‘Think big but start small’

At the height of the dotcom bubble in 2000, almost anyone with a cheque book could put money into a hot new technology company. Few got out without losing their shirts.

But Carmen Busquets, a 46-year-old Venezuelan entrepreneur, managed to make a successful bet on an e-commerce venture, and has gone on to become one of the most important investors for fashion-related internet businesses.

An early backer of Net-A-Porter, she recently made an angel investment in ModaOperandi.com, which allows fashion obsessives to order straight from (and straight after) the runway.

Ms Busquets’ investing style stands apart from more famous venture capital firms, which shower start-ups with tens of millions of dollars, bestowing young companies with colossal valuations. Instead, she doles out small investments as a company needs capital.

“Why give a million dollars to someone if they have not proved that they can make a million dollars?” she asks. “I learnt this from my father, who would never give us more money than we could make. If I maxed out a credit card, he would cut it.”

Ms Busquets began making small investments in websites in 1997. “I recognised the huge potential that the internet could provide in order to create, economically sustain, and grow individual success globally,” she says.

Three years later, she met Natalie Massenet, who had just founded Net-A-Porter. Ms Busquets invested an initial £250,000 and joined the board. “Each member of her small team of co-founders specialised in a different important area of the business. “For me, the winning strategy in any start-up business is ‘think big but start small’.”

Over the next five years Ms Busquets increased her stake to £5.9m and brought in as a co-investor Richemont, parent company of Montblanc, Cartier and other luxury brands.

Net-A-Porter began to turn a profit in 2005 and has grown to become one of the premier destinations for high fashion online. Last year, Richemont bought the 67 per cent of the company it did not already own for $533m. The deal kept Ms Massenet on as chairman, and delivered Ms Busquets a large payday.

With the proceeds from the sale, Ms Busquets has again gone looking for investments. Last year, she became lead investor in Caratime, an online jewellery and watch marketplace. And this year, aside from Moda Operandi, she has made five investments in new ventures, buying stakes in GoTryItOn, a social fashion site; Lookk, an online community for designers; JEM, a socially responsible jewellery company; and Astley Clarke, an online jewellery retailer.

She also increased her investment in CoutureLab, a high-end online gifts site in which she first invested in 2006.

Asked what she looks for in new companies, Ms Busquets says: “Right-sized, good team, strong business plan, credibility, flexibility and creativity. It is also very important to understand who my partners and the lead investor are going to be, that they can make good decisions and follow through.”

Ms Busquets worries that the frenzied climate in Silicon Valley is positioning the industry for another burst bubble.

“Investors are impatient and they are also desperate for the ‘next big thing’ and they are not paying attention to the fact that the ‘next big thing’ can be an economic crisis that they have created by being very irresponsible with their power,” she says.

“We already know this has not been constructive behaviour in the past. It only shows to me lack of creativity and patience.”

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