There has been a significant rise in the numbers of angel investors looking to back startups across the globe. Technology is the most popular sector and food and beverage seeing the fastest year on year growth. These are some of the key findings from Angel Investment Network’s annual analysis of the global state of angel investment funding based on data from their platform.
AIN has 40 networks extending to over 90 different countries; and now with more than 1.75 million users it is the largest angel investment community in the world. The results are a real barometer of global startup investment activity in 2022.
The data reveals there has been a significant rise in interest from investors looking to back businesses solving problems in a range of industries. There was a 6% increase in searches from angel investors looking for potential startup investments. Over the same period, the number of pitches fell by 7.5%, which highlights an increasingly positive ratio of investors to startups.
Technology remains the most popular sector for investors, with searches up 23% year-on-year. Software remains second, up 7%. Food and beverage is third with the fastest growth of all sectors, up 35% with a range of innovative ideas coming to market.
The finance sector becomes the fourth most popular sector, up 24% YoY, with huge interest in the FinTech space. However, there is a mismatch with it being only the 11th most popular sector for startup ideas. Meanwhile, interest in property has soared since the start of the pandemic, up more than 100%.
AgTech businesses remain in high demand and since the start of the pandemic have been one of the fastest risers.
Top 10 sectors for startups 1. Food and beverage 2. Property 3. Technology 4. Entertainment and leisure 5. Fashion & Beauty 6. Retail 7. Software 8. Agriculture 9. Manufacturing & Engineering 10. Hospitality, Restaurants & Bars
Top 10 sectors for investors 1. Technology 2. Software 3. Food & Beverage 4. Finance 5. Agriculture 6. Property 7. Medical & Sciences 8. Entertainment & Leisure 9. Energy & Natural Resources 10. Retail
According to Mike Lebus, founder of Angel Investment Network: “The results show the global startup ecosystem in good health. We are seeing a lot of pent-up demand from angel investors, who have held back during the pandemic and have accrued more capital that they are now looking to invest. Meanwhile entrepreneurs are now working harder at ensuring the proposals they are bringing forward are more fleshed out so we are seeing more quality over quantity in terms of nascent startup proposals. During a challenging period many have taken the sensible decision to bootstrap their businesses further and go for funding at a slightly later stage.”
Antony Yousefian is the co-founder of innovative agtech businesses Bx Technologies. In the latest Behind The Raise interview he talks to AIN about transforming farming, his lightbulb moment courtesy of cannabis growers, a near death epiphany, and a clever approach for refining your pitch for investors.
Antony Yousefian, co-founder Bx Technologies
Tell us about Bx Technologies and how you came up with the idea?
Bx Technologies helps farmers switch to climate friendly practices by measuring the climate-impact of produce, and putting that information on food. We do this via our software technology that quantifies farmers’ positive impact on improving their soil. We then sell that as a service. This enables farmers to differentiate their crops from others.
My co-founder Ben Bardsley is a 5th generation farmer and my background is in asset management where I was involved in the initial waves of cleantech. So we really understood the challenges in this space. Both on the ground and the economics behind it.
What is the problem you are looking to solve? Food production systems are the main driver for 70% biodiversity loss and over 30% of greenhouse emissions globally. With the pressure to feed the growing world, this is creating a negative feedback loop, we are incentivising farmers to produce food as cheap as possible, at the expense of the planet.
Our soils are our biggest carbon sink. They can hold three times the amount of carbon versus air. However through the use of damaging chemical inputs and pursuit of cheap yields, we are turning our biggest source of carbon capture into an emitter.
There is now a clear realisation this needs to change, but helping farmers to transition is critical. Many farmers are also in the red, with many farms only covering costs with the farming subsidy. I have to give a shout out to Jeremy Clarkson for bringing this to life in his series on Prime. Supermarket and food brands are under pressure to reduce their emissions – with the majority coming from farms. So what if we could use technology to quantify farmers who improve the soil, share that knowledge and incentivise more of it?
What was your lightbulb moment? My personal “ah ha” moment was when I was working with medicinal cannabis growers in North America with a Dutch agtech company 30MHz. They seemed to be optimising the crop by improving the soil health. The byproduct or result of this was putting more carbon back into the soil.
They did this because they were incentivised by their buyers (pharmaceutical companies) who paid more for higher nutrients or therapeutic effects from the crop. When I quizzed these growers and said, “Why don’t you do this for food? Their response was, “Yes we should” and I asked them “why don’t you do it then?”. Their response was “There is no money, there is no incentive”.
This was where my two worlds collided together. I had left the finance industry where more than 30% of assets had an ESG mandate and looking to invest in impact. Here is one of the most important industries in the world, which can grow in a way which repairs and improves the soil and our planet.
No amount of agtech or robotic automation was going to solve this. We had to either pay growers more for what they did or help them earn new revenue streams. For example repairing nature or putting carbon back into soil. Where it belongs by the way! It is how nature has been designing it for 3.8 bn years.
How did you get the business off the ground? Thanks to my co-founder Ben. He had been on a remarkable journey, coming back into his family farming business in 2013, after being a leader in the British army, who was shot on the front line in Afghanistan. He had a realisation in the moment of being shot that if he did survive, he needed to focus on something that would truly make a difference. He realised the farm would have to change if it was going to survive. He made the brave decision to stop investing in new trees for his farm, and agreed to set-up and incubate Bx within his farm business.
My role was to build out the capability to measure the positive impact in the soil (more carbon), quantify it and find a way to sell it. We had the perfect incubator and the envy of many Agtechs, where we had 800ha of playground to test and iterate. We were able to go fast, test and iterate with a market leader in the industry at scale.
It worked. Bardsley England became verified as Carbon Negative. Bx supported the farming business to win a multi-year contract with a supermarket. There we saw a brand or retailer willing to pay more for planet positive produce. We had proved the model.
What traction have you seen? Food Brands are under pressure and also have made commitments to remove emissions. The majority of their emissions are occurring on farms. For example for Nestle 90% of their total emissions come from scope 3 (ingredients, farming). Working with brands directly, we have found they are willing to pay more for carbon removal. In some cases 10x more than carbon credits farmers are selling for today (£15/t Co2e). Consumers want this to happen and brands can capture market share and premium. We have seen fantastic traction with leading food brands in the UK, and have our first international customers in the US and NZ.
Why are you raising investment now? We are raising to push out our series A raise (Early 2023), deliver the MVP for these first customers, including discussions with a major UK supermarket. We can double down resources on data-science, build on our machine learning capability and automate data-collection on the farm. This will give us the foundations, readying us to scale up with a supermarket and larger global brands in 2023.
What initially attracted investors to your company? We are told it is our story and the experience of the team. We understand farming and the food chain deeply, the problems that exist including in agtech development. Bringing together data-science and experience from sectors including legit money making games, media and finance.
Our business model has been attractive to investors which is centred around incentivising a transformation in the food system. We are able to quantify impact and reward it explicitly. One of our first investors was Counteract, a carbon removal VC. They understand this space well and the potential for soil to remove carbon at scale.
How important are startups in helping to solve climate change? And how can their ideas be best facilitated to tackle the existential threat to our planet? This is probably where us and Counteract see eye to eye. We believe it is going to take big bold bets NOW, not later to prevent a disaster. We need entrepreneurs with clear vision and backed by passionate impact investors who want to make a difference. Waiting for validation of business models is going to be too late. We have less than 8 years in the current carbon budget (1.5c warming-) and we need to start creating disruptive changes to industries. As Larry Fink (Blackrock CEO) said recently, the next 1,000 unicorns will be climatetech.
What is your top tip for anyone raising investment for the first time? Take time to do your homework on the investors you want to approach. Obviously capital/cash is one of the main drivers but investors can add a lot of value. For us now, patience, impact, food, ag. capital is best for us.
For Bx right now, Angel Investment Network is perfect for us. Though in 12 months time, we are looking for investors who understand how to build an AI business. The expectations and go to market are different versus say an enterprise SaaS solution.
Another tip, once you have done the above, make a tier list and go to the tier 3 first and then end of tier 1. You will have refined the pitch, the deck and your data room.
My biggest fundraising mistake has been… From a previous life, not doing the homework on the investors and bringing in the wrong type of investor. They wanted acceleration of commercialisation vs product development. This took us down a wrong path and stalled our growth.
If you had a magic wand and could wave it what would you wish for to improve the fundraising process for startups? Reduce the time needed. It would be great, if investors were able to look into a business remotely and it didn’t require any significant time from the founders of the business. It’s catch 22 though, you need to educate investors about your business but some of the most valuable people driving the business forward are out of the business for months on end.
Bx Technologies are currently raising. Please contact Sam Louis for more information – sam@angelinvestmentnetwork.co.uk
In this article, founder and CEO of Addition Finance Graham Davies explains how automation can help small businesses create scalable processes and promote growth.
The average startup is working with extremely limited resources and manpower in its early days. As cash is king, it’s easy to focus all your time and effort on delivering your product. This is natural and understandable. However, it’s also why founders are hitting burnout at record levels as they try to stay afloat while under pressure from wearing multiple hats. Attempting to manage everything, alone and all at once, isn’t only dangerous – it’s also ineffective.
