Should you Invest in ICOs?

The cryptocurrency market has caught the attention of many people in recent years – from traders who want to make a quick profit to angel investors concerned about the authenticity and transparency of the system. Within the startup community, ICOs (Initial Coin Offerings) have come into prominence.

So far, ICOs have helped many entrepreneurs raise funding far more rapidly than traditional avenues. Many investors too have reaped the rewards of being able to exchange an asset that would normally only realise its value when and if the business exited via trade sale or IPO.

How does an ICO work?

Before a currency is put on the market, ICOs are made available for sale as tokens, which can be converted into currency or resold as tokens once the company becomes successful. When an ICO is started, the tokens are usually sold at a very low price making it easy for investors to buy lots of them.

Once the ICO hits the exchange platforms, there are very high chances that their value will increase. Investors who bought the tokens can sell them at higher prices if there is demand.

There have been lots of success stories on ICO funding, and people are already anticipating that there will be an increase in the number of ICO fundings within the next five years. We have certainly seen a rise in the number of companies offering ICOs on Angel Investment Network in the last year or so.

Btxchange.io mentions the example of SpectreCoin in their infographic, as one of the most successful ICOs of all time with a whopping 37,175% increase in their crypto coin value.

Are ICOs all good news?

While ICOs can have advantages compared to conventional funding methods, there are some downsides that investors should be aware of.

ICOs are poorly regulated by nature, and there have been incidents of fake fundings like the Benebit case in 2017. The initiators of the coin offering scammed people into investing large sums of money, and then just disappeared with the funds, without a trace.

Also, even if the ICO is legitimate, there is no guarantee that the new coin will gain enough value for you to make a profit. It’s a gamble like any other investment!

The bottom line is that, if you are interested in ICOs, and you don’t mind taking the necessary risks, then there is an excellent opportunity to generate quick returns from startup investments. Initial coin offerings have fast returns which could double or triple your capital in just a few months.

If you are either a complementary investor or an angel investor, it’s a good time to get involved with ICOs.

Btxchange.io have produced a helpful infographic to explain the ICO landscape further:

REVOLUTIONARY WAY TO GET FUNDED: ICO ROUNDUPS

https://btxchange.io/ico-roundups-infographic/

Startup Due Diligence for Investors – Best Practices & Checklists

What is Due Diligence?

‘Due diligence’ sounds awfully serious.

When it came into use in the mid-fifteenth century, it simply meant ‘reasonable care’. It became a specialised legal/business term in the 1930s when the US government passed a law to ensure that securities brokers disclosed sufficient information when selling to investors.

It is now used as a general term for the process of verifying information.

The level of due diligence required and the level of due diligence possible varies depending on the information being checked. Naturally, a high-level corporate merger would require extensive due diligence.

When it comes to investor due diligence on early-stage companies and startups, the due diligence need not be overly laborious. It is necessary but should not be daunting, even if it’s your first investment of this kind.

So, for the remainder of the post, I shall refer to it as DD. It’s less daunting that way. (And easier to type!)

Why is due diligence different for early stage companies?

Any sort of institutional or corporate investment requires sophisticated and extensive DD.

Investment institutions tend to invest in companies who are well past the proof-of-concept and early growth stages. As such, they can examine substantive data in their assessment and check its validity. They also need to check it so that they can justify the investment to their own shareholders.

It’s only when a company has achieved a certain level of tangible traction that you can reasonably run analytics on it in the hope of predicting the eventual outcome and the risks involved. The later stage the company, the more data, the more due diligence, the more predictable the outcome.

Early-stage companies accepting investment from private investors tend to have less tangible evidence available for checking because the company simply hasn’t been operating long enough. This means that the checks an angel investor carries out are mostly formulaic.

Due diligence at the level of early-stage investments is predominantly about checking the claims of the company in their documents.

This does not mean you should carry out minimal DD. Evidence suggests that investors who spend longer on DD get higher returns (UKBAA research has shown that at least 20 hours due diligence has a positive impact on the likelihood of a multiple investment return (Siding with Angels; Robert Wiltbank, Nesta-UKBAA)).

Correlation or causation, it doesn’t really matter. You should carry out thorough due diligence.

But the point is that it is not a complicated process. People making their first skirmishes into angel investments are sometimes put off by the idea of DD. They think that they don’t have sufficient experience to do it properly and as a result, they’ll be throwing away money.

They think like this because they have the expectation that their DD ought to be as rigorous and detailed as that carried out by a private equity firm, for example.

But this is an unfortunate belief. It’s naïve to think that the same level of DD should be carried out – there is not enough information on early-stage companies. Because they are early-stage!

If there was more information to check, then the investment would probably not be open to private investors. Nor would the opportunity for the huge returns possible for early-stage investors be available because the risk quotient would be so much reduced.

It’s important to remember the reasons why we choose to invest in early-stage companies:

  • We want to bring our experience and network to bear so that we have an active role in helping the company grow and succeed.
  • We want to take a calculated risk to help a team of founders we believe in to achieve something cool.
  • And in so doing, we want to make a good return on our investment.

The early stage means that we have the opportunity for all those things but, naturally, the risk is larger. Proper due diligence is your armour against this risk.

due diligence

Is there an optimum way to carry out due diligence?

DD research can be divided into six principal sections as set out in the following section.

But how should you approach them?

It’s simple enough to work systematically through each, but this can be time-consuming and, human as we are, we are all prone to mistakes and oversights.

