Hostelworld's millionaire founder has this advice: 'Don't sell your mum stock'
Ray Nolan made €100 million from the travel website he founded more than a decade ago.
WHEN IT COMES to turning a buck by building and selling a company, entrepreneur Ray Nolan knows a thing or two.
He founded the travel website Hostelworld, formerly Web Reservations International, in 1999 – and he personally bagged €100 million when it was sold for around twice that sum a decade later.
Since then he has been dabbling in another company, XSellco, while flexing his muscle with investments in other hot tickets like billion-dollar Scottish outfit Skyscanner.
But his top advice for other entrepreneurs? Don’t go too crazy giving away large shares in a company at an early stage – that is if they want to make any money should they eventually be in a position to sell up.
“Don’t mess with your capital table too early. This idea that some geezer who comes in or great marketing person gets a bit of stock or selling your mom some stock … next thing you’ll have 40 people on the cap table. They’re all over the gaff.
“I’ve been involved in the sale of a company where we couldn’t find the guy who owned a quarter point in the company and the deal nearly didn’t happen. Keep it tight. You can reward people other ways.”
No happy endings
Nolan was speaking this week at AngelSummit, where he also shared some of his harsh opinions on how it can be hard graft to be an investor in early-stage companies.
He said the “angel-investing model is fundamentally broken” and those involved shouldn’t even entertain the notion of hitting upon a so-called unicorn – a venture capital-backed company valued at $1 billion or more – in the early days.
“You put €30,000 in, you’re first in the risk queue. You’ve got a 100-1 bet and you’re going to get diluted really bad by venture capitalists. You will have made the company a less risky thing because your money will have been spent. You’ve got to moderate, you’ve got to work out what’s the risk to reward here.
“Angel investing is not for amateurs. If you don’t have the next €50,000 or €150,000 to invest, you need to get ready to get f**ked as an investor.”