“Well who else is going to do it?”. I hear you. It’s tough being an entrepreneur – especially when you’re just starting out. Maybe you’d love to outsource the bulk of the grunt work, or expand your team, but money’s tight and you’re not quite there yet. If this is you (and even if it’s not), automation is your friend.
Whether it’s B2B or B2C, automation trends are on the rise. According to 2022 Gartner research, AI software revenue will hit approximately $62.5 billion this year – with a 21% increase over last year.
Five ways automation can help you level up
Automation can help streamline workflows and reduce manual tasks – giving you (or your team) more time to focus on the human elements of growing a business, such as sales or customer service.
When wielded with precision, an AI toolkit is the perfect ally for startups – wherever you’re at on your business journey.
Let’s break this down.
1. Processing Power
The power of streamlined processes can’t be understated. Regardless of how big your team grows, you want your product or service to be delivered in a consistent way. This builds trust, brand loyalty and credibility.
Workflow automation leader Zapier sums up its purpose very clearly in its Quick Start Guide: ‘The heart of any automation boils down to a simple command: WHEN and DO. “When this happens, do that.” Even the most complex automation can be broken down into this simple command.’
For example: when you get a lead from your ‘Get in Touch’ website form, the ‘do’ would be to have an automatic message sent to your sales team. This is a very basic workflow process, but it ensures that no leads are slipping through the cracks.
It may sound obvious, but always have your team test the trial version before committing. Different tools serve different workflow styles. We love Zapier and Make (formerly Integromat) at Addition. These are highly effective tools, but they do require training to use. Consider either hiring an automation specialist or investing in a training course for one of your team.
TOP TIP: Ask a sales rep to walk you through a demo on a call and answer any questions. This will help you determine whether the tool is really the best for your business. There’s sometimes wiggle room for price negotiation as well (if you don’t ask, you don’t get).
2. Less hard, more smart
It’s not how many hours you work, or even how hard you work – it’s how smart you work. Diligently scraping data together into an Excel sheet, or manually emailing cold leads is a noble effort, but it isn’t going to help you scale. In fact, quite the opposite – it will slow you down and hinder growth.
Using automated software for process-heavy tasks is like using a dishwasher or tumble dryer. You could do without them – but the rate of progress isn’t even comparable.
TOP TIP: Lead generation, nurturing and conversion is one of the most common areas for automation. Tools like Hubspot and Mailchimp are giants in this space and for good reason. Hubspot has a wealth of free guides, ebooks and certified courses on all kinds of automated marketing processes. If you haven’t checked them out yet, it’s definitely worth the effort.
3. Right on the money
Money, money, money. Businesses spend it, earn it and invest it. Keeping track of ingoings and outgoings is a lot easier with automation. There’s a wealth of bookkeeping and accounting software to choose from. Just picture it – a platform where you can raise and pay invoices, balance the books and manage your taxes, all in one place. Major leg-up for your company, right?
TOP TIP: Speaking from experience, Xero is the number one tool to beat. Why? Its open API syncs with over 1000 other apps (Stripe, Paypal etc). Also, optional add-ons like Payroll or Xero Tax make it a limber tool that can grow with your business. We love it at Addition.
4. Track and trace
Ah the ‘key performance indicator’. We all know why they work – but figuring out how to get started is often just as difficult as keeping track. Automation can help you collate data to work with, like unique website visitors, conversion rates and domain rankings. When you already have a clear picture of where you’ve been and how you got there, it’s much easier to chart a path to where you want to go. And getting that information gets a lot easier by utilizing technology for your payroll.
TOP TIP: If you’re already automating things like your lead generation, the tool you’re working with probably has options to report back on KPIs. But if not, or if you’re looking for software that is KPI-tracking specific, here’s a list of some KPI Dashboard tools.
5. Checks and balances
AI is by no means flawless. You’ll often find the ‘computer says no’ scenarios crop up where the situation isn’t cut and dry. This is where the human touch comes in – and it’s important to keep the right balance between program and person.
Focus your AI use on process-heavy tasks (like generating templates and reports, extracting and importing data scraped from multiple sources, or auto-filling forms). You can then channel that extra time and manpower into stellar customer service. Never underestimate the power of a sincere note or phone call when your clients hit a snag. And always double check your AI’s final product – just in case the computer said no when it should’ve said “let’s talk”.
TOP TIP: While the pandemic has given remote working and automated processes a huge boost, the need for human connection is also at an all-time high. If you don’t have the budget for a permanent physical office, look into shared professional spaces (like WeWork) where you can offer clients face-to-face meetings to build trust and relationships (and host company socials!).
In Conclusion:
It may take a bit of fine-tuning and digging, but the right tools to take your business further, faster are definitely out there.
However, automation can be much more than a tool to save money and scale quickly. Setting up efficient workflows through automation requires you to think about every process on a granular level and will give you a unique understanding of your business.
Addition offer outsourced financial services for startups in the UK and US.
When it comes to launching a brand-new startup business many entrepreneurs miscalculate how expensive it is to launch, and what sorts of things that they will need to spend money on to make their business successful.
We explore some of the main start-up costs that efficient small businesses owners may need to consider when they set up a new business. Not all these business startup costs apply to absolutely every business, but they might apply to certain types of business.
Also, many of these costs will apply to all businesses, so it is a good idea to familiarize yourself with some of the common expenses and business costs that entrepreneurs should have planned and covered for in their business plan, and for employees forms, the use of a w9 creator can be the best choice.
Research & Development Costs
When it comes to research and development, the costs here can be astronomical depending on what it is you are hoping to release. If you are bringing a brand-new concept to market, the cost of development might be so high that you will immediately require third party investment into your business. If you’re an entrepreneur with an existing track record, this might come from venture capital companies.
These costs do not apply to everyone. Some businesses do not really have much exposure to research and development outgoings, aide from some basic market research. This is especially true if the organization is being built on your own skills or as a services company.
Incorporation Costs
Although you could start your business on the side unofficially, as soon as you need to grow and lay some proper foundations for your business down, you will need to register it, and this will incur some incorporation costs.
The cost for incorporating your business is dependent on your own local market. For instance, the cost varies at a state level in the US. You will also need some documentation created depending on the type of company that you intend to create. With that in mind you may need to hire an expert to help you incorporate your company correctly, so you may need to factor this in as well. However, this expense is typically a one-time cost, and the fees are quite low in comparison to other things that you will need to invest in for your business.
You may also need to look at specific business licenses covering the area that you want to work in. These might be one-off costs or re-occurring but often you’ll need to get these before you begin trading so you should include them at the time of incorporation or trading if there is going to be a big delay between the two points.
Real Estate & Property Costs
When it comes to office space, warehouse space and retail space in general, the costs can range from effectively zero to a huge amount of money. It all depends on what sort of business you will be running and what your operational needs are.
If you are looking to launch a new business, one question you need to ask yourself is whether your business model can operate without office space in the first place. Many businesses today can run just as well with its team members working from home. When starting a brand-new business, it is a good idea to trim the expenses and costs down as far as you can, and often, renting or leasing expensive office space is a good way to burn through your finances quickly, without much to show for it.
Of course, some businesses require real estate, so this cost must be factored in. Size and location are the key factors to consider when choosing a retail property for your business. If you need to save some of your money on rental think about what your needs are and what location, you could base your business in.
Product, Tooling, Machinery
If your business sells physical products, then you will need to consider the costs of the products you sell. Retailers will look to source products from resellers, distributors and manufacturers and you will need to research where you can get your products from.
One problem is that many larger manufacturers won’t supply a new business with product directly, they will push you through to a reseller or distributor and even these companies can be picky with who they deal with since often they will look for a track record in retail and a decent credit score. Many new retailers find that the ‘doors are closed’, and it can be hard to buy product in the first place.
Other businesses that aren’t looking to sell other companies products look to create their own and bring a new product to the market. For these companies there is a different problem. How will the product be developed and produced?
Ultimately this will depend on the product you are creating. Sometimes it is a good idea to create the product yourself, but for this you may need tooling and machinery. Often, a different approach when a business first starts out is to outsource all of this to a third-party manufacturer. With this method a new business can at least get quotes and ascertain what the outgoing cost is going to be at an early stage, prior to investing in expensive machinery or tools. Often this is the preferred approach for a new business and many large multi-national companies also use this approach when manufacturing products for sale.
Another aspect that is overlooked that is relevant to this type of expense is shipping. Both from manufacturing plants and to your customers. It can be expensive and often it is an aspect that can be overlooked when calculating product profitability.
Business Equipment
Business equipment is another expense that is often overlooked. Some brand-new startups can get away with just one computer or laptop to get started but many people do not consider that if they recruit employees, each of these individuals will likely require a laptop if they are office-based staff. This then leads to the need to go to the furniture store for office furniture such as desks and office chairs. Even things like the office kettle or coffee machine can fall into this category, so again, have a long hard think as to what you will need for your business. This also includes all the software packages you will need to buy.
You will need to buy office supplies, from coffee, to stationary and all sorts of other things that employees need in their day-to-day activities. These will also need to be replenished on a regular basis, so you’ll need to consider this in your general day-to-day business expenses.
