The post is titled, as blog posts tend to be, “9 things you didn’t know about the UK’s tech scene“, but really delivers an incisive analysis of why investors specifically (but by extension entrepreneurs) have reason to be sanguine about the tech sector in the UK (even post-Brexit).
You can read the full article (15min read) by following the link in the title above or by clicking here
If you haven’t got 15 minutes or so, I’ve listed three of the key points here:
1. The UK is the second biggest destination in the world for VC money, on a per capita basis ($3.6 billion was invested last year, up by 70 percent from the year before!)
2. The UK is second in the world for tech startup exits, after the US. There were 135 mergers and acquisitions in the most recent quarter of 2016.
3. The UK government helps tech companies from cradle to exit with the world’s most generous tax breaks and capital gains exemptions for investors as well as visa schemes for digital innovation experts and grants for entrepreneurs.
The cause is strong!
The so-called ‘Lean Startup’ methodology, coined by Silicon Valley entrepreneur Eric Ries, has come into vogue in recent years and aims to address the problem of heavy cash outlay during the early stages of your business. In other words it advocates proving your concept as far as possible without building the finished product. It aims to take the financial risk out of building a startup (as far as that is possible!).
The lean startup methodology is all about experimentation, feedback and iteration. Or to use the vernacular of a school science teacher: hypothesis, evidence, synthesis and improvement. The idea is that rather than spending hours and hours writing a ‘perfect’ business plan, keeping your ideas hush-hush and finally launching a fully developed product in the hope that investors and consumers will be won over, you test hypotheses by collating customer feedback from your MVP (Minimum Viable Product).
For example, you could throw up a landing page selling a product/service that, as yet, does not exist, and measure the popularity and interest in it. By this means, you can calculate whether the idea is worth pursuing and how it can be optimised; or whether you should ‘pivot’ or iterate, or change the concept entirely. For more information on what lean startup means, you can visit www.theleanstartup.com/.
But in this post I want to address the question of how far this lean startup method has proven itself as viable. Ted Ladd is a professor and entrepreneur who has conducted research on this question and recently published his findings in an article for the Harvard Business Review. Click here to read the full article.
In a nutshell, he concludes that while the experimentation and customer feedback produced by following the method does impress investors and presentation panel judges, it does not necessarily indicate subsequent success. He states a number of possible reasons for this:
– Too much feedback erodes entrepreneur confidence
– Method may produce ‘false negatives’ when there is no clear rule in place to stop testing and start scaling. In other words, entrepreneurs are experimenting so much that they always end up with negative results.
This leads him to say that while the lean startup method has considerable benefits for entrepreneurs, it is important that the testing and experimentation on a micro-level is combined with a broader strategy. That way, only the priority areas are tested; and time and confidence are not wasted testing every aspect.
He ends his article with the following:
“The popularity of the lean startup method is well deserved. But, as is true of any business process, the method must be tailored and employed with reflection and constraints, not blind allegiance. Just like the new ventures it creates, it will improve as researchers and practitioners propose, test, and incorporate refinements.”
Food for thought…
This morning I read a great post by Venture Spring. Venture Spring is a hugely well respected ‘venture development’ company which “helps Fortune 500 companies innovate like startups” according to their company mantra. The article is about the differences between venture capital funding and funding from angel investors.
Understanding the points of difference could be crucial to the way in which you approach your fundraise; and how your company ends up being run down the line. So it’ll be worth your while familiarising yourself with the key points…
You can read the full article on their site here. (It’s a 5-10 min read).
Or, I’ve summarised the key differences for you here and (added in a few that they missed!):
– are private individuals investing their own money
– can make quick decisions regarding investment
– can be flexible in the amount they invest
– can provide expertise, contacts and support as well as capital
– can feel personally attached to your business
– can be as hands-off or hands-on as you require
– can qualify for tax breaks like SEIS and EIS
– do not have to be given board positions
Venture Capital Firms:
– are whole companies that invest in startups
– are run by professional investors investing money from corporations, individuals, funds and foundations
– take board positions and have a strong say in how the company is managed and grown going forward
– invest much larger amounts than angel investors
– do not usually invest at seed stage
– generally invest not less than £1million
– take a longer time to make investment decisions and broker deals
Pivigo (http://www.pivigo.com/), a data science marketplace and training provider based in London, has announced the successful closing of its funding round with investment secured from high profile consortia including Angel Academe, Craigie Capital, Dubai-based Dunamis Ventures Ltd and London Co-Investment Fund, the Mayor of London’s early stage business fund.
Angel Investment Network is delighted to have made a significant contribution to this success story through its introduction of Dunamis Ventures Ltd.
You can view the full press release on the Pivigo blog here
Now that they are fully funded, they are well placed “to reach a much larger audience, help connect more people with each other and work with companies to gain value from data…” as Founder and CEO, Kim Nilsson, puts it.
