Until March 2013, Damien Regent was a fairly typical investment banker. Up at dawn, he worked 12 hour days as UBS’s co-head of financial credit trading in London. Two months ago, all that changed. Unleashed from UBS following the bank’s decision to pull back from fixed income, Regent has reinvented himself as an angel investor.
“I was working long days in an investment bank. Now I work in a strategic, non-executive function with small businesses I invest in,” said Regent. “I’m building my own job. I still work long hours, but my working day starts later and has shifted into the evenings – I attend a lot of networking presentations for angel investors, which take place between 6pm and 9pm at night.”
In search of the next David Karp
As a managing director at UBS, Regent was responsible for interviewing both graduates and lateral hires who wanted to be – and already were – investment bankers. As an angel investor, he’s trying to spot the next David Karp – the 26 year old entrepreneur and high school drop out who just made $275m selling Tumblr to Yahoo.
The entrepreneurs at the angel investor events are “super ambitious” and “super bright,” said Regent. They are also very different to the young people who decide to go into banking.
Bankers vs. entrepreneurs
“It’s not that I’m coming across people who are more intelligent than people in banking,” said Regent. “They’re just very different. In banking, people are used to working in large teams with big internal networks. In start-ups, people are used to working in small teams with very limited resources. It attracts a very different kind of person.”
Both bankers and internet entrepreneurs are interested in making money, said Regent – but bankers’ downside tolerance is lower. “In banking you get a lot of people who enjoy the security of a base salary and the upside of a bonus. In the internet world you find people who have very little in the short term, but who are looking at the upside of selling a business in a few years’ time.”
Internet entrepreneurs like Karp are risk takers. Bankers and traders aren’t. In March it emerged that Lou Motilla, a vice president in Morgan Stanley’s commodities trading business in London, had been seriously out-earned by his teenage son Nicholas D’Aloisio-Montilla, who made £20m selling his Summly news summary app (also to Yahoo).
“With a start-up, it’s all about living simply now and looking to the equity upside in the future,” said Regent. “The upside can be extremely high compared to what’s on offer in banking – but you need to have the right idea at the right time, perfect execution of the project, and a business that can be cash flow positive.”
Risk-averse bankers mostly absent from angel investor events
Bankers’ innate risk aversion may be one reason why Regent said he doesn’t come across many of them at the angel investor events he attends. These include London Business Angels, Angels’ Den and Seedcamp.
“I haven’t come across many other people with a banking background who are full time investors,” said Regent. “Instead, there are a lot of exited entrepreneurs and some bankers who are looking to make investments alongside their full time jobs.”
For bankers who do want to become angel investors, the UK government offers significant tax breaks through the enterprise investment scheme. Regent said there are also plenty of opportunities to invest in “disruptive technologies” in the financial services sector.
For the moment, Regent’s investments include LaunchPad Recruits, a new online video interviewing tool, which he said has the potential to revolutionize the way that banks and other organizations hire. “It can be very difficult for firms to put together a shortlist of candidates based solely upon résumés. LaunchPad Recruits is a quick and easy way for recruiters to identify the best candidates to shortlist before inviting them to a physical interview,” he said.