When it comes to software often there are free versions that offer similar features to the main applications that many businesses use. Perhaps you can cut costs and use these instead in the beginning. Other software packages such as with accounting software, you may need something that is specialist, so you cannot cut cost easily for all packages. Either way, anywhere you can save money on your startup costs and ongoing expenditure is something worth doing since all these business costs add up, especially in the beginning.
If you’re thinking of opening a retail outlet, then you will need to fit it out and invest in a whole range of different things to Point of Sale equipment to shelving and signage. It’s a long list of things that you’ll need so you will have to set a lot of money aside for this aspect. Warehouses, specialist outlets and manufacturing plants come with their own types of expenses, and these costs can add up quickly, so it is a good idea to have a comprehensive plan as to what it is you need in terms of startup funding. Often the expenses are a lot higher than first expected.
Business Insurance & Cover
There are a lot of different business insurance products available to help protect yourself when you are trading as a company. You might not need them all in the beginning, but lawsuits and claims can be expensive.
Some of the different types of business insurance products that might be applicable to your business (but not always all) might include: general liability insurance, professional liability insurance, product insurance, hazard insurance and insurance to cover issues with employees.
It is worth sitting down and going through the different insurance packages that are available to work out what you need and what doesn’t apply to your business type. It is an added expense to your outgoings but could make the difference to whether your business survives or fails if something is to occur that is unexpected. You’ll need to shop around to find out what the average cost of insurance is for your small business.
Recruitment, Employees, Outsourcing
Generally, a business needs people to service it and that’s where employees come into the picture. Payroll and salary expenses normally take up a huge amount of a businesses operating cash so you will need to factor in as to what employees you need and what budget you will need for them.
When evaluating how much an employee costs, you shouldn’t forget that they usually need items to do their job. Think about the uniforms, laptops, chairs, desks and even coffee! This also needs to be factored into your budgeting.
How are you going to find employees? If you use recruitment firms then these can be great at finding the right employee for your business, but they come with their own set of fees.
Often when a business is new it can be pragmatic to consider using freelances and external companies to service some of the areas of the business which you would need to typically need to hire a person for. One example might be too hire a third-party accounting firm to handle your books or to outsource your IT services. Although these costs can be high it is a lot easier to switch or cut back on an expense from another company than lay-off internal staff.
there are a wide range of professional services and freelancers that you might need for your business anyway, regardless of employees. These include accountancy firms, book-keeping, legal firms and lawyers to handle legal fees and issues, IT, and even marketing and advertising agencies, who all bring specialist skills into your business which you would otherwise have to recruit for. However if you or someone you love has sustained a traumatic brain injury, you’ll be needing good lawyers for the legal representation you need to make sure that you are fairly compensated.
Marketing & Advertising
Marketing and advertising is another area that you might need to spend money on as a business. If nobody knows about your product or service, how are you going to sell it? You need to get the word out about your new business and the way to do this is through marketing and advertising.
How much you may need to spend on marketing is dependent on your budget and your industry, but the good news is that there are some ways to reduce your marketing costs by utilizing some of the free marketing channels, such as social media. If you manage to get a post trending on social, then your customers can come in from that. Of course, social media is not always useful for every type of business, but it is one option out of many.
Most businesses these days have a website and if you’re an online business this might be a necessity. Building a web site can be expensive, but you can find free packages available for your site with free templates. You could pay someone to create a custom template, but if you’re looking to cut costs then a free one will get you started.
Once it’s time to launch your business then you will need to think about branding and design. This is something else you’ll need to spend money on at the beginning, because you will want something that looks professional and unique.
Types of Business Cost
When it comes to your business there are a lot of different costs, and these can be broken down into different expense types. Unfortunately, in the first year of trading there are a lot of different expenses and business needs, and this can have a big influence on your cash flow.
Some of the different business operating cost types are classified as:
Fixed and ongoing costs – these are the costs for your business that you cannot change. For example, your business property rent might be considered both fixed and on-going (even if it might be subject to change at some point or if you move location). In this case this is an expense that you need to factor in to pay your bills each month.
Variable costs – are the costs that can change depending on what happens in your business. Examples of variable costs are employee expenses and business travel.
One-time costs – These one-time expenses can be the big investments that your business needs, such as tooling and machinery, or even things like office equipment, such as laptops. You may occasionally need to replace items, but typically they can be classified as one-off costs. Often this is a type of upfront business cost that is quite high in the beginning.
How to Finance Your Business
So how do you finance your business? There are many ways to get the money to launch a new business. The question is what business finance method is right for your own startup?
Often new businesses are self-funded by the entrepreneurs own personal savings. You may even hear of businesses being launched off the back of someone’s credit card. These success stories are few and far between.
If you have a business idea but lack the funds to realize it, then you could look to outside sources for money for your business.
When you open a bank account you might expect that the lender will also offer you a small business loan. Unfortunately, that is not the case for most brand-new businesses and a line of credit is not open to most. Often, they will not even give you a business credit card.
The good news is that there are other financing options such as angel investment. Angel investors are high net worth individuals who look to invest in brand new businesses and startups in return for some equity in the business.
Often angel investors can help with business startup expenses or expansion costs and offer an invaluable service to would be entrepreneurs what have good business ideas but do not have the means to launch themselves with their own finances.
In our latest blog, Startup founder and AIN’s Head of Product & Growth Ching-Yun Huang looks at how early stage startups can tackle product development.
Developing and designing a product may seem like a daunting process for any startup founder. Indeed in AIN’s recent research on startup sentiment, we found concerns about building a product ranked as the second biggest concern for entrepreneurs, behind raising investment.
First of all, although you might have aspirations and aims to create the next tech giant and become a unicorn business in 5 years, your main focus should be toward the very first stage of the funding process – the early pre-seed round. The good news is that at this stage, you will not be expected to have anything close to a finished product. It is the idea and the understanding of the market that investors will be interested in.
So what are the first tentative steps in developing a product that is investable and potentially scalable?
What problem is your product solving?
Any product has to serve the ‘needs state’ the startup has identified. The two questions that must be asked are: a) Does what you have in mind solve your audience’s problems? b) Would they pay for it?
In respect to the first question – how do you establish a need for a product? Most successful product innovations will be based on the knowledge of experts in that market, because they have experienced it first-hand and know that enough people have the same problem. Having lavish technology is rarely the solution, but identifying the need and whether people might pay for it is. Investors will be looking at your experience of the market as well as your team and advisors.
If you can win early stage investors over with this proposition, you can then open the door to investing in the R&D and design to bring the idea to fruition.
Research your market Market research is obviously a good way to understand and test the need for your product. A good example of this would be Beauhurst, the data platform that helps businesses discover, track and understand high-growth companies, accelerators and funds. Before launching their now very established platform, they spoke to many people in their target audience (i.e. startup founders) and found out the sort of information they might need about companies they might be looking to do business with.
Similarly with Angel Investment Network, the idea came about after the founders James and Mike had multiple conversations with startup founders globally and found a real barrier to funding for those who didn’t already have an established network of contacts. It is now the world’s largest online angel investment platform.
Proving the concept The next stage is proving the concept. Looking at Beauhurst again, their approach was to gather all the information in a simple spreadsheet that they could sell to their audience. So the essence of the company was information, not a shiny platform to hold it in. Once they had feedback on the information, they could iterate in this basic format and build out the platform. Similarly for the developers of Google Sheets, they used Excel as their template and encouraged users to work with the BETA version. They could then see what functions users were using but also crucially not using. The engineers could then streamline things.
Can you piggyback off existing technology and save money Thinking you need to invent a new Facebook or Uber platform is the wrong starting point for bringing your idea to life. The early stages for any business are about survival. What is the simplest way to bring an MVP to life while you are pre-revenue? If you look at the development of Slack – this was based on an iteration of existing technology, MSN.
Slack began as an internal tool for Stewart Butterfield’s company, Tiny Speck, during the development of Glitch, an online game. It was based on an identified need; using a specific messaging channel for a topic using an established technique – a hashtag. It is of course far easier to build things that people are already using and then iterate. 8,000 customers signed up for the service within 24 hours of its launch in August 2013. Just 1.5 years later, they had 135,000 paying customers spread across 60,000 teams.
Similarly, Ant Group’s platform offering financial connectivity to billions as the world’s largest mobile and online payments platform just required a mobile phone and a QR code on any product or service, anywhere. QR already existed and didn’t require a lot of infrastructure associated with electronic payments cards, networks, terminals and merchant accounts.
Develop a road map Finally, while early stage investors won’t necessarily need to see a developed product, they will want to see that you have done the work on the stages from idea to activation. One approach can be to develop a goal-oriented roadmap. If you set it up, you have to follow it through, so they will hold you to this. There would be several elements of product strategy implementation:
Date – A deadline or timeframe for achieving a certain product goal. Name – The name of the digital product version you’re developing over a particular timeframe. Goal – An achievement your product should accomplish over a specific period of time. Features – A list of high-level features you need to implement to meet the product goals. Metrics – Success and performance indicators used to check if a certain goal was met.
So in summary, there are several steps that startups should consider in tackling product development. Focusing on the very pre-seed stage is crucial with investors not needing a finished product but instead a strong idea filling a gap in the market. This gap can be identified through research of peers, ideally from experts with a strong and established understanding of a particular market. The idea will need to solve the identified problem and be something people will be prepared to pay for.