We can’t wait to see the progress they make!
There’s a lot of dross on the internet. Too much of it. Too many people weighing in with half-baked, ill-founded opinions in an attempt to seem like an authority on whatever subject they’ve taken it upon themselves to spout about.
That said, the internet has gone a long way to help ‘democratise’ education; suddenly, people’s horizons have been opened up by the plethora of information available. If you’re bright and motivated, you no longer need a teacher, you can teach yourself with the web as your guide. You just have to be able to sift through garbage to find the gold.
Here I’ve attempted to do this for you. A lot of people like to offer their opinion on the subject of Angel Investing; a lot of people should be more considered. But every now and again it’s nice to get the view of a real authority with a track record in startups and in angel investing. Paul Graham started out as an entrepreneur, founding Viaweb (the first SaaS company) which was acquired by Yahoo in 1998 fora reported $49million. He then founded Y Combinator which has funded over 1000 startups since 2005, including Dropbox, Airbnb, Stripe, and Reddit.
In this essay, he offers his wisdom on how to be an Angel Investor which he describes as “mysterious and complicated” at first but “turns out to be easier than…expected, and also more interesting.”
Well worth a read! Here’s the link: How to be an Angel Investor by Paul Graham
Xavier Ballester, the co-director of our brokering division, appeared on Intelligentcrowd.tv offering some pearls of wisdom to investors and entrepreneurs alike, including:
– How we evaluate startups worth working with
– Why we exchange part of our cash success fee for equity shares in our clients
– Recent exits and hot prospects including Brightnorth, Superawesome and What3Words
– How we raise money for our clients
Check out the interview below:
What’s the point of a proposal? Why use sites like Angel Investment Network? Why not just send your full business plan to people you want to invest?
Well, for a start, not everyone has the contact details of a large number of investors just sat in their inbox. Networking/Connection sites like Angel Investment Network hold the key to advertising your latest business venture to thousands of prospective investors so that you can find the right ones to suit the nature of the project. That sounds a little sales-y, I know, but it’s important to understand in order to realise the significance of the short proposal instead of the full-blown business plan.
When you’re marketing an idea to thousands of people, not just in the fundraising community but anywhere, you cannot simply take it for granted that people will actually take time to consider your idea; in any marketplace thousands upon thousands of ideas are competing to grab the attention of the onlookers. Precedence is not always, and certainly not necessarily, defined by merit, but rather by the ability to capture attention.
Don’t think ‘I know my idea is brilliant, so why wouldn’t investors read my business plan? They’d be stupid not to…’ That attitude will help you raise the square root of nothing. Think instead ‘How can I make it so that investors literally cannot wait to get their greedy paws on my business plan and start properly digesting my idea?’
Here’s where your short proposal comes in. It is meant to be pithy and concise. Something that can be easily understood and result in them wanting to know more. It is the first rung on the ladder towards them investing; and that can often be the hardest part – getting them to step onto the ladder. Once they’re on, of course some may fall off on the way to the top, but at least you’re beginning to win them over and it becomes progressively harder for them to get off.
As such you should consider your proposal as a ‘hook’, to use Nir Eyal’s term, or in internet-speak a CTA (call-to-action). In your proposal make them love your idea enough to take the next step. Tell them the best bits. Don’t swamp them in superfluous detail.
It’s funny what working near a beach for 3 weeks will do to one’s ability to keep their blog updated! But I’m back in the office now, back to the grindstone so your weekly dose of pitching/proposal advice is back up and running.
The previous 4 tips have talked in general terms about the ideal structure for your proposal: Tip #1 advised you to put your achievements first, Tip #2 encouraged you to then articulate the problem you solve, Tip #3 how you solve that problem and Tip #4 told you to make it clear how big the market opportunity is.
This week I wanted to talk about tone. How should your pitch come across? Funny? Serious? Detailed? Light?
When I arrived in the office this morning one of my colleagues was bragging about how he had re-written someone’s proposal for them after they had got no interest from investors after 90 days on Angel Investment Network. Now the business wasn’t bad at all, but it wasn’t an Uber or Facebook by any stretch of the imagination. The reason the guy had done so poorly was that the way he had written his proposal was about as exciting as watching paint dry in prison.
My colleague made no drastic changes – the fact of the business and its products (innovative power tools) were beyond his control. And yet his changes resulted in 82 investors contacting the entrepreneur. 82. When previously he’d got zero.
What did he change? He injected some life, some enthusiasm, some excitement into the proposal. The subject matter remained the same, but he gave the proposal a buzz. He infused it with a sense of success just around the corner; and that’s what intrigued the investors.
So give yourself a fighting chance and make sure you strike the right tone…