In our recent chat for the Meet The Investor series, we had the pleasure of speaking with Joanna Jensen, who heads the Enterprise Investment Scheme Association (EISA) and founded Childs Farm. She laid out her reasons for supporting emerging brands, discussed the essentials of investor-founder partnerships, and took us through the current trends in the market. Joanna also shared her thoughts on social responsibility and pinpointed what she believes the UK Government should focus on to bolster the nation’s startup environment.
### Why did you become an angel investor?
My passion for supporting Challenger Brands stems from a firm belief that they truly cater to what consumers and businesses need, instead of what large corporations forecast. Navigating the path of an SME is anything but straightforward; it’s filled with a mix of incredible highs and daunting lows, a journey I’m familiar with more than most. To serve as a mentor to other founders, helping guide them towards their aspirations, is genuinely fulfilling for me. This role lets me accompany them on their journey in a minor, stress-free way. Honestly, holding shares in a company like M&S feels a bit monotonous compared to this.
### Which sectors or new investment opportunities are you most excited about right now?
Many SMEs are having a tough time right now due to added expenses from the recent budget, not to mention their ongoing cost of goods sold and staff-related costs. There’s also an extra layer of uncertainty with the looming One-Day Employment law. Despite these challenges, I believe food innovation remains a lively area. At the moment, I’m particularly optimistic about opportunities in collagen products and gut health. And because it’s currently not on everyone’s radar, I’m eyeing apparel too. There’s always potential in tech, but it’s challenging to predict winners in that ‘wild west’ landscape.
### What are the key foundations to building a strong relationship between investors and founders?
Communication is key, along with the clarity of information. It’s crucial not to take things personally and have patience with the process.
### What common misconceptions do you encounter among founders about the fundraising process, and how can they better prepare themselves to address these?
Founders should always remember that their initial investors took a significant gamble when they first backed them. It’s important to keep respect at the forefront as your business expands and you seek additional funding. I’m frequently dismayed to see original and early-stage investors neglected when flashy, suit-wearing VCs wave enticing checks. Founders often overlook the terms in their Articles and the existing shareholders’ pre-emption rights, neglecting their early backers. When those charismatic investors lose interest and purse another venture, founders might find themselves not just distracted, but also somewhat estranged from their original investors.
### What are the most important factors that lead you to back startups today and has this changed over the years?
For me, it always boils down to two main things: the founder and the product. The founder’s energy, intellect, ambition, drive, and resilience must be evident. Then comes the product or brand—there must be a clear demand for it, and a defined consumer base. These have always been, and will continue to be, critical considerations for me.
### Can you share a specific experience where an unexpected challenge influenced your investment decision, and what lessons did you learn from that situation?
There was a time when I organized a group to invest in a consumer product that excited us all. However, during our discussions, we noticed a dynamic shift between the two female founders—one was outspoken while the other remained silent. So we decided to send a trusted friend and potential chairperson to spend time within the business to grasp their dynamics and scrutinize their finances, where there seemed to be inconsistencies. It was during this evaluation that we realized our investment would entirely go towards clearing debts due to discrepancies in their partnership, which wasn’t as smooth as they’d portrayed. An investor should never be expected to cover prior financial missteps; they are looking to fund future growth, not past mistakes. Consequently, our discussions ended, as the dominant founder’s conduct didn’t inspire confidence and we chose not to invest.
### How do you measure the impact of an investment beyond just financial return, and does social responsibility play a role in your investment strategy?
Integrating sustainable and socially responsible practices within successful businesses is not only possible but essential. For me, enterprises that prioritize social responsibility are highly appealing.
### As market trends and economic situations evolve, what approaches are you employing to mitigate risks while identifying promising startups?
Diversification is a must for any investor. My focus leans towards scaling companies because that’s where my expertise lies. My golden rule is to continually support the investments I believe in as they grow. True investors stay committed; I only withdraw if the business isn’t performing as it should or if my financial situation doesn’t allow it. At this moment, the resilience of the founder is more crucial than ever.
### You’ve talked about the importance of dreaming big. How can we encourage more girls to follow in your footsteps and dream big and become successful entrepreneurs?
Listening to podcasts featuring entrepreneurial women is a fantastic way for young girls to gain insight into the realities of entrepreneurship. I’d encourage them to pursue studies they enjoy, and if they’re still undecided, consider an accountancy course; understanding the numbers is invaluable, regardless of whether one starts their business or ventures into another career.
### If you could offer just one piece of advice to a young startup, what would it be?
Understand your consumer inside and out. Absolutely, know your consumer.
### You’ve been vocal about the potential negative impact for startups of the recent Budget. What should the new Government now do to better support the UK’s startup ecosystem?
The boundaries of the S/EIS schemes need expanding. The investment limits and timelines haven’t changed in years, and they are set to remain stagnant for a decade longer. We must significantly increase the investment thresholds for SMEs under this scheme—currently set at £12 million and £20 million for knowledge-intensive businesses—while also extending the duration in which they can attract new investments. Female-founded brands often get disadvantaged, having juggled business and family commitments so that when they’re ready to scale up, the seven-year investment window has elapsed.
Joanna Jensen leads the Enterprise Investment Scheme Association (EISA) and founded Childs Farm, the UK’s leading baby and child skincare brand. She invests in 12 female-founded businesses spanning products and services.