If the idea can piggyback off an existing technology, this can be hugely effective and has been the proven approach for a series of tech unicorns. Finally, make sure you develop an effective product road map so that early stage investors can see a pathway to scalability.
Good luck!
Ching-Yun Huangis AIN’s Head of Product & Growth and is also CEO and co-founder of the Moment App.
Funding will help accelerate global borderless education support in higher education
Fast growing EdTech startup Vygo has raised £1.5m in a pre-seed funding round supported by Angel Investment Network, the world’s largest online angel investment platform. Vygo is a Saas platform reinventing the conventionalsocial support ecosystem in higher education.
Offering personalised support services beyond the physical campus, the business already works with a third of Australian Universities and is rapidly growing in the UK. The raise will help it expand in the UK and Europe and fuel its ambition to build borderless social education for every student.
The round was led by EdTech VC Sparkmind and supported by Angel Investment Network. Other participants include EdTech accelerator Supercharger Ventures and the Australian Catholic University. The funds will be used for platform development and expansion of its UK and European presence.
The demand for Vygo has soared in the past few years as a result of the increased demand for HE institutions to extend their support services digitally. A recent JISC study estimates that up to 96% of university students require additional access to support during their undergraduate degree. This demonstrates the need for support services to be more accessible than ever to ensure that students are getting the best educational experience possible.
Ben Hallett, Vygo CEO & Co-Founder, comments: “At Vygo, we believe that every human deserves a world-class education and that social experience is at the core of impactful learning. The Vygo platform gives every learner a social education community filled with their peers, mentors, tutors, advisors and other supporters. With Vygo, education institutions are able to reinvent their social support ecosystem online and ultimately improve their student outcomes whilst scaling their impact. We were delighted to work with AIN to find amazing investors and individuals through a well-streamlined process.”
According to Sam Louis, Director, Angel Investment Network: “We’ve worked with some fantastic EdTech startups in recent years – Ben and the Vygo team are right up there with the best of them. Their focus on the social and pastoral side of education resonated with us right away and, combined with significant international traction, investors within our network from right across the globe felt the same. The need for this platform has only accelerated in the past few years with so much learning being done remotely and we’re delighted to have helped Vygo on their journey.”
Olivia Sibony, AIN’s Head of Impact, looks at the rise in interest in green and clean tech startups and why we have seen a ‘perfect storm’ of conditions for their growth.
Over the past few years we have seen the perfect storm of conditions that have rocketed investor interest in green and clean tech startups. Looking at the patterns of investor keyword searches on the AIN global platform we have seen impressive growth for green business terms, including ‘renewables’, ‘greentech’ and ‘environmental’.
In the last three years these business ideas have gone from niche to mainstream with investors hungry for standout solutions for our manifold environmental challenges. The COP 26 conference further committed Governments to carbon reduction targets. As was acknowledged in Glasgow, it is private enterprise and nascent businesses that will provide many of the solutions.
Factors such as the recent surge in gas prices have made us more aware of the need to find alternative and renewable energy sources, alongside smart ways to reduce energy consumption.
Reasons behind rising interest
There are several reasons for the rising interest among investors.
Firstly, the increased global natural disasters with floods and wildfires closer to home have really brought this home to everyone. Including consumers, business leaders and governments.
We then saw COP 26 turning up the volume on the dialogue. This included recognition of the need for the ingenuity of businesses to come up with the solutions to the challenges we all face.
A third factor at play has been covid reframing people’s values on what really matters and the increasing interconnectedness of the planet.
Companies have realised they need to nurture theircustomers and the younger generation who have the most to lose are the most vocal in advocating for change. So they’ve shifted their focus which has opened up the supply chain market for a lot of B2B Climate Tech opportunities.
A further spur to action comes from companies also realising their employees increasingly care about the environmental impact of the companies they work with, so has also stimulated growth in this space.
Case study examples
This means more entrepreneurs are stimulated to build companies in this space as more investors see great commercial opportunities. As well as the obvious motivation for passion driven angel investors in investing in something that will provide a better future for them and their children. Over the past year through AIN, we have seen some impressive cleantech businesses being backed by our experienced angel investors.
Exciting businesses who have raised including cleantech business, eleXsys Energy who successfully raised £5m last year. They have developed a unique, enabling technology that will drive the transition of global energy grids to a clean energy future. Investors bought into their vision for their technology which enables commercial and industrial rooftops to become grid-connected, solar power plants.
Another business that has seen a great deal of investor interest is Zero Carbon Farms. They are a cutting edge AgTech company that builds and operates Controlled Environment Farms, providing a future-proof and sustainable solution for growing. They solve the problem of carbon generation in farms by providing up to 90% less water and a fraction of the space compared to conventional farming.
While Zero Carbon are dealing with sustainable production, Greyparrot – Co-founded by CEO Mikela Druckman, are applying cutting-edge deep-learning AI computer vision technology to the formidable problem of waste recycling. Their solution analyses waste on moving conveyor belts to allow monitoring, audit and sorting of waste at scale. Greyparrot have trials ongoing at 12 facilities with leading waste management companies, and are now raising a £10m Series A to scale their commercial product and become the category leader in waste analytics.
Seeing the success of these businesses can inspire the next generation of entrepreneurs to come up with their own solutions, offering the chance to marry profit with purpose. In turn many will go on to become investors themselves creating a virtuous cycle to help power the circular economy that must become the future of the planet if we are to avoid the worst ravages of climate change.
In this guest blog, Carine Schneider, President of Astrella, providers of leading cap table management software, gives a 101 on understanding your cap table, and some of the key risks to avoid when it comes to share ownership.
WHAT YOU NEED TO KNOW ABOUT PRIVATE COMPANY OWNERSHIP
So, you’ve got a game-changing idea that’s going to disrupt your industry and you are ready to raise funding and change the world. Congratulations! You’re ready to move fast and break things, to turn it up to eleven, to do what most won’t, to live like most can’t. You’re ready to build your very own rocket ship
And we love that about you. But take a breath.
The startup landscape is a wild world. Sobering statistics are often tossed around about the single-digit percent of startups that make it, with relatively few companies receiving venture capital funding.
But there are steps you can take from the start to significantly increase your chances of success, from negotiating the initial agreement that lays out the foundations of your partnership with your co-founders to your five-year road map. Decisions you make now will determine how sustainably you grow, the quality of investors and investment you attract, and the level of control you maintain.
Let’s build that rocket ship on rock-solid foundations.
WHO OWNS WHAT?
“A lot of entrepreneurs don’t really
understand how the pie is divided,”
Carine Schneider,
President of AST Private Company Solutions.
Too many founders think it’s just slicing up the company and distributing (or selling) the pieces. They think ownership is locked in with a one-time decision that lays out clear-cut, unchanging percentages (maybe they’ve watched too much Dragon’s Den…). They may think they own half the company and will always have the final say in decisions that affect it.
All too many learn the hard way that things change.
Even in the simplest scenario, where you and a co-founder are splitting company ownership 50/50, you’ll need to put aside 10 to 15 percent for the employee equity compensation plan. So, the slices have gotten more complicated before you’ve even thought about accepting investments from multiple rounds of investors.
What’s more, regardless of share types and percentages, your board will make important decisions about your company’s finances, strategy, and even ownership (more on building your board in a future post!).
Equity is all the same… OR IS IT?
“Shares” sounds simple enough.
Except that the shares you and your employees hold in your company aren’t necessarily the same as the shares your investors will own. It’s important to understand the variables among different shares and share classes; the powers and responsibilities that come with them can vary significantly.
“Say you and I each own 100 shares of a private company,” Schneider says. “We can’t really compare that value until we understand when we each bought the shares, what kind they were, and the rights and privileges that came with those shares.”
Although this can get far more complicated, the first key distinction to understand is between common and preferred shares. Broadly, common shares – the kind you issue in your own company – come with voting rights and low or no dividends, while the preferred shares, which are what you may typically sell in priced rounds, usually do not have voting rights and pay higher dividends. In a private company, there is a lot of flexibility on the rights and privileges that can be assigned to different shares.
Experienced investors will negotiate preference items that affect how the shares are handled in the event of different outcomes, including at exit, which could be an acquisition or stock-market flotation, or maybe a liquidation.
Think of company ownership as a line of shareholders. You and your co-founder and your early employees were there first, so you will always be at the front of the queue, right?
Wrong.
The thing is, the people who set up chairs and camped out from the start (holders of commonshares) can get trampled by the investors (holders of preferred shares / share-classes) who showed up much later with more money.
Savvy early backers will try to negotiate anti-dilution clauses to keep their percentage from shrinking, even as later investors line up preference items to ensure their full amount is returned to them. At your company’s exit, you may be surprised to find yourself at the back of the line.
In short, ownership can be complex and not intuitive.
You need to make sure you always understand who has what type of shares, what the terms are, and what the implications are for your ownership.
You will be well served by lining up expert advisors who can help you make sure you are making the best decisions for your company from the earliest steps. It’s also important to have access to a system that provides you with both exit as well as “next-round” modeling tools. Real talk: the incredible disappearing stake. There
OK, so seriously… WHO OWNS WHAT?
