Ideamensch: Interview with Brooks Newmark:

Brooks Newmark is an angel investor, philanthropist, academic and campaigner on homelessness.

Brooks served in the House of Commons for over 10 years, as the Member of Parliament for Braintree and in the Coalition Government as Minister for Civil Society, responsible for charities, the voluntary sector and youth. He served on the Treasury Select Committee as a Government Whip and Lord Commissioner of HM Treasury. In Opposition, Brooks served as a Whip, during which time, he founded Women2Win, set up to increase the involvement of women in the Conservative party, and the Million Jobs Campaign to increase youth employment.

Brooks is studying for a DPhil at the University of Oxford’s Education Department focusing on Education Reform in Rwanda. He is also a Visiting Academic at the Middle East Centre, and is researching a book on Bashar Assad.

After leaving politics, Brooks pursued his passion for philanthropy and education reform. He is the Co-Founder of A Partner in Education, which works with Rwandan teachers to give children access to schooling and quality, inclusive education. Brooks is also committed to ending the plight of homelessness. He is a member of the Government’s Rough Sleeping Advisory Panel and a volunteer for Crisis UK. In 2017 Brooks wrote a report at the Centre for Social Justice entitled Housing First: Housing led Solutions to Rough Sleeping and Homelessness.

Brooks is a recognised expert and author of various articles on security and foreign affairs. He currently sits on the Panel of Experts for the International Commission of Missing Persons, which is dedicated to locating people missing due to wars or disasters.

He also sits on the board of directors at Connaught Brown, the Catholic Herald, Mace Media and Brooks Newmark & Co. He holds an MSc in Education from the University of Oxford, a BA in History, Harvard College and an MBA in Finance, Harvard Business School.

Where did the idea for your career come from?

I became an angel investor only fairly recently (5 years ago), although I had dipped my toe in the water a couple of years before. I worked in private equity for fifteen years (I was a Senior Partner at Apollo Global Management) before going into public service for ten years as a Member of Parliament in the UK. When I left Parliament in 2015, I had coffee with a successful investor, a friend of mine who had invested his own money very successfully. He had known me a long time and suggested I might also be a good investor in start-ups. While in Parliament I was one of the architects of the Seed Enterprise Investment Scheme (SEIS), recognising that there was a lack of real risk capital supporting start-ups in the UK. So when I left Parliament I decided to focus on investing in and mentoring pre-revenue businesses primarily run by young entrepreneurs. To date I have backed ten businesses, including one small turnaround, none of which has failed (to date!) and some of which have shown returns of 4x, 10x, 80x and 200x from my initial investment.

What does your typical day look like and how do you make it productive?

I don’t have a typical day. I am a polymath (aka a ‘Jack of all trades and master of none’) so tend to do several things at once. I am currently working on a doctorate in education at Oxford University (I completed my Masters 3 years ago); I run an education charity in Rwanda (see www.apartnerineducation.org) which I founded over 10 years ago; and, I am a big campaigner for homelessness and sit on the UK government’s Rough Sleepers Advisory Panel. On the business side I try to speak to the various entrepreneurs I have backed once every one or two weeks and give my advice on any challenges and opportunities they may be dealing with. I also get people contacting me with business ideas pretty much every day.

How do you bring ideas to life?

As an angel investor I don’t bring ideas to life, I back people that do. Many great ‘ideas’ people are not generally good business people. My job, as I see it, is to make sure they don’t make stupid mistakes or run out of money. Venture capitalists and angel investors are not entrepreneurs in the truest sense, and they shouldn’t make the mistake of thinking they are and getting into the weeds of what the entrepreneur is trying to bring to life. Almost every time I have tried to second-guess an entrepreneur when they do a pivot on an idea, I am wrong. In some ways I am like a gardener nurturing an exotic plant – I let the plant do its thing and just try to make sure it doesn’t wither on the vine! Most businesses die not because the original idea isn’t good, but because they simply run out of money. If I believe in something and someone, I make sure they don’t run out of money until they can bring their idea to fruition.

What’s one trend that excites you?