It can make the process less burdensome and pressured if undertaken with one or more investment partners. You can divide the labour, check each other’s research and discuss to form an opinion.

If you then all decide to invest, it can make the process even more enjoyable and less pressured.

What DD should you carry out on early-stage companies?

Your DD should cover six main areas (I have written a downloadable checklist for each):

1. Team & Management

Early stage investment is often said to be in people rather businesses. This is because it’s the execution that counts…

This checklist will help you form an impression of whether you think the team has what it takes to execute.

Download checklist

2. The Business

Do you believe in the idea?

This checklist will help you work that out.

Download checklist

3. The Market

Market research is the process of finding out information about demand, trends, size and competition in the target market. It’s an important process for gauging sales volume, pricing and ultimately whether there is sufficient opportunity to develop an idea into a lucrative business. Entrepreneurs will present you with certain claims about their market – your DD should aim to verify their claims.

This checklist will help you decide whether the company has identified a viable market opportunity.

Download checklist

4. The Technology/Product (if applicable)

The team is often considered more important than the starting product. But it’s still essential to check the product is a great solution. A great team with a great product ticks a lot of boxes!

This checklist will help you assess the tech.

Download checklist

5. Finance & Tax

When entering into an investment agreement, you need to be aware of any information that may increase or decrease the risks involved. Financial DD ensures that you are aware of all the existing assets and liabilities.

This checklist will help you assess the company’s position.

Download checklist

6. Legal

It’s a good idea to send a legal enquiries check sheet to any company you are interested in. Use this template drawn up by Tony Littner at Harbottle & Lewis LLP, Jon Gill at Eversheds LLP and Sandy Finlayson at MBM Commercial LLP for the UK Business Angels Association. (If you’re looking at a company based outside the UK, it should work for you too.)

Download legal letter checklist template

Summary

These checklists are in no way exhaustive. Your DD questions will vary according to the type of business you are evaluating. But these should serve as a useful starting point. And they should indicate the level of due diligence required for these types of investments.

*Thanks to the UKBAA whose own due diligence checklists were the inspiration for this article.

The Startup Microdose Podcast & The Future of Information Sharing

Podcasts are becoming some of the most avidly consumed content available. More and more people are tuning for their ‘microdose’ of wisdom from industry leaders and pioneers. It’s a great and easy way to broaden your mind while you commute, work, cook, exercise and relax.

I’ve got in on the act with my colleague, Ed Stephens, from the senior team at Angel Investment Network.

On our show, The Startup Microdose Podcast, we interview successful entrepreneurs and investors to unpack their stories, opinions, quirks and wisdom.
Microdose 1

Popular episodes include:

Oleg Fomenko, Founder of Sweatcoin – the fastest growing health and fitness app in history

Anthony Rose, CEO of Seedlegals – angel investor and the man who built BBC iPlayer

Pip Jamieson, CEO of The Dots – ‘The LinkedIn for Creatives’

Tim Armoo – the 23-year- old marketing whizz behind Fanbytes – a Snapchat-focused influencer marketing platform

You can view all available episodes with full descriptions on iTunes or www.startupmicrodose.com

microdose itunes

The Future of Podcasting – The Interactive Experience with Entale

As part of this project, we’ve teamed up with our friends at Founders Factory-backed Entale.

They are revolutionising the podcast experience by incorporating visual context, time-stamped links and chaptering. These additional features allow listeners to derive a deeper and more interactive experience from their favourite podcasts.

microdose entale

They’ve got a tonne of great shows already on the platform including The Startup Microdose, so make sure you check out their app!

Coming up on The Startup Microdose Podcast:

Maya Pindeus, Founder of Humanising Autonomy (Deep Machine Learning in Autonomous Vehicles)

Emma Sayle, Founder of Killing Kittens & one of the UK’s leading ‘sex-entrepreneurs

Julian Hearn, Founder of Huel (Nutritionally complete food)

Giles Rhy-Jones, CMO of what3words (A new address sysstem for the world – previously featured on this blog in a post called “How what3words are Changing the World

We are very excited to share this with you – enjoy!

Do you want to be interviewed on the podcast? Or know someone with entrepreneurial flair and knowledge to share?

I’d love to hear from you…

What are the UN’s Sustainable Development Goals?

In the past few years, there has been a dramatic surge in interest relating to so-called ‘impact’ companies and investments. Public awareness and concern for global economic, environmental and social issues are at an all-time high. We attribute this in part to the so-called ‘Blue Planet Effect‘ and in part, to the ever more ominous severity of the issues we face. As a result, institutions like United Nations have set out strategies like their Sustainable Development Goals to help solve these issues (more on these below).

The data from Angel Investment Network‘s 1 million users reflect this growth in interest. We’ve seen an astonishing 250% increase in the number of investors interested in the Greentech & Environment industry in the UK since 2016. The number of companies raising money who define themselves as ‘ethical’ and ‘sustainable’ has blown up at a similar rate.

And we don’t expect this interest to dwindle anytime soon. Our newest product, Seedtribe, was built to support investors and companies in the ‘impact’ sector. In a previous post, I described how Seedtribe is encouraging investors to commit more to this space and I defined ‘impact’ in this context as:

…when an investor backs a business which has a social and/or environmental mission at its core…[but is also] targetting profitability alongside its social mission.

This works as a general definition. And makes the important point that investing in ‘impact’ is NOT philanthropy.