With all the complexity involved in ownership, how do you keep track of everyone’s place? Enter the capitalisation table.
The “cap table” is a tool that tracks company ownership data. In short, it determines that line of stakeholders by tracking their equity stakes over time. A good cap table means no surprises.
A common mistake new founders make is waiting too long to create a cap table. Nearly as common—and just as harmful—is creating a poor (or inaccurate) one.
While a simple spreadsheet may give a snapshot of a moment in time in ownership, it can be dangerously inadequate. Spreadsheet files can get lost, or a simple typo can change your billion to a million. It’s important to use a robust tool. to store, track, and model ownership data that tracks the changes to ownership over time.
The cap table is one of the first things any potential investor will request when considering an investment. In addition to showing constant, real-time ownership data, it will model the changes to your ownership under different potential investment scenarios. “A smart investor is always going to want to look at the cap table, and a smart investor is not going to want to look at a cap table that comes from a spreadsheet,” Schneider says.
Companies raising capital through Angel Investment Network benefit from complimentary access to Astrella for up to 15 stakeholders, with the following code used during registration:
LAURENCE15
For more information about Astrella please click here.
About Carine Schneider
Carine Schneider, FGE, is the President of AST Private Company Solutions. She was honored in 2019 with the ProShare Award for Services to Employee Share Ownership, in 2017 as one of the 100 Influential Women in Silicon Valley (Silicon Valley Business Journal) and one of “17 Women to Watch” in 2017 by Brown Brothers Harriman.
Carine was invited to become a Fellow of Global Equity (FGE) in 2019. An experienced and well-connected leader in private market & global compensation industry. Carine was formerly the President, NASDAQ Private Market Equity Solutions
For any equity related queries or cap table assistance contact Laurence@Astrella.com.
Out investment series continues with an exploration of litigation funding, with a guest post from Sophie Liu at Axia Funding:
AxiaFunder is an online litigation funding platform that connects investors with pre-vetted commercial litigation opportunities that we believe have the potential to generate attractive risk-adjusted returns. We are specifically targeting cases on the lower end of the legal market which, in our view, has been underserved by existing funders.
To date, AxiaFunder raised £2,387,843 for 14 commercial cases, of which six have already reached a positive resolution, generating a 12-94% return to our case investors each over a period of 2-15 months (with an average IRR of 48%). The remaining 8 cases are currently ongoing. There are no losses to date. *
What is Litigation Funding?
Litigation funding is where a third-party agrees to finance the legal costs of a dispute in return for a share of the proceeds that would be eventually recovered by the funded party. Litigation funding is typically provided on a non-recourse basis, meaning the funded party has no obligation to repay the funder in the event the case is unsuccessful.
What are the benefits of litigation funding as a new investment asset?
Litigation funding can potentially generate significant returns to case investors. It is common for investors of a winning case to expect to double, triple or quadruple their initial investment.* This asset also has zero correlation with the fluctuations in the broader economy and other assets. In addition, each case is almost entirely uncorrelated with each other. Thus, this offers further diversification.
What are the impacts of post Covid-19 economic environment on litigation investment?
In contrast to other investment opportunities (such as equities or real estate), litigation investment has zero correlation with the fluctuations in the broader economy and other assets. This makes it a compelling investment in current economic environment plagued by volatility and ongoing uncertainty over the end of the Covid-19 pandemic. In addition, litigation itself is expected to increase during an economic recession due to a sharp increase in a number of business insolvency related claims.
What are the social benefits of litigation funding?
Litigation funding helps to level the playing field by offering access to justice for those who need it the most. The litigation process is well known to be an expensive and often lengthy exercise with the final legal costs being uncertain. SMEs or individuals who enter contractual agreements with large companies often find themselves exposed to additional commercial risk due to the prohibitive cost of protecting their legal interests. Litigation funding offers claimants a means of pursuing a viable claim while preserving liquidity and minimising risk.
Can you give any examples of your funded cases?
• An unfair minority shareholder prejudice petition, where the defendant, the majority shareholder and a director of a company, allegedly diverted economic value from the claimant, a minority shareholder, who was instrumental in developing the business. This case has resolved successfully generating a 33.1% return to investors in 14 months.*
• An insurance claim by the builder, whose development was subjected to an arson attack, against both the insurance company for unreasonably seeking to avoid settling the client’s claim on its insurance policy, and the insurance broker for the non-disclosure of information on the basis of which the policy has been voided. This case has resolved successfully generating a 11.8% return to investors in 2 months.*
How do you select litigation cases?
Cases have to satisfy the following criteria:
• Legal merit: The legal merits of the claimant’s case must be strong. Typically, independent legal counsel will have endorsed the case with a high probability of success.
• ATE insurance policy: Each case must have an ATE insurance policy in place. It protects AxiaFunder’s case investors from adverse cost risk and helps to eliminate low quality cases.
• Case economics: The estimated damages normally have to be at least 5x the estimated costs of pursuing the case to trial.
• Enforceability: There must be clear evidence that the defendant has the financial resources to pay the damages and that any court judgement can be enforced.
• Experienced legal team: AxiaFunder will only fund cases for which the claimant’s legal team are clearly competent and have in-depth experience in the relevant area.
• Alignment of interest: The claimant and his legal team should share some downside risk in the event the case loses.
Other considerations include regulation, security for costs, pricing, and funding strategy to trial.
What are the risks of investing in litigation cases and how to mitigate them?
Litigation funding is typically provided on a non-recourse basis. As a result, an investor stands to lose all or most of their original investment if the case is unsuccessful. However, the downside risk of losing the entire investment can be significantly reduced by investing in a portfolio of litigation cases. This is illustrated in the article Single case versus portfolio litigation funding.
There is also a risk of having to pay the other side’s costs in the event the losing party themselves lacks the capital to cover these costs. The adverse cost risk can be mitigated by having After-The-Event (ATE) insurance policy in place. It provides protection against the liability to pay the other side’s costs in the event the case is unsuccessful.
How to invest with AxiaFunder?
Investors need to register on the AxiaFunder platform and complete the onboarding process which involves completing identity checks and passing the investor suitability test. Once these steps are complete, investors are ready to invest.
* Past performance is not indicative of future results & Capital at risk. Returns are not guaranteed
A few years ago when myself (Katie) and my sister (Amanda) learned about the sheer amount of waste produced by the fashion industry, we knew we had to do something about it. So, we came up with the idea to launch Pantee – the world’s first underwear brand made from deadstock t-shirts.
Raised remotely during the pandemic, we began bringing Pantee to life in late 2019 and after a year of research and product development we launched pre-orders on the crowdfunding platform, Kickstarter, in November 2020.
Katie and Amanda McCourt, Co-founders, Pantee
Why did you decide to raise investment?
From day one, we have been on a mission to disrupt the fashion industry and build a brand that pushes the boundaries of what can be achieved with deadstock fabrics and by upcycling. We planned to raise the investment from the beginning, first with a crowdfunding round on Kickstarter and now with an SEIS raise with Angel Investors. We wanted to do this to give us the resources to further amplify our mission and set us up to create a greater impact in the future.
What is your top tip for anyone raising investment for the first time?
I think everyone would say this, but don’t be disheartened by the rejection. As first time founders, we found the process of raising very difficult and we rode extreme highs and lows from start to finish. You’ll hear so many no’s, but it isn’t necessarily a reflection on your business or your idea – you just might not have been speaking to the right person.
What attracted investors to your company?
We were able to prove a strong amount of early traction that Pantee had received within the first few months since launching our D2C eCommerce store.
Within a short time of launching, we had grown an engaged community of over 10,000+ women, were racking up 5* reviews on Trustpilot and had been featured by the likes of Vogue, Stylist Magazine, Drapers, The Observer and named a ‘Top Sustainable Underwear Brand’ by The Independent.
During the raise period, Pantee also received recognition from major global tech companies having been featured on Shopify’s ECommerce Masters Podcast and awarded Klarna’s Small Business Support Package.
This really helped us to prove to investors that the brand was not only resonating with early customers that loved the product, but that it was innovative and newsworthy – building their confidence in our brand awareness capabilities.
My biggest fundraising mistake was…
Don’t underestimate how long you need and celebrate every win, no matter how small.
Raising investment can be a long process. It’s never too early to start building relationships with investors to instill confidence in both you and your idea. Get them excited about your business and take them on the journey with you, the more involved you get people early on the more likely they will invest, in my opinion.
It’s really easy to get bogged down by the no’s which you will get a lot of, in most cases more than the yes’. Don’t let it slow you down – we were given some great advice by a fellow startup founder who advised us to ‘learn to enjoy the rejection’ – once you stop taking it personally it allows you to learn from it – in a productive sense!
Why did you choose to use the Angel Investment Network?
We signed up to the Angel Investment Network halfway through our raise to expand our search away from our own network and connect with new investors from different backgrounds. It was a great decision as it led us to connecting with one of our biggest investors that was instrumental to helping us close the round.
What has the funding enabled?
We have just closed our SEIS raise and have already begun putting in place our strategies to further amplify brand awareness, build a core team, expand upon our lean product range and certify our sustainability efforts with accreditations.