I don’t follow trends and if anything am a contrarian investor (old habits die hard – I started life at Apollo, one of the most successful contrarian investment companies in the world). I back ideas and I back people. I look for business opportunities that are scalable, have high barriers to entry or first mover advantage and tend to avoid tech businesses, where I feel there could be someone sitting in a garage that could quickly make whatever tech idea I am backing redundant. I am sceptical of crypto currencies, which I see as the ‘tulip mania’ of the 21st century.

What is one habit of yours that makes you more productive as an entrepreneur?

I stick by my beliefs and will back my entrepreneurs multiple times. The mistake many angel investors make is to only be there for one or two rounds of investing. As long as you and the entrepreneur maintain communication (key advice for any entrepreneur – keep your investors in the loop in good times and bad) you should be there to back your entrepreneurs through thick and thin. Many angel investors spread money around in the hope that one or two of their investments work out. I tend to be a little more focused. I make only two or three investments a year and take between 10% and 20% of the business, thereby aligning my interests as much as possible with the entrepreneur.

What advice would you give your younger self?

Never give up. If you believe in something, stick with it. Equally importantly, work with people you like and in a business you care about. Hopefully the money will follow and even if it doesn’t you will enjoy going into work each day. Don’t do a job just for the money unless you absolutely have to – it’s a recipe for a lifetime of misery.

Tell us something that’s true that almost nobody agrees with you on.

My most successful investment right now comes from backing someone who had previously failed spectacularly. He had a great idea but for non-business reasons the business blew up. This is the UK and unlike in the US, where failure is a badge of honour and people believe an individual can learn lessons, in the UK there is a different culture where the business establishment simply close ranks. I have backed the guy several times over four years when it was almost impossible to find other investors (bar about three other people). It’s a tech business which we finally launched in the middle of the Covid pandemic in September 2020, and the business has grown spectacularly since then and is an 80x on my initial investment.

As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?

I constantly challenge my entrepreneurs. I make sure they don’t run out of money. I never give up.

What is one strategy that has helped you grow your business?

I stay focused on a relatively small handful of businesses I back. I am available 24/7 for a conversation with the people I back. By limiting the number of investments I make each year to two to three I can give the entrepreneurs the time and attention they need when they need it and make sure I am there to support them financially over several round in the first two to three years.

What is one failure you had as an entrepreneur, and how did you overcome it?

My very first investment as an angel investor in 2013/4. A friend of mine asked me to help someone who was a friend of theirs, so I invested more as a favour than anything else. I lost 100% of my investment. I never trust anyone’s judgement but my own now. This personal lesson has worked well so far, as none of my investments to date have blown up or shown a loss.

What is one business idea that you’re willing to give away to our readers?

Probably my most expensive idea. To completely disintermediate the mobile and broadband companies (who generally provide an awful and expensive service which never seems to work where and when you need it) by launching a series of ‘mini’ satellites, circumventing the globe, to provide broadband and mobile phone service anywhere you are in the world. The UK satellite tech sector has the skill set to do this, but I am sure Elon Musk will beat us to it!

What is the best $100 you recently spent? What and why?

Getting acupuncture. I am a real sceptic when it comes to alternative medicine but for whatever reason it seems to have worked on me and made me much calmer in my day-to-day life.

What is one piece of software or a web service that helps you be productive?

As an angel investor I backed a great bookkeeping business called Addition Finance. This helps me and several of the other businesses I have backed stay on top of their cash and daily expenses. It’s really good for small businesses and start-ups and only costs £99 a month, so it’s much cheaper than paying a bookkeeper.

What is the one book that you recommend our community should read and why?

Malcolm Gladwell’s book The Outliers showed me the importance of putting in the time if you want to be successful, not being afraid to be different or of taking risks, and in doing so accepting failure and rejection if they happen. There’s the chance there might be something better around the corner.

What is your favorite quote?

I have two, one short, one long. The first is my motto: “Failure is only important if it’s the last time you try”. This has inspired me to develop huge resilience and never to give up if I want something or believe in something. The second is my favourite quote which is from Steve Jobs: “Here is to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes, the ones who see things differently, they’re not fond of the rules, and they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them because they change things. They push the human race forward and while some may see them as the crazy ones, we see genius because people who are crazy enough to think they can change the world are the ones who do.” This quote has inspired me to take risks, to do what I feel is right, even if it’s against the prevailing thinking. This has impacted me both in business and politics, often, if not always, for the better.