This point is reflected in Seedtribe’s model for selecting companies. There two key focus areas in our evaluation:
  • We are committed to generating returns for our investors. We select businesses that we believe have the strongest chance of achieving high-growth and/or high-profit. These will ultimately have the best chance of producing returns for investors. Our investment committee has 14 years’ experience investing in and raising finance for startups. It employs due diligence methods honed over this period to pick the most promising companies.
  • We are also committed to working on ‘impact’ businesses. Our investment committee also evaluates businesses according to criteria developed by the United Nations, known as ‘Sustainable Development Goals’ (SDGs). It is these businesses which we believe will produce positive and lasting change in the world and allow our investors to invest in impact.

sustainable

But what are the UN’s Sustainable Development Goal (SDGs)?

The SDGs, or Global Goals for Sustainable Development, are a collection of 17 global objectives set by the United Nations in 2015.

The 17 goals focus on global social, environmental and economic issues. Their purpose is to produce positive and lasting change across key development problems in all countries.

The official title for the project is ‘Transforming our World: the 2030 Agenda for Sustainable Development’.

The goals are broad and interdependent, but each has its own specific targets. Each goal is described in brief below:

Goal 1: No Poverty

End poverty in all its forms

Goal 2: Zero Hunger

End hunger, achieve food security and improve nutrition and promote sustainable agriculture

Goal 3: Good Health & Wellbeing

Ensure healthy lives and promote well-being for all at all ages

Goal 4: Quality Education

Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

Goal 5: Gender Equality

Achieve gender equality and empower all women and girls

Goal 6: Clean Water & Sanitation

Ensure availability and sustainable management of water and sanitation for all

Goal 7: Affordable & Clean Energy

Ensure access to affordable, reliable, sustainable and modern energy for all

Goal 8: Decent Work & Economic Growth

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Goal 9: Industry, Innovation & Infrastructure

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

Goal 10: Reduced Inequalities

Reduce inequality within and among countries

Goal 11: Sustainable Cities and Communities

Make cities and human settlements inclusive, safe, resilient and sustainable

Goal 12: Responsible Consumption & Production

Ensure sustainable consumption and production patterns

Goal 13: Climate Action

Take urgent action to combat climate change and its impacts

Goal 14: Life Below Water

Conserve and sustainably use the oceans, seas and marine resources for sustainable development

Goal 15: Life on Land

Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

Goal 16: Peace, Justice & Strong Institutions

Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

Goal 17: Partnerships for the Goals

Strengthen the means of implementation and revitalize the global partnership for sustainable development

sustainable 2

How is Seedtribe helping?

The UN recognises that successful implementation of these targets will be most realistically achieved by individuals and institutions working towards them on a local and regional level. Lasting global impact will then be realised provided there is a sufficient collective effort across different regions.

Seedtribe aims to contribute to this collective effort. We help investors and entrepreneurs use their skills and resources to create impactful businesses with the potential to affect positive change across all these SDGs.

Watch this space.

Impact Investing Interview #3: How what3words are Changing the World

My first project when I joined Angel Investment Network back in 2014 was to organise a pitching event in central London. We selected five of the most exciting UK companies who were fundraising; we had no specific agenda to include impact companies – we just wanted innovation! We prepped them to pitch to 150 investors whom we had specially invited from our network.

what3words was one of those companies.

Mike Lebus & James Badgett, the founders of Angel Investment Network, had already invested in what3words’ seed round – so they were keen for Chris Sheldrick, the CEO and co-founder, to put in a good performance.
chris what3words impact

He obliged. His understated charisma perfectly complemented the visionary nature of the project – dividing the globe into 57 trillion 3×3 squares and giving each a three-word “postcode”.

I was thoroughly impressed. The investors appeared less so, preferring to engage the other companies (some SaaS products and a few apps) in conversation during the post-pitch drinks. This lack of impact baffled me. I asked some of them what they thought of what3words – it was a cool idea but apparently, they couldn’t see its application.

Four years later they must be kicking themselves!

Since closing £600k through Angel Investment Network, they have gone on to raise $13.8m across several funding rounds with Intel Capital leading a $3.5m Series A; and Aramex International leading a $8.5m Series B. Their most recent round was a corporate one with German car manufacturer Daimler buying 10% of the company in January 2018.

And that application problem?

Well, I’ll let you read for yourself in my interview with the what3words team below.

Prepare to have your mind blown…

The Interview

Part 1 – About what3words

What’s your mission?

We are on a mission to make the world more efficient, less frustrating and safer. Our goal is to be a global standard, giving everyone and everything a simple, accurate and reliable address they can use whenever they need it. what3words impact 7

We want businesses, governments and services worldwide to use 3-word addresses to become more efficient, and improve their customer experience.

At the same time, we look forward to showing how better addressing can reduce businesses’ environmental impact, ease pressure on crowded cities, fuel economic growth in developing nations and save lives.
what3words impact 3

Who are your clients?

Our 3-word addresses are now used by over 650 businesses, government agencies and NGOs across over 170 countries, and by sectors including automotive, e-commerce, logistics, automotive & mobility, travel & navigation, post, national infrastructure, events, humanitarian, disaster response and emergency services.

Our customers include Mercedes-Benz, who are about to launch the world’s first car with built-in what3words voice navigation. Drivers will be able to say a 3-word address and navigate to a precise destination, anywhere in the world.

Global logistics giant Aramex has integrated what3words to optimise its last mile operations in the Middle East and South Africa. Many other couriers and food delivery customers are using 3-word addresses, including Domino’s Pizza in Saudi Arabia.