Keen to hear more?
If you would like to see what other companies are up to on Angel Investment Network, or are interested in raising funding yourself, you can find your local network here.
Angel investors generally invest early in a startup’s life, meaning that if they identify successful investments, there is potential for huge returns. One of the key steps for angels to assess investment opportunities is looking at metrics and benchmarking against other similar companies.
To be clear, every sector, and indeed every startup, will have different relevant metrics, but these should be of use as a starting point:
Churn rate
A company’s churn rate is the percentage of customers that cancel in a given period. It’s of particular importance, in that acquiring new customers is typically considerably more expensive than acquiring new customers.
Furthermore, if a company has a high churn rate, it can be a sign that there are issues with the product, or potentially that the service does not provide long term value for the customer.
Liquidity on the Balance Sheet
Looking at a company’s balance sheet to determine the spending power of a company gives a number of important insights: how long the company can cover expenses and continue to operate, a company that is overextended, for example, may give cause for concern about their management style, consequently having an impact on whether you wish to invest.
Monthly Recurring Revenue (MRR)
Particularly relevant to subscription businesses that will have new customers signing up, as well as existing customers cancelling (churning). MRR gives you an effective way of evaluating the growth of a company and projecting ahead.
MRR is calculated by multiplying the number of customers on a monthly subscription by Average Revenue Per User.
Customer Acquisition Cost
Customer acquisition cost (CAC) is the cost to acquire a new customer. Typically for new companies this will be high, as they only have limited insights as to how to target their customer and have yet to fully optimise their conversion funnel.
However as they start to scale, there will be a competing factor, as you start to bid for more traffic in auctions on platforms such as Facebook and Google Ads, it will become more expensive on a per user basis to get more users.
EBITDA
EBITDA is defined as earnings, before interest, tax, depreciation and amortisation are subtracted. EBITDA is a profitability metric that strips out expenses that might obscure how a company is actually performing and therefore gives a cleaner interpretation of how a company is actually performing.
A higher EBITDA margin (EBITDA divided by total revenue) indicates a more financially stable company with lower risk.
Customer Lifetime Value (CLTV)
By measuring customer lifetime value (CLTV) in relation to customer acquisition cost (CAC), you can estimate the length of time it takes to recoup an investment to acquire a new customer.
Customer lifetime value is calculated by taking the average purchase value and multiplying it by the average number of purchases that the company in question obtains.
A predictive customer lifetime value model will take account of the fact that customers’ future behaviour might change, i.e their purchasing may become more frequent in the future due to certain factors.
Break-even
Getting to break-even is the point where total revenue reaches total costs. When a startup reaches break-even point, any money earnt above that is profit. As such, the startup becomes less reliant on raising future investment to keep growing. From an investment perspective, if the company is likely to achieve break even quickly, then it has the effect of de-risking the investment.
Net Promoter Score (NPS)
Net Promoter Score is a measure of the overall customer experience. NPS is calculated by asking ‘On a scale of 0-to-10, how likely is it that you would recommend our service to a friend or colleague?’.Customer that score a 9 or 10 are classified ‘promoters’, those that score 0-6 are classified detractors. NPS is the total number percentage of promoters – the total percentage of detractors.
NPS provides an insight into how happy customers and is therefore a leading metric that can be used to understand the potential for revenue and value capture in the future.
Keen to hear more
As your investment journey continues, you will become more familiar with the investment metrics that you should pay close attention to. If you are looking to learn more about investing, you can read our investing guides here.
Antonis Argyros is the CEO of Vesquad, in this guest post he shares advice about getting Due Diligence right – from setting up processes and using relevant tools, to getting to know the founders. Vesquad support investors by enabling them to provide hands-on support to their portfolio companies through an integrated approach.
As an angel investor, handpicking promising startups that actually do have the potential to succeed is one of the most challenging tasks you’ll have to undertake. Europe in 2021 had one of the best – if not the best- years in terms of startups’ revenue, which possibly exceeded $100 billion in total venture capital investment, according to a report created by Atomico for the investment firm Cambridge Associates. But how can you ensure that you’ll secure a piece of that revenue?
By creating a transparent and objective process of evaluating which ideas and early-stage startups are worth investing in, you’ll be able to identify the most profitable opportunities and increase your revenue through successful exits. Building and implementing such a process allows you to identify a startup’s weak points early on to evaluate which of these can be improved through operational support or which could lead to failure.
For a VC firm with multiple investors, one profitable exit for every ten investments might be an acceptable ratio. For an angel investor, however, a thorough due diligence process is essential in decreasing investment risk as much as possible. Bonus points, providing constructive feedback to the founders of startups that were not selected for funding, gives them the opportunity to improve any weak points and emerge again as a candidate startup with more potential in the future.
However, handling an entire portfolio of companies and at the same time evaluating new investments can be very time-consuming. To make things easier, we’ve gathered the most important steps that will help you during the due diligence process, and the things that you should look out for before investing.
Build a structured process
Before moving on to financials, you probably already have certain basic criteria that a candidate startup needs to meet before investing in it, such as a specific area of focus or a specific market both in terms of technology and geography. If not, make that your number one priority.
Assuming that you have, in order to better examine if those criteria are met, you’ll need to build a structured and transparent process that will ensure there will be a careful evaluation of all the desired parameters before a startup becomes part of your portfolio. The best way to do that is by dividing your process into stages and identifying what you need to examine during each stage. This will help you to quickly eliminate any startups that you don’t think would be a good addition to your portfolio and focus on the ones that seem fit.
Get to know the founding team
We’ll start with the basics, as this is something that is often overlooked, usually due to everyone’s hectic daily schedule or due to the fact that we tend to focus on business and forget about the people. Dedicating some time to grasp a founder’s vision can reveal a lot about the startup they’re trying to build. What their background is, what skills they have and what value they can bring during later stages, what inspired them, and what drives them are all questions that will help you establish a relationship with the people you’ll possibly be in contact with until that much-coveted exit.
Enrich your inventory with the right tools
To gather all the necessary information that will guide you in the right direction and help you conduct the due diligence in the most effective way, you’ll need a series of different tools for each stage of your process. You could start with simple tools, such as an extended questionnaire with targeted questions that will give you an idea about the basics, such as the vision, the value proposition, the market size, and the KPIs. Keep in mind that the entire process should be guided by a positive attitude since the goal is to find the ideal fit for both the investor and the startup so that there is a win-win situation.
At Vesquad, we’ve developed a series of tools exactly for this purpose, that can help you automate the due diligence process by going past the basics and defining in precision the maturity level of each venture.
Adopt the best negotiation tactic for your personality
When negotiating financing, it is important to aim for a result that will be fair for both sides, keeping everyone content, and that the relationship between everyone involved remains intact. The composition of a legal term sheet that will be beneficial to you and at the same time attractive to the startup’s founders, can be achieved through the right negotiation tactic that matches your personality. These tactics have analogs and can be useful or ineffective in reaching a negotiated agreement. It’s crucial to understand how different styles complement one other, how some conflict, and how some have inherent advantages.
Being prepared in advance of the meeting and having a specific plan is crucial. This will give you the opportunity to be prepared about which terms you will be willing to accept and when to abandon the deal, which if it is left to be decided during the meeting can lead to mistakes and ruin the relationship with the founding team. This is why building a relationship beforehand, as mentioned earlier, is crucial. Knowing the people who will attend the meeting could reveal their strengths, weaknesses, motivators, and insecurities, which can give you valuable insight and ensure a better deal.
Venture Building Framework
After the deal has been sealed, what’s next?
We said that selecting the right startups that will lead to a successful exit is one of the many challenges an investor will face. The next big challenge is everything that takes place during the interval right after the investment is made and during the startup’s exit. Maintaining a close relationship with the founding team is equally important even after the investment has been made. There is more and more data showing that founders expect more than money from all their funding sources. So how can you stand out and satisfy that ever-increasing need?
By offering an added value that goes beyond capital itself and focuses on the operational needs startups and their founding teams have in order to grow. This is exactly the value we offer both to investors and entrepreneurs at Vesquad. We can help you adopt an operational model and provide hands-on support to your portfolio companies in order to accelerate their growth and minimize failure rates. From sourcing new ventures to supporting your existing ones, we’ll connect the dots for you so that you can focus on the cool stuff.
2021 saw a record number of investors join Angel Investment Network. We expect to see the trend continue into 2022, with both established investors and new investors joining the platform.
If you are thinking about taking the plunge for the first time and getting involved in backing some of the great businesses of tomorrow, here’s our guide for getting started:
What is an Angel Investor?
An angel investor is an individual who backs one of a startup’s first rounds of funding, investing their own money, rather than a venture capitalist (VC) that invests pooled funds at a later stage.
The term ‘angel’ apparently originally came from Broadway theatre, where wealthy individuals gave money to help bring the theatrical productions to life.
Why should you become an Angel Investor?
Backing startups whilst high risk, opens you up to much higher potential returns than traditional forms of investments. In some countries, governments also provide tax breaks to investors that back startups.
Who can become an Angel Investor?
