face is vital.
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A heartfelt thank you to Adam for lending his voice and insights to our podcast. His debut appearance, rich with unique perspectives and actionable advice, has been truly enlightening, and we’re certain our members will find it of great use.
If you need support or guidance with your fundraising efforts, join the All Together community today for up to 5 hours of pro bono mentoring from one of the UK’s leading CEOs, every year.