National postal services in 10 countries to date have adopted what3words, giving over 200 million people an accurate and reliable address, many for the first time. Many of our customers are innovative future-facing companies including DXC Drones and IBM’s #AccessibleOlli.

Our humanitarian partners include the United Nations, who have adopted the what3words system for its disaster response and recovery app UN-ASIGN, alongside the Red Cross. Other NGOs include Gateway Health in South Africa, who are using what3words to address township homes on the outskirts of Durban, and who have trained local ambulance drivers to use 3-word addresses to reach pregnant women faster in the township areas, saving lives.

(Remember that application problem?)

What stage are you at?

what3words started in March 2013. A team of three managed it through its early development and funding. We now have over 70 employees across the world and we’re growing fast.

what3words can be easily integrated by businesses, governments and NGOs into apps, platforms or websites, with just a few lines of code using our online API or SDKs. Our free what3words app, available for iOS and Android, and the online map enable people to find, share and navigate to 3-word addresses is available in 22 languages. 3-word addresses can be switched instantly into any supported language, and even looked up in one language and shared in another.

what3words impact 4

Our newest product, 3WordPhoto, allows people to easily label photos with a 3-word address and share them in any language. This means that a simple photo, shared in a message or on Twitter, can give a precise location.

We have already had great success integration our system with voice input with specific automotive partners, and intend to roll out voice capability into our own products in the future.

What is your business model?

what3words is free for individuals, and qualifying not-for-profit and humanitarian entities.

For business use, we sell licenses for our products including our API and SDKs, and services such as very large-scale batch conversion of 3-word addresses to GPS coordinates or vice versa.

How much funding have you raised to date?

To get to where we are today we put a lot of energy into seeking out the right investors to bring the business credibility, contacts, experience, and knowledge as-as well as funding.

We are incredibly lucky to have a range of industry-experts backing what3words, all drawing upon extensive expertise, following successful careers in the automotive, technology, venture capital, and challenger sectors.

Earlier this year, Daimler acquired a 10% stake in the business, following the announcement that Mercedes-Benz is about to launch the world’s first car with built-in what3words voice navigation. Our Series B investment round was led by Aramex, with other notable investors including Deutsche Bahn and Intel Capital.

What’s next?

Within the next year, we will launch our 28th language, allowing 3.8 billion people to use 3-word addresses in their home language (that’s 51% of the world).

We also expect to open more local offices to add to those we’ve opened in Mongolia and South Africa.

Our growth plans involve more global integrations to add to Daimler, Aramex and the UN, along with focused local market activity targeting all sectors within one country or region, creating an ecosystem in which 3-word addresses become a standard.

An example of this is Mongolia, where what3words is already used for post, e-commerce, taxis, banking, fast-food delivery, tourism and microfinance.

Part 2 – What3Words on Impact

What does “impact” mean to you as a profit-driven company?

We believe that companies should do good by doing business. We want to make our system as accessible as possible – what3words is free for individuals, and qualifying not-for-profit and humanitarian entities.

The practical impact of what3words is very clear: we give everyone and everywhere a simple address. Providing a simple way to communicate the location of homes, remote areas and disaster zone enables social and economic inclusion, the delivery of mail and facilitates emergency responses, registering to vote or opening a bank account.

We recently conducted global research and discovered that an astonishing 33% of people are open to trying an entirely new form of addressing.
what3words impact 2

Can you give me an example of how what3words is used in the UK? And in the “developing world”?

The what3words technology is being used all across the UK: from a number of police forces to the emergency response teams at Glastonbury, delivery companies and Black Tomato a luxury travel company.

But it’s not just companies benefiting from the technology; individuals in the UK are using what3words every day to meet friends at festivals, organise running clubs in Hyde Park, planning hikes in the Peak District, communicate the location of injured animals on farms and to guide guests to their AirBnB entrances.

We are enabling everyone, everywhere in the world, whether they are in cities, on remote islands or even in tents on the Mongolian plains, to have a simple and reliable address.

An example of this, as mentioned above, is the fast developing country of Mongolia – remote and nomadic in culture – who have adopted what3words as their official addressing system. Now, for the first time, Mongolians are able to receive mail, register for a bank account and receive food deliveries – all by using a 3-word address. Similarly, we have been adopted by countries such as the Republic of Côte d’Ivoire, Djibouti, and Nigeria as a recognised form of address.

Do you support any charities?

what3words is, and always will be free for not-for-profit and humanitarian entities. We are used by diverse humanitarian partners, and it’s powerful to see our technology supporting those in need. We were used by the Mexican Government to aid disaster relief during last year’s earthquake, and are being used today by the Red Cross, NATO and the United Nations to provide humanitarian aid.

We are also used by a number of smaller nonprofits – one of our earlier partnerships which still remains incredibly special to us is Gateway Health. The Gateway Health Institute provides healthcare and community services in disadvantaged areas across South Africa. They run programs to deliver medicine, supply emergency transport for women in labour, and identify hot spots for human rights abuses. But many of these programs struggle due to the lack of reliable addressing.

Gateway Health uses 3-word addresses in the township of KwaNdengezi, near Durban. The what3words grid system means that every part of the township – including homes, community centres and facilities like water pumps – already has a pre-assigned and fixed address.

what3words impact 5

Once a home knows its 3-word address, its residents can share the location accurately and reliably. Medical services can identify where pregnant women live and provide them with essential pre-natal care. Should any complications occur during labour, ambulance crews also know exactly where to go, to provide life-saving assistance.

What is your current biggest challenge?

