Managing Your Cash Flow

Not all good investments are sexy

2 min read

09 December 2013

Shiny may attract a crowd but the Wizard of Omaha himself is often found investing in the dull and functional, so long as it’s fairly priced. That seems to be the case with Inform Direct, which raised £450,000 on our equity crowdfunding platform. Although far from sexy, Inform Direct would appear to tick all of the boxes Warren Buffett looks for in an investment. Here are his four main points for finding a good investment.

1. A business you understand

Inform Direct makes dealing with Companies House easy. Anyone who has run a business and dealt with Companies House online will generally agree that interface is not the most user-friendly. Filing reports, managing shareholders records, and updating company directors are all made easy with Inform Direct.

2. Favourable long-term economics

In 2012, there were nearly 500,000 new companies registered in the UK, and the predictions for 2013 point towards an even larger volume, as well as a long-term upward trend. However, it’s not just new companies that benefit from using Inform Direct, as existing companies must interact with Companies House in much the same way. Inform Direct has already generated a good level of traction with the market and is generating revenue.

3. Trustworthy management

Henry Catchpole, CEO of inform Direct, has experience in building a brand and successfully exiting. Henry was CEO at Suffolk Life Group, where he built the team from 8 to 200, and the assets under management from £3m to £3.5bn, before eventually selling the company to Legal and General for £68m.

4. A sensible price tag

Much can be gauged from Inform Direct’s forecast to return to investors 1.9x by 2018. Most business angels will say they look for a larger return over a five year period. Inform Direct make modest promises, and while they may hope to deliver much more, they have priced the offer on the conservative side. Many playing the stock market would love 1.9x over a five year period, so this is nothing to gawk at. Heck, even Warren will tell you ‘It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.’

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