Hindsight is just plain irritating. Why do we understand perfectly what makes a great investment when it’s too late? There are some common mistakes in assessment – and all of them can be illustrated by the big ones that got away from me.

A stockbroker friend of mine (let’s call him Joe) was trying to sell some shares in a property IPO to the legendary Leonard Licht at Mercury Asset Management. Joe explained in great detail why his client had a great management team and great marketing strategy, only to be met with a stony silence.

Redoubling his efforts (he could never be accused of being a quitter) he eventually elicited this curt response: ‘But will it go up?’ Joe spluttered and eventually answered in the affirmative.

‘Then buy me half the issue,’ Mr Licht replied, and promptly put the phone down.

You need a compelling story

The moral of this anecdote is that investing is not just about the company and what it does. It’s also about whether investors think the company has an interesting story, in terms of both sector and price.

During the dotcom boom, I turned down a company because I did not rate it very highly and I really did not like the sector or the management. Six months later the company came to the stock market, investors loved the story and shareholders made three times their money! With the benefit of hindsight, I realised I had forgotten the Leonard Licht rule of investing.

A high price may be the right price

Another company that got away from me was Betfair, the online betting company that matches bets between parties, taking a commission as the intermediary.

The pitch was that Betfair could take a percentage of the traditional bookmakers’ market, dominated by the likes of William Hill and Ladbrokes. But I could not see a real market developing between ‘matching’ bets online. And in any case the entry price, at £100 million-plus, seemed insane.

Today, Betfair turns over in excess of £60 million a week and has proved to be a massive hit. Punters got better terms going direct and the complex back-office technology needed to match thousands of deals in real times and then provide proper settlement procedures has proved to be a substantial barrier to entry for would-be competitors.

Related: Who and where are the UK unicorns?

Underestimating market changes

Technology can cause significant change to markets as we all know. Currently it is the use of mobile data. For instance, one of my companies sells software to manage engineers in the field. Until recently, using mobile devices was too expensive for all but the biggest of companies. But now, even the smallest, employing say two or three engineers, can make it work for them. The effect? The whole buying cycle for new software in the sector has been moved forward. The ROI is too compelling not to change to software that links with mobiles.

Even with my technology background, I still managed to reject Pixology, the technology company backed by Lord Young that eradicates ‘red-eye’ from photographs. The company has now successfully floated on AIM at a market cap of about £20 million.

Only with the benefit of hindsight do I now understand Pixology. It was really all about mobile phones being used as digital cameras and the ability to get hard copy photographs to the end user through a digital download, with the customer never needing to go anywhere near a film processing shop. As phone cameras get better, this is a fascinating sector and the market for Pixology shares has been very strong of late.

The lure of leadership and design

I’m sure I’m not alone when I recall how an American friend of mine recommended that I buy some shares in Apple (pre-iPod), but I didn’t. Apple, of course, is a classic case study of how much difference a truly inspirational business leader (and a healthy dose of design) can make. Even if this had come to me as a private equity deal, I still would probably have passed. It is amazing to me that the iPod has become such a market phenomenon – after all, MP3 players were already around. And, showing my age, what was so wrong with the Sony Walkman?

Financial engineering can be the driver

Whilst technology can move markets, so can structural changes in an economy such as demographics (people living longer for example), or, more recently, low inflation delivering a sustained lower interest rate environment.

A few years ago, the monopolies commission required that large brewers divest the bulk of their tied estates and there was a plethora of private equity deals done in this area. I did not participate because I believed that the market for pubs was dying and that different types of leisure activities, including home entertainment, were taking business away from the local boozer.

Of course I completely missed the point. Investment in pub chains was not about drinking but about property, and it took Guy Hands, when he was at Nomura, to securitise the property and instantly create a massive profit, to make me realise what a mistake I had made.

The challenge of low interest rates

The brewery example is particularly relevant today. Let me explain.

The low interest rate environment has led to the private equity industry being able to raise considerably more debt on deals than ever before. Although more risky, this has meant that the operational leverage has increased and small improvements in performance are bringing large returns to investors. For many quoted companies, including Sage, this means private equity companies are increasingly becoming our competitors for potential acquisitions.

A low interest rate environment has made my last area, retail, a fruitful sector. But I completely missed the hidden cashflow value in retailers. The phenomenal success of Philip Green at BHS and Arcadia has shown what can be achieved if this is combined with really tough and able management.

But, as they say, ‘What goes around comes around’. What will happen to over-leveraged businesses dependent on consumers if the housing market falls and really does start to impact consumer confidence? Perhaps my regrets for all the great deals I could have done but didn’t will diminish.

Michael Jackson is chairman of Elderstreet Investments, the leading technology venture capitalist, which he founded in 1990. He is also chairman of Sage, the FTSE-100 accounting software group, with which he has been closely involved for the last 20 years, since its unquoted days.