Our biggest challenge is that we’re trying to effect a huge, global behavioural change. People have been using street addresses their entire lives, without questioning them. They get lost, packages go astray and billions of people worldwide have no address at all but, until they’re challenged to really think about it, some people don’t inherently feel there’s a problem.

We’re overcoming that challenge by refining how we clearly and quickly demonstrate the problem, finding examples (and there are so many) of when poor street addressing frustrates individuals and costs companies billions. As soon as people see how poor addressing affects them personally, they immediately see the need for our solution.

What are you most proud of/excited about for your business?

The Mercedes-Benz partnership was a huge achievement, and the announcement at CES was an incredible memorable moment for us. The process was also especially fast – taking only 6 months from inception to integration – and there are already over 700,000 cars on the road which are what3words enabled.

what3words impact 6

Because poor addressing affects so many industries – from navigation to travel, logistics to events – it’s exciting to see the tangible impact that our technology brings, and the room for exponential adoption. Bad addressing is so universal that our potential partners and use cases are unconstrained.

So where does what3words come on the Impact Scale?

The vision of this company is extraordinary. Four years ago it was so extraordinary that many of our investors could not see its application and potential impact. The what3words team’s execution over the past four years has made a mockery of that.

Here is a company that can count itself among the most innovative to come out of the UK tech scene in recent years. Who knows what the future holds for them but I’d put my money on good things!

Angel Investment Network’s latest project SeedTribe, which focuses on angel-led crowdfunding for impact companies, was built to help companies like what3words get off the ground and change the world. You can view latest impact companies here.

I hope that what3words’ story can inspire budding impact entrepreneurs and investors to build impactful companies.

Impact Investing Interview #2: Netflix for Independent Films

Last month, I published our first ‘Impact Investing Interview’ with Work For Good who are revolutionising the market for corporate charity donations. Since the publication of that interview, Work For Good is now overfunding (accepting pledges until 30th April) on SeedTribe (Angel Investment Network’s impact-conscious crowdfunding platform). Thanks to those of you who contributed and shared!

For those new to impact investment, the post starts with a concise definition of impact investment, its benefits to investors and its ability to bring about positive and lasting change in the world.

The purpose of this series of interviews is to edify and entertain investors and entrepreneurs with an interest in impact and socially responsible investment/entrepreneurship.

Today’s interview is with Dean Fisher, the Director of Bow Street Media whose latest project ‘Film Ahoy‘ is bringing a socially-conscious angle to online film distribution. It’s an enormous market but often considered ethically-bankrupt.

Film Ahoy is working to change this…

The Interview

Part 1 – About Film Ahoy

What’s your mission?

Our mission is to create an alternative film distribution platform for both consumers and filmmakers. The product we’ve been developing will change the industry and offer great alternative programming. We plan to launch the platform soon with the aim to be online on mobile and eventually on smart TV’s.

Who are your clients?

The digital distribution market has now outgrown the physical distribution market. On one side, our clients are consumers who watch films online; and on the other side, content providers and filmmakers complete our client base.

Norjmaa_poster_awards impact

What stage are you at in your business?

We have developed the technology and the website is ready to go live. We have also got on board an advertising partner who can start selling advertising on the site. So far we have secured over 150 titles to the site and will continue to grow the films on offer. We are going to soft launch the website and then start marketing it to consumers to build traffic and awareness for the Film Ahoy brand.

What’s your business model?

We acquire and place films on the Film Ahoy platform where consumers can watch them for free. All they have to do is watch 2-minute commercial breaks every twenty minutes. If they don’t want to watch the commercials, they will pay £1 per film to own the title and be free of commercials. All revenue is split 50/50 with the filmmakers. We will also generate additional revenue through ad placements on the site.

How much funding have you raised to date?

We have raised £67,500 through SEIS.

What’s next for your company?

We are launching the site in the next couple of weeks. There are a few tweaks being done by our developer next week and then we are ready to go. All of our marketing materials are in place and ready to go live. Each film’s trailer will also be promoted on the web through social media and advert placements. (Here’s a link to the new consumer advert).

Once the site starts to build traffic, we are going to produce the app for IOS and Android. We also have some options to put the site on Smart TV’s which will give the consumer every chance of using the platform.

Part 2 – Film Ahoy’s Potential Impact

impact

What does “Impact” mean to you as a profit-driven company?

We will generate 50% from all advertising and pay per view revenue. We can also generate revenue from Google adverts, product placement, merchandise and the sale of statistics on how many times each film is viewed. The overheads of running the company are quite low so we feel we can turn this into a profitable business in a reasonable time frame.

What are the metrics you will use to track/measure your impact?

We have targets each year on how many views we are looking to achieve. We can assess our progress on a month by month basis. Our reporting system gives us the stats we need to monitor our progress. We can also what campaigns will help drive traffic to the site.

How do you go about choosing and confirming the films to list on your platform?

We attend film markets all year around. The three key film markets are Berlinale in February, Cannes in May and the AFM in November. At the markets, we meet with as many content providers as possible. These can be in the form of filmmakers, sales agents who represent films or distributors. So far we have some signed deals with a large number of companies. They provide us with multiple titles which we curate by initially watching the trailers and the films. At the end of the American Film Market, we had received over 1000 films.

What is the vision for the company?

The vision for the company is to launch in the UK first of all. We want to focus on building the brand and making the platform the go-to place for free independent films. Once we have established ourselves in the UK, we will then move into the US market.

