Meet the Investor acting as a guardian angel to small firms

“As a student living on baked beans, it was the most money I’d ever seen,” recalls small business investor and advisor Arnold Du Toit, who nearly 20 years ago was stood on a fairway filming a friend taking a test ride of his prototype ride-on golf trolley.

Another player came over and prodded Arnold in the back with a nine iron. “This guy asked ‘Where did you buy that?’ and I replied it was just something I built for a university project,” says Arnold. “But he kept prodding, saying: ‘I want this thing; how much is it?’

“Look, it doesn’t have a price’, I told him – so he asked if I could sell it to him.” On the spot, Arnold came up with a figure of several thousand pounds, hoping the man would disappear. But instead he asked: ‘Would you take a cheque?’

The offer was politely declined, but it served as an introduction for the young inventor to negotiation, product value and how others will seek to capitalise on great ideas.

Arnold’s trolley – known as RolleyGolf (pictured) – allowed golfers to stand on a folding platform on the back, press a button and ride around the course. “It was the best of a golf buggy and trolley: you could either ride it, or push it to keep your exercise going.

“For my final year project, I wanted to combine my love of skiing, skateboarding and cars with my new found hobby of golf. I took the idea from the back of a napkin all the way through to a working prototype, tested it, came up with a business plan and pitched it at a design show.”

Building momentum in a growing business

RolleyGolf started out in a basement workshop at South Bank University in London where Arnold studied product design. He was encouraged to take part in a ‘Dragons’ Den’ style competition where students pitched for investment, and it turned out that one of the judges was a keen golfer. Arnold secured funds and started the first of two businesses: Drive Daddy which focused on building the product, and later the RolleyGolf Experience which hired out the trolleys.

“Within the first year I secured 30 pre-orders and every time we tested the product, it gathered interest.” The trolley featured in golfing magazines and on television, but it was another two years before Arnold was able to secure a manufacturer. To keep customers interested, he offered them the latest prototype to test so he could receive feedback to help the next iteration.

Arnold spoke to several successful business people out on the golf course, and secured extra investment to scale-up the company to provide a broader offer: a lightweight electric vehicle to navigate congested city streets.

But within five years the firm experienced difficulties. Demand kept growing, but the product was struggling to meet various pieces of legislation required of vehicles. Arnold launched one final investment round, but investor fatigue appeared to be setting in. “Sadly the company had to be dismantled in front of me.”

Arnold spent two years in and out of court, “learning everything I needed to know about business through the mouths of lawyers. It taught me how to build a business, raise investment and what my responsibilities are – not just to clients but investors who had backed my dream. Once a business grows, it can be hard.”

The experience “tore down my entrepreneurial world” but Arnold was thankful for the support of family and friends. He decided to use his experience to help other entrepreneurs.

Explaining the appeal of angels

So why should entrepreneurs seek the help of angels? “In the current investment landscape, it is incredibly hard to raise money from one individual or company. But thanks to technology, it is easy to quickly create syndicates. My advice to entrepreneurs is find an angel investor who is passionate in what you do, but don’t expect them to complete your entire funding round. Lean on them to find other angels and talk to clients. If they bought your product, they may buy into your business.”

But why seek investment from others at all? “If your business is able to grow organically, then definitely reinvest profits and build for the long term,” he replies. “But many companies require a lot of resource to get their idea to a proof-of-concept stage.

“If we look through the lens of decarbonisation, the timeframe is set to achieve big goals. Technologies being developed now might be the key to solving global issues. So the aim of the game is to get them out as quickly as possible.”

And what is the appeal for an investor to put money behind a start-up? “Yes, we are looking for a return, but investors should never spend money they cannot afford to put at risk. The perfect situation is where you believe in the people behind a company, believe in its cause and believe it has a future.”

Collaboration within the Catapult

Arnold is a familiar face among SMEs associated with Connected Places Catapult, and became an advisory board member to the Freight Innovation Cluster steering group last spring to drive growth in the sector, especially around decarbonisation. “Collaboration among start-ups, academics, local authorities and large corporations is important to come up with answers to big problems,” he says.

Arnold humbly says his best investment to date has been his family, but from a professional point of view adds that it is also in the time given back to others. Any regrets? “I probably should have listened to fewer people, and only taken advice from those who are where I wanted to be, or were going to places that I wanted to go.”

He adds that “patience, sector specific knowledge and a deep understanding of finance” are key attributes in a successful investor. Being able to spot an outlier who becomes the next best thing also helps. “It can certainly be rewarding to put your cash into the hands of other people who see a better future. If it works out, it can be tremendous.”