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Getting Started

Through a tech investor’s eyes

You may think you have a game-changing technology, but we ask former Sega boss Mike Hayes what really attracts investors

Through a tech investor’s eyes

Being the boss of a computer games company is probably a dream that millions of teenage boys and girls have had at some point in their lives.

Mike Hayes achieved that ambition, working for Nintendo and as chief executive for Europe and America at Sega, during a 30-year career in the industry. 

Now, instead of helping to boost the career of Sonic the Hedgehog, he is investment director and head of digital and digital entertainment at Mercia Technologies PLC striving to help the next generation of UK entrepreneurial talent make the big leap into business.

Mercia invests in technology firms showing high growth potential primarily in the Midlands, the North and Scotland. It provides early-stage funding ranging between £50,000 and £2m through its fund management subsidiaries. If the firms continue to flourish and are hitting milestones such as securing revenue streams then there are opportunities to be supported by the AIM listed parent company, Mercia Technologies PLC, which can invest up to £10m.

Spotting the tech stars

The technology firms that Mercia invests in cover a range of sectors from electronics and manufacturing to biosciences and artificial intelligence software, as well as Hayes’s beat – digital and digital entertainment.

“I am looking for games engineering firms which are providing games content but, increasingly, I am also looking at serious gaming used to support virtual reality or augmented reality in the worlds of education, training, defence and trading platforms,” he explains. “The UK has a very vibrant gaming sector and has potential for bigger growth still. All the investment directors here have walked the walk and know their fields very well.”

Investment examples include: nDreams, a gaming publisher which creates content, such as new puzzle game Danger Goat for virtual reality platforms; VirtTrade, a trading engine which takes traditional sticker and card albums into the digital world; Immersive Interactive, which turns ordinary classrooms into football stadiums or the galaxy; and Genba, which provides the secure delivery of digital content and codes in the video games market. 

“You look for the golden ticket, the top-end disruptor who is going to shake-up an industry, but they only come around every so often,” Hayes says. “Mainly we look for those who have seen a gap in the market or are carrying out an existing product or service more effectively and efficiently.”

Deals are sourced through Mercia’s partnership with 18 universities, a network of partners and entrepreneurial mentors, attending “almost every single incubator or accelerator event” and even emailing entrepreneurs with a two- or three-page business summary. 

Hayes is looking for ideas with commercial growth prospects, so even though he typically invests in pre-revenue firms he is eager to hear of any licences the firm already has or potential customers.

Investing in people

Equally as vital are strong teams.

“Are they the kind of people who are going to take the business to the next level? Can they listen and take advice?” Hayes asks. “They have to be great at the elevator pitch making their idea relevant and understandable, because clarity and having good communication skills is really important. We don’t want a 60-page business plan at this stage, a Dragons’ Den aggressive, salesy-style or even a prototype. We don’t want you to overpromise or tell us something that really isn’t feasible. We want to see your passion, your drive and what you really want to achieve. Be precise, concise and honest.” 

Hayes says a track record in the sector helps and that he is seeing more people with successful careers now “spending their cash on starting up a business”.  

He says: “That gives us more confidence but the number of young people we hear from and the ideas that they have is remarkable. We invest in the right idea, the right approach and the person. We don’t need the moon on a stick at this stage!”

Hayes is passionate about the technology sector and what it means for the UK economy at present and in the future. 
“Technology is an increasingly strong environment with tax reliefs and strong regional funding, such as the Northern Powerhouse Investment Fund, which we can help our businesses with,” he states. “It will drive our economy in the years ahead.”

He points out that this growth will come from all parts of the UK. “London and the South East is totally oversubscribed with investment. Beyond that it is under-subscribed and we are helping shift some of that imbalance,” he states. “The technology ideas we are seeing out of Leeds or Edinburgh are equally as good as you will find in London. They just need the opportunity.”

​The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.