Can you tell us more about the need for Film Ahoy in the film industry? What do you see as the biggest challenges in the film/media industry at the moment and how do you hope to address any of them?

The market has many subscription service providers for every genre. We feel we have a different angle and will appeal to both consumers and filmmakers. For consumers they do not want to subscribe to every service available and some people cannot afford monthly fees. Film Ahoy is an easy-to-use, no-commitment service. Consumers will put up with adverts if the content is free.

We don’t feel that an independent film should be £9.99 to purchase online. Independent films need to be more competitive and priced accordingly. When iTunes came out tracks were £0.69, this took away the need for people to download illegally as it was easier to purchase the track then look over the net and download a virus. Pricing films at £1 to own means that independent films can be competitive.

The industry is becoming more and more challenging. Hollywood Comic book films perform consistently but independent films have to fight to find their voice. We have got the support of the industry and many companies have signed up to provide content. For filmmakers, they can use Film Ahoy as an additional revenue stream. We will also be encouraging people to promote their films on the platform which will drive traffic to the site. Eventually, people will be making films just to go up on Film Ahoy which will give us unique content.

What is your current biggest challenge and how are you seeking to address it?

We feel we need a reasonable marketing budget to grow the company and create awareness for the brand. If we do not raise as much as we hope the growth of the company will be slower.

What are you most proud of/excited about for your business?

We feel this model can really shake up the industry. Cynical people would say how can you compete with Netflix or Amazon. The marketplace is big enough for new players and services which gives the consumer an alternative viewing experience. We feel that Film Ahoy can break into the market and become a global brand.

Interested in Impact Investment?

If you want to find out more about Film Ahoy and their current fundraising round, visit their pitch page on Seedtribe.

Do you anyone who might consider using Work For Good for their business?

Do you know anyone interested in impact investing?

Please consider sharing. You’ll be doing good!

Impact Investing Interview #1: Work For Good

What is Impact Investing?

Impact investing is when an investor backs a business which has a social and/or environmental mission at its core.

This is not the same as philanthropy where investors expect no returns on their investment other than the reputation boost; and an impactful business is not the same as a non-profit.

Impact investments are made, with financial returns in mind, into businesses targetting profitability alongside their social mission.

An impact investor is, therefore, someone who chooses to support great businesses aiming to do good and make money, rather than just turn a profit.

The decision to be an impact investor is an empowered choice which has already enabled many world-changing businesses to do great things. The rise in awareness of the key social and environmental issues of our time has started a shift in the way many investors view the desired outcome of their investments. More and more want their financial outlay to have an impact as well as generate returns.

What are we doing to help this movement?

Angel Investment Network recently launched Seedtribe to attract more of its investors into the impact investment space.

Seedtribe is an angel-led, crowdfunding platform when everyday investors can invest from as little as £1000 into opportunities backed by angel investors and curated by the Seedtribe team. Investments can be made directly through the platform so the process is as seamless as possible.

impact

We are confident that this new model will help impact businesses complete their funding rounds quickly so that they can focus on bringing their benefit to the world.

We are delighted to have Work For Good as one of the first impactful businesses on the Seedtribe platform.

Who are Work For Good?

UK annual charity income is around £20bn, but only 2% of this comes from businesses, as the process is complex, costly and lacks transparency with many legal and tax impediments. Work For Good’s platform removes these barriers and has created a market for corporate giving.

Work for Good makes it easy for businesses to give in a way that’s good for them and charities – by doing what they already do. By giving through the Work For Good platform, they can impress their clients, inspire their people, and be a force for good in the world.

impact

Liv Sibony recently took charge as the Head of Crowdfunding at Seedtribe and brought Work For Good onto the platform. (Liv previously founded and sold Grub Club, a platform aimed at helping chefs build a reputation and an income by hosting pop up dining experiences.)

She sat down with Danny Witter, CEO & Co-Founder of Work For Good, to get some insight into the problem of corporate giving and the Work For Good solution…

The Interview

What’s your vision for the company?

To make business giving the norm and to unleash the giving power of the business world. Business giving makes up only 2% of all charity income in the UK which is a disgraceful figure. We can not rely on the giants of the business world to do it for us, The FTSE 100 charitable donations are down 25% from 2013 to just £1.2 billion in 2016, so why not create a culture where the other 5.7 million businesses support causes just by doing the work they already do? If 5% of SMEs gave one day’s revenue, it would generate £208 million annually.

It also improves the bottom line for businesses (68% of SMEs believe their company’s donations to charity had a positive effect on their company’s profitability and 37% of SMEs claim that giving to charity helps to attract new clients) and improves employee morale while raising vital funds for charities.

For charities, especially the smaller, local ones who have less capacity to market themselves and seek donations, we will create greater visibility and support for them to grow their efforts and allow businesses to match with charities that are local or relevant to them.

We don’t think this vision should be limited to the UK either, we strive to see people working for good across the globe, and are delighted that we’ve now received trademark protection across the US and EU.

Can you tell us more about the meta-trend of purpose in business, as you see it?

Investing in good causes grows your business too. In fact, many companies are using it as a major part of their business strategy – TOMS’ ‘One for One’, Warby Parker’s ‘Buy a Pair, Give a Pair’, and Bombas socks ‘One pair purchased = One pair donated’ are just a few using ‘giving back’ as part of their marketing strategy. Cause-related marketing is not just a fad, it’s the response to consumers buying with their own values and in mind.