In the UK, to qualify as an angel investor, you will need to meet the criteria of either a self-certified sophisticated investor or a high net worth investor:
Self-Certified Sophisticated Investors
Self-certified sophisticated investors need to broadly meet at least one of the following criteria:
– Have been a member of an angel network for at least 6 months;
– Made two investments in an unlisted company in the last two years, this could for example include on crowdfunding platforms;
– Work or have worked in the last 2 years in private equity, or providing finance for small and medium enterprises;
– Be a director of a company, or have been in the last 2 years with annual turnover of at least £1 million.
High Net Worth Individual
Achieving high net worth individual status broadly means that you have a salary in excess of £100,000, or net assets excluding property of over £250,000.
US – Accredited Investors
In the US, angel investors are normally (but not always) individuals who have accredited investor status. The Securities and Exchange Commission (SEC) defines an ‘accredited investor’ as one with a new worth of $1million in assets, excluding personal residence, or having earned $200k income for the two previous years, or $300k for married couples.
How much do you need to invest?
Whilst startup ticket size varies hugely, a typical amount that an angel investor might invest is between £10k and £50k in the UK, and $25k to $100k in the US.
Should I diversify?
Many investors aim to diversify their investments by building a portfolio with 10+ investments, in the hope that a few successes will counter any companies that are unsuccessful, leading to a positive Internal Rate of Return (IRR) on their portfolio.
How do you get started?
On the Angel Investment Network platform you can set preferences for the kind of deals that you are interested in and get relevant opportunities sent to you, or use the search facility to find deals worldwide.
Providing you either meet the criteria of a self certified investor or a high net worth individual, you can sign up as an investor on Angel Investment Network here.
Whilst we’ve seen some huge successes in terms of fundraising in the last year, it’s important to remember the companies that have been successful, not only have worked very hard and persisted to get there, they often have clever hacks and systems to help.
As many of you are thinking about new year’s resolutions from a personal perspective, here are some recommendations for hacks, tips and processes that could improve your fundraising in 2022.
Look after yourself to look after your startup
Get exercising
Running a startup means there is always too much to do. Important investor meetings get diarised, exercise and eating healthily, not so much. But if you are not creating the best version of you, are you going to be presenting your start up optimally when you pitch to investors?
Make sure you are looking after your physical and mental health, it will likely pay off with you presenting yourself in the best manner possible, and in the quality of your pitch with investors.
Sleep well – keep your phone out of the bedroom
Avoid blue light – keep your phone out of the bedroom
Now’s the time to start getting some actual quality downtime. If you check your emails in the middle of the night, it can quickly become a self enforcing habit that effects your sleep and alertness.
Lack of sleep has a number of negative effects, including impacting memory – important when recalling key metrics in investor meetings.
Keep your phone out of the bedroom and ideally have a pre-bed curfew to avoid blue light before bedtime. Leave it charging in another room over night to ensure that this doesn’t slip.
Try the Pomodoro Technique
Raising investment whilst balancing the everyday tasks of running a business is an arduous process, it’s easy to get bogged down in the never ending cycle of replying to emails and firefighting tech bugs and customer complaints.
Reclaim your time by planning and blocking out time using the Pomodoro Technique.
With the Pomodoro Technique, you create a list of the key tasks that you need to do.
Break the tasks into 25 minute segments (the optimal amount of time that people can generally concentrate effectively for).
Then fill your day with the appropriate amount of tasks. Set a timer for 25 minutes and get started on the task in hand, ignore the temptation to check your email, or anything else for that matter. When the timer ends, have a scheduled five minute break before jumping into the next segment.
It’s a unique way to stay focused, avoid distractions and obtain a sense of flow when working. Find out more about the Pomodoro Technique here.
Pimp Your Zoom Set Up
External webcam versus internal webcam
The large majority of investor meetings are still happening virtually, and it looks like that might be a lasting legacy of the pandemic, with all but a small minority of later stage meetings likely to take place over video calls.
With so many investor meetings, how can you make sure that you present yourself in the best possible way? Firstly using meeting scheduling software such as Calendly can be useful for sharing gaps in your availability, making it easier to coordinate meeting times with investors – it can also be integrated with Zoom or Google Meet to automatically schedule a video call.
Think about your backdrop – what kind of message do you think a cluttered backdrop sends to investors? You could use a virtual background, but sometimes using a real background will give investors some insight into what you like and help build rapport, whether it’s books you enjoy reading, pictures or some unique memorabilia.
Whilst you can make it work with pretty much any kit for video calls, having an external mic will make your voice feel warmer, like you are there in the room; an external webcam can give you a much clearer image and more of a contrast to get you stand out from the background; and a ring light can help you ensure that you maintain the focal point.
Do you find fundraising dispiriting? You’re not alone. Investors are typically very busy and often looking to invest in something that specifically meets their criteria, meaning that it’s not uncommon for messages to not receive a response.
On the Angel Investment Network platform, you can keep track the stage of investor conversations. You can also use software such as Pipedrive, ForceManager or Trello to categorise your investor conversations by stage.
It means that you can set yourself clear targets: i.e get X number of investor meetings this week, rather than fixating on the goals of raising investment, which can take longer, and you need to focus on getting more people through your funnel to get yourself in a position where they will convert.
CRMs have the advantage of letting you set yourself reminders to follow up with contacts, giving you analytics as to how long it is taking for contacts to get between stages, as well as adding in automation, i.e an email that it sent to investor contacts when they get to a specific point in your funnel.
In Summary
We hope you have had a chance to restore over the festive period and have come back invigorated. If you are about to embark on a fundraising journey, now is the time to think of a few habits and hacks that could go on to pay dividends for you.
When we reflected on the year at the end of 2020, a few things sprung out: the sheer chaos inflicted by the Coronavirus, or COVID, as we now call it. It caused all kinds of new problems – with new startups emerging to solve these problems.
Redundancy and furlough led to the talent pool increasing and the quality of start up teams increased, a key predictor of startup success. Productivity jumped as people found new ways to save time, skipping their daily commute and switching meetings to shorter Zoom calls.
Whilst 2020 was devastating on a personal front, there was no shortage of innovation. So where does that leave us towards the end of 2021?
The Antisocial Networks
Whether it’s Brexit, anti-vax debates, or anything in any way political, it’s clear that social networks are incurring serious strain in their never-ending challenge to chase engagement. Facebook’s recent rebrand ‘Meta’ makes logical sense to deflect some of the focus away from it.
Facebook’s commitment to the metaverse has led to considerable interest in the space from Venture X, with key investors coming out as hugely bullish, even if very few people can clearly define what the metaverse is, or will become. So what is a metaverse, anyway?
According to Andy Liu from Unlock Ventures “It’s the intersection of the physical and digital worlds, where augmented reality, virtual reality, blockchain-based environments enable people with blockchain development skillsets to develop and live in new ‘worlds’ — a fully immersive experience to express themselves, connect, interact, conduct commerce, and experience a whole new reality.”
One of key questions on investors’ lips is will the metaverse be dominated by the Metas and Microsofts, or more nimble startup? Eitherway, expect an onslaught of new metaverse startups emerging in the new year.
Good COP, bad COP?
COP26 had some clear outputs from cutting methane emissions to curbing oil and gas exploration, protecting forests and shifting from coal to clean power. Whether COP26 went far enough or not to keep the goal of a 1.5 degree temperature rise by the end of 2030 is still for discussion.
However, in the words of AIN’s Head of Impact and CEO of SeedTribe, Liv Sibony,
‘If you’re looking at predictions, one thing I would say is that big companies and governments are now committing to much higher standards of environmentalism, and that demand will stimulate growth/the market for start-ups offering environmental solutions, especially in the B2B space’.
Whilst it’s too early to see the direct impact on start up innovation, it will certainly be interesting to see the startups that step up as a result of COP induced changes in legislation.
Are we WFHing?
As the COVID pandemic started to recede, only to spike again with Omicron, one of the things that became clear is that no one knows where they are going to be working.
There was the colour coding your bookshelf stage, the pimping your home office with external mic, light and webcam, and then the ‘pingdemic’, with those in shared offices in particular, waiting to be pinged.
In short, we’ve tried a lot of different ways of working over the last year, and the one thing that we can agree on is, well, it’s hard to predict where we’re going to be working next year.
Whatsmore with escalating inflation and a spiral in wage demands, there’s a clear war for top talent emerging. How to attract and retain top talent is going to be clearly front of mind for startups in 2022.
Diverse Investing
According to Nadine Campbell, Ace Entrepreneurs, ‘in the UK while just 5% of founding teams have two female founders, research has also shown that only 1% of venture-funded startups have black founders. In the USA, black startup entrepreneurs still received only a tiny fraction, 1.2%, of the $147 billion in venture capital invested in U.S. startups’.
With movements such as Black Lives Matter providing a catalyst for a growing number of new funds and outfits supporting underrepresented founders, there’s a growing acceptance about how diverse team are better rounded, have less blindspots and ultimately, are better positioned to achieve a higher valuation multiple.
We see some positive steps in the right direction and challenge our whole investor community to think about what you can do to help accelerate this.
In Summary
At AIN, our mission is ‘to connect the world to enable investors to back the great business of tomorrow’.
For us, it has been a strong year, we’ve launched a fund, AIV capital, enabling investors to back later stage, high potential companies, we’ve had record number of investors signing up to the platform, and a 15% increase in investor connections being made with entrepreneurs.
Ultimately, it wouldn’t have been possible without you, our investors and entrepreneurs, and the AIN team for all their hard work.
We know how hard it can be to switch off, but hope you get a chance to recharge in the festive period. See you in 2022.
In the next of our Tips from the Top series, we speak toEd Lowther who leads The Soke’s Founders Development Programme, a first-of-its-kind course designed to provide vital knowledge, understanding and skills to founders at the helms of fast growth businesses.
When Harvard Business School spoke to its 141 HBS alumni who led start-ups, they asked: “What does someone who aspires to your role need to know?” The research revealed that of all the possible areas to focus on, there are two essential areas that over 80% of the group unanimously agreed on.
At the outset, a founder needs to assemble a founding team – a series of vital decisions around choosing co-founders, appointing key talent, splitting equity, recruiting advisors, and managing a board. These are all vital, but highly demanding tasks that a founder must achieve alongside building their new business that if not done correctly can lead to early failure, no matter how brilliant the idea. Founders reach these decisions through a combination of instinct, experience and the use of trusted advisors or mentors, in combination with key skill development.
Secondly, for those looking for investment, or looking to invest, a founder needs to foster a critical set of leadership skills needed early on, that in turn helps to attract further investment and support the business on its path to success. What’s clear is that early development of specific leadership skills in communication and conflict management is where a founder can really differentiate themselves.
Whilst many founders may believe that they naturally possess the skills to successfully build their business to success, the reality is that few come to the fundraising table with the array of skills needed to successfully lead an organisation from an idea through the teething stages to growth and finally exit. This is particularly the case when founders are required to run a company not purely to satisfy their own ambition (management, creative, financial, or otherwise), but to meet the expectations of investors and other stakeholders, including staff.
So what steps can founders can take to improve their skills in communication and manage conflict with their co-founders or staff?
Your business is founded on a great idea – it does not mean all your ideas are great.
In business journals, strategy reports and insight magazines, much is made of creativity being at the heart of business success and growth. Tesla CEO Elon Musk is vocal in encouraging his employees to think creatively, eager for them to predict future trends and allowing them to share their ideas freely, to improve the prospects of the company. The stratospheric growth of Tesla suggests that his approach is bearing fruit.
For those at the beginning of this journey, the thought of fostering creativity can feel like a luxury, alongside all the other business demands. Innovation is however proven to create growth. Businesses at all stages need to remain nimble as their customers’ needs and demands change. How successfully a founder facilitates the communication of ideas around their business and across functions is a marker for future innovation and adaptability for the business idea to survive in the market.
Create dedicated time for creativity and innovation as part of routine business operations, giving space for open communication between the founder and team members of all functional areas. Foster an environment for the team to be creative and openly communicative, without it all being founder-led, so that ideas are assessed on their own merit, whatever the role of the team member in the company.
Learn to share through building communicative resilience
Once a founder has the fundamentals of their new business in place, the idea is taking hold in the market and revenue is growing, it’s an exhilarating time. Few businesses can grow rapidly through organic growth alone and therefore a founder must also accept the challenge of securing capital through external sources. It can be an exciting but risky time, with a number of factors that can damage a business just as it begins to succeed. Much of the damage comes from the amount of time that is needed, coupled with the energy required to be successful, which takes away a founder’s dedication to their clients. Customers can sense neglect, just at the moment a business wants to secure their lifelong loyalty.
At this moment, a founder will be at their communication limits, often exhausted by the sound of their own voice, as they describe the brilliance of their business, the financial plan and the superb team assembled to make it succeed, to yet another room of potential investors. The key skill to develop here is ‘communicative resilience’, a combination of sustaining a consistent and engaging narrative of the idea, clear understanding of the business strengths and challenges, and a willingness to answer penetrative questions designed to interrogate a founder’s financial shortcomings. This combination tells investors that you can share this with them and make it successful at the same time.
Be mindful that you communicate the strengths of the business in a way that puts the business idea at its heart and that through additional financial support, this idea will flourish. The moment that investors sense that a founder does not want to share and is more interested in their own success irrespective of the idea, the fight for their funding is lost.
Conflict is inevitable – fail to prepare for it, prepare to fail.
It’s likely that as a founder builds their team, they have been successful in recruiting a diverse team, all with unique skills and often varied or differing opinions. In fact, this diversity is often a key ingredient for driving a business forward as these individuals bring perspectives to the founder that they would not otherwise have seen, helping them grow the business successfully.
The differences in this team that exist through individual variances of cultural background, learning styles, personality and many more factors besides, overlaid with managerial expectations, accountability issues and communication styles, will inevitably lead to conflict. And at this point, the founder needs to establish a pathway that is neither a hierarchy of opinions, where ‘I win because I’m more senior,’ or that a conflict is simply ignored. Without establishing this early on, conflicts cannot be resolved satisfactorily and can lead to increased stress and decreased performance in the team, which will impact business growth.
Plan to navigate conflict by setting out a framework for all employees to identify and resolve issues between each other, building a culture that celebrates diverse perspectives with a way to manage the conflict that this diversity can bring. It will help shape the best outcomes for the business and build genuine trust and respect between team members, managers, and the founder.
In the run up to the festive period, the AIN team highlights some of the companies that they are most excited about. With two companies shaking up the property market, a chocolate brand targeting the very top of the market, and a company that is revolutionising 3D printing.
Virtual View App
During the pandemic, viewing properties has been difficult, at times impossible, but one of the lasting effects of it is more and people screening potential properties with virtual tours.
Virtual View’s ‘Vieweet’ app helps amateur photographers create a 360 view, or virtual tour on an app. It’s useful for viewing potential property to buy or let, but other use cases span insurance, interior design and surveying.
Key Facts
– Vieweet currently collects data on the 7% of the UK properties sold every month
– Partnerships with some of the largest property sites including Zoopla
– Customers include some of the largest estate agents, such as Purple Bricks and Countrywide
‘The thought of them already collecting data on 7% of UK properties sold every month before turning on the revenue taps showed me just how confident the founder is. The levels of data they can gather on each home will help further stimulate several other industries’ Xavier Ballester
Continuing the property theme, PropertyLoop is an end to end lettings platform. Making life much easier for property landlords. It’s also the world’s first commission free letting platform.
Landlords typically spend thousands on unhelpful agents just to find a tenant. On PropertyLoop, landlords list their property only once, the listings then are posted on to hundreds of portals including Rightmove, Zoopla and OnTheMarket. PropertyLoop verifies renters identities, as well as sorting tenancy agreement, deposits and renewals.
There’s also a ‘Smart’ tools service where tenant report any issues with the property online, where it is automatically sent to relevant, qualified contractors who bid for the work. Property Loop takes care of all the access, proof of work and invoicing so that landlords don’t have to.
Key Facts
– Multi excited founders
– sold one of London’s biggest retail estate agency chains, taken care of $1 billion of property every year.
– 95% of the market still being dominated by High Street Agents, the ‘Blockbusters’ of the Property Market
Total Addressable Market – £1.7 trillion rental market
‘Having spoken to a number of landlords about PropertyLoop each of them said they would be crazy not to use it. Everything to do with the running of your property under one roof and free is definitely a problem being solved!’ Xavier Ballester
Firetree
Firetree
There’s expensive chocolate, and then there’s Firetree – chocolate is priced at a price point that you wouldn’t really expect to see chocolat at, more the territory you would expect to see a fine wine.
Firetree is a new chocolate brand positioning itself at the top of the end of the market, and therefore avoiding the competitive mid-market with the likes of Cadbury and Mars. Chocolate is roasted in its shells using a slow chocolate craft production process to ‘optimise their complet taste characteristic’.
Firetree believe they are the only serious player who can capture the top of the market with an experienced team that combines both mass market and high end chocolate experience.
Key Facts
– Set for £1m in revenues in 2021
– Retailers include Harrods, M&S and Ocado
– Vegan, Dairy-Free, Nut Free, Halal and Kosher Certified.
‘ I tasted them and know just how delicious they are. My wife is a big chocolate snob and says she has never tried a better chocolate. Firetree could be the brand to take over the super premium category.’ Xavier Ballester
Wayland Additive have overhauled additive manufacture (3D Printing) of metals, making it faster, more reliable and allowing for the printing of larger structures than has commonly been possible.
Wayland aims to create metal Additive Manufacturing (“AM” – 3D printing) machines to sell to industrial organisations, including in the aerospace and medical industries. With highly advanced tech created from the worlds of scanning electron microscopy and electron beam lithography.
As a result of these innovations the machine will offer higher productivity, unparalleled process monitoring and control, and versatility in materials.
Facts
– First client signed in N. America (£850k) and working with the MOD
– £29m pipeline of opportunities
– Raised £2.1m of a £3m round backed by Longwall Ventures
To hear more about Wayland Additive, reach out to Ed Stephens directly ed(at)angelinvestmentnetwork.co.uk.
Keen to hear more?
If you would like to see what other companies are up to on Angel Investment Network, or are interested in raising funding yourself, you can find your local network