Consumers increasingly care about where their products come from and how businesses behave, and we see lots of marketing around sustainability and responsibility, and now, giving. The trend is deepening fast, and when in January Larry Fink, CEO of the world’s largest asset manager BlackRock, published a letter saying that firms that lack a social purpose “will ultimately lose the license to operate from key stakeholders” it marked a watershed moment in the importance of authentic corporate responsibility. This applies from global behemoths to sole traders, and Work for Good is particularly focussed on SMEs that have less resource to do so.

For all the personal graft no business was ever built by the founders alone. Just as it takes a village to raise a child it takes a community of stakeholders to build a business. Without loyal customers, reliable suppliers, supportive investors, engaged communities and dedicated employees you have no business. Today, these constituencies want more from the companies they interact with. They are as interested in the story behind the business, the purpose the drives it and the positive values that underpin it. It is no coincidence that B Corp businesses, exemplars of the purpose-led commercialism, have been shown to grow 28 times faster than the UK economy. The giving mechanisms on our platform can also allow for a company’s clients/customers to choose the charities to which they donate. It gets everyone involved and motivated.

Why is it currently so difficult for businesses to give to charities?

The mechanisms currently in place just do not create a marketplace for business and charities to find each other and make transactions. It’s not just as simple as seeing a charity you would like to support, and then donating. Charities often do not even have a payment portal on their sites. The days of writing a cheque are long gone. Charities also find it hard to cut through the noise to create relationships with relevant businesses who may be interested in supporting them.

Work for Good is encouraging businesses to give in a smart way that is good for business, specifically by linking donations visibly to what they do, and talk about it with pride and authenticity in a way that will engage all their stakeholders, and inspire other businesses to follow suit.

However if you link donations to sales and talk about it you get caught by the charities acts, which prescribe that you have to bilaterally negotiate a commercial participation agreement with every charity you might give to, and the charities have risk of paying VAT on those donations.

As such it is painful to implement, and many charities have minimum annual donation requirement of up to £100,000 a year before they’ll negotiate a CPA with a business, which excludes virtually all SMEs.

Work for Good has solved this, the combination of the terms a business signs with the platform and the terms signed by any charity jointly form the CPA, allowing businesses to give to as many charities as they like in a few clicks, in any size, and without having to engage the charities direct, with both parties being entirely compliant. There is also no VAT payable by the charity.

What does “Impact” mean to you as a profit-driven company?

It’s a way to merge the profit-generation that people already strive for with the purpose of producing a specific benefit to society. We want to maximise that impact potential for businesses.

For us, the amount of money going to charities via our platform is the metric we concentrate on most. We believe that good business should have a positive impact on society. Our mission is to create a culture of business giving and therefore an increase in the amount of donations charities receive from SMEs. We also believe that giving has a positive impact on a business’ bottom line – two-thirds of businesses we surveyed reported higher profits when they incorporated giving into their business strategy.

Interested in Impact Investment?

If you want to find out more about Work For Good and their current fundraising round, visit their pitch page on Seedtribe.

Do you anyone who might consider using Work For Good for their business?

Do you know anyone interested in impact investing?

Please consider sharing. You’ll be doing good!

7 Positives for the UK Startup Scene from the Autumn Budget

Yesterday the Chancellor unveiled his budget plan for the UK.

The main headline was that we can expect slow growth (around 2%) for the next few years. And that Brexit seemed to be the principal cause of this. A gloomy budget indeed.

But, as ever, even in the murkiest river a nugget of gold can be found. With a little sifting, I’ve found some positive news for us spirited folk on the startup scene.

The sifting was very boring. I’ve tried to set out my findings as clearly as possible. So, you can enjoy the gold without getting your feet wet! You’re welcome.

The Treasury conducted a survey called ‘Patient Capital Review’ which set out to consider how to support innovative firms in getting funding and achieving scale. The conclusions drawn are positive and will be a boon for early-stage companies over the next 10 years.

These conclusions resulted in an ‘Action Plan’ in the budget which aims to unlock £20bn over the next 10 years to support growth in innovative firms.

The main points are as follows:

1. Tax Breaks (EIS & VCT)

– EIS allowance for people investing in ‘knowledge-intensive companies’ will double from £1m to £2m each year.
– ‘Knowledge-intensive companies’ can receive twice as much EIS & VCT investment each year. That’s a move from £5m to £10m.

(Check out a previous post for more info on the benefits of EIS.)
SEIS & EIS budget
Result: An estimated extra £7bn of investment.

2. Government-backed Co-investment Fund

– A £2.5bn Investment Fund incubated in the British Business Bank will be established to co-invest with the private sector.
Result: An estimated extra £7.5bn of investment.

3. Backing Fund of Funds

– The British Business Bank will invest in a series of private sector fund of funds.
Result: An estimated £4bn of investment will be unlocked.

4. Backing Fund Managers

– The British Business Bank will continue to back new and existing fund managers through its existing Enterprise Capital Fund.
Result: An estimated extra £1.5bn of investment.

5. Backing overseas investment into UK

– The Department of International Trade will support overseas venture capital into the UK.
Result: An estimated extra £1bn of investment.

6. Support for Regional Investment

– The British Business Bank will establish new investment programmes to support business angel groups outside of London. This will complement existing programmes like the Northern Powerhouse Investment Fund and the Midlands Engine Investment Fund.
– £21m is budgeted to expand Tech City UK’s reach across more regions.
Result: Unlocking of investment potential outside of the London hub.

tech city uk budget (1)

7. Other

– British Business Bank to investigate supporting Women Entrepreneurs getting access to equity investment
– £2.3bn increase in R&D spending
– £1m Games Fund to support video game development
– Helping Pension Funds invest in innovative firms
– Qualification for Entrepreneurs’ Relief will no longer de-incentivize accepting external investment

I hope all that makes sense.

It’s pleasing to see that, in difficult times, the government recognises the importance of supporting the innovation sector as a key driver of our economy.

If you want more detail on this Action Plan in the budget, I’ll be at the UKBAA National Investment Summit on 28th November. Keith Morgan CEO of British Business Bank will be leading the discussion on the Chancellor’s proposals.

You can get tickets here

Hope to see you there!

Startup Investment – How do you get good deal flow?

Investors are all looking for a startup investment they believe will be successful. That much is self-evident. Of course, some investors will be looking to invest in companies in which they are interested or experienced. But ultimately, everyone is linked by the shared ambition to back winners.

So that begs the question – How do you pick a winner?

Pick an investment winner

The answer to this comes in three parts: the first is to do with Deal Flow and will be discussed in this post; the second concerns Deal Evaluation which was discussed in a previous post; and the third part is to do with Due Diligence, which will be covered at a later date.

Deal Flow:

One of the most important factors in successfully picking a winner is to have a large and varied number of deals to choose from. Naturally, the more deals you can get eyes on, the more astute you will be when it comes to picking good ones to invest in. That statement comes with a slight caveat – the deals you view have to be of a reasonable quality for you to learn anything valuable.

So where can you find a constant stream of deals of reasonable to high quality?

Network, Contacts & Friends:

The traditional way to do this is through your contacts. If you’re acquainted with people in the startup/investment community, whether they be entrepreneurs or investors, it’s highly likely that they’ll send deals your way. Especially if you ask them. (Silicon Valley in the US is basically fuelled by referrals).

The more you get involved in conversations the more you’ll be included in further conversations. For instance, if a friend or investment broker, sends you a deal, even if you know you’re not going to invest this time around (for whatever reason), it’s still worth responding to them and thereby keep the conversation open by demonstrating your continued interest and engagement.

Many of our investors on Angel Investment Network say that carrying out Due Diligence on companies vastly increased their networks by the simple virtue of having conversations with the right people (even if most were via email!); and as a result, they all started coming across increasingly better opportunities.

In other words, the more you build and nurture your network within this sector, the more you will be exposed to better investment opportunities.

Angel Investment Sites:

Using your network, as set out above, is the traditional way, but it still holds just as true. However, since the digital networking boom with the rise of sites like LinkedIn, it has become easier to broaden your professional network in less ‘organic’ ways. You no longer have to know someone to know them.

It is now easier than ever to expose yourself to quality investment deals and startup contacts online, and in so doing expand your personal network as never before. And you are, no doubt, aware of this as you browse this content on a site called Angel Investment Network!

Further to this, when you actually invest in a startup not only are you casting yourself in a very positive light to the company you invest in, but also to whoever was involved in brokering the deal, other investors you spoke to during your Due Diligence and to friends of the company you invested in. Once you’ve done this, you can guarantee that an increasing number of deals will come your way a) from the fact that you’ve expanded your network in the right way and b) from the fact that people know your serious and not a time waster.

Paul Graham says the following in support of this in a talk he gave at AngelConf in 2009 called ‘How to be an Angel Investor’;

“The best way to get lots of referrals is to invest in startups. No matter how smart and nice you seem, insiders will be reluctant to send you referrals until you’ve proven yourself by doing a couple investments. Some smart, nice guys turn out to be flaky, high-maintenance investors. But once you prove yourself as a good investor, the deal flow, as they call it, will increase rapidly in both quality and quantity.”

(Paul Graham is the guy who founded Viaweb (the first SaaS company) which was acquired by Yahoo in 1998 for a reported $49million. He then founded Y Combinator which has funded over 1000 startups since 2005, including Dropbox, Airbnb, Stripe, and Reddit. So he knows a thing or two about this.)

Startup Pitching & Networking Events:

The final string to your bow when it comes to receiving good deal flow is, of course, networking and pitching events. At these events, you’ll be able to both see deals pitched directly to you and to discuss them and network with other investors and entrepreneurs. You can learn a great deal and expand your network over complimentary drinks and nibbles.

There are tonnes of these events especially in startup-focused cities. We hold a pitching and networking event biannually. For information please send a quick email to info@angelinvestmentnetwork.co.uk.

Summary:

Ultimately, it all comes down to expanding your network and maintaining positive conversations with people in the industry. To recap the best ways to do this are:

– Startup events

– Angel Networking sites

– Investing

And in all cases, it’s the value of the interactions you make that will dictate the positive influence on your network and concomitantly, the standard and consistency of deal flow that gets referred to you.

Video Interview: What’s the difference between Angel Investors and VCs?

The difference between angel investors and venture capital firms always seems to confuse entrepreneurs.

In truth, the difference is fairly clear-cut.

Who are they? What do they look for? How can they help? How much are they likely to invest? These are all key differentiators.

As an entrepreneur looking for funding, it’s important to understand these differences. Your choice of who to approach and when could have a significant effect on the efficiency of your round.

Xavier Ballester, the co-director of Angel Investment Network’s brokerage division, explains more in this recent interview. He’s talking to our friends at Linear, a specialist prime broker and award-winning hedge fund incubator based in London and Hamburg.

Enjoy!

Prefer to digest your content in written format?

I wrote an article on the topic for Angel Investment Network’s Learn centre. You can read it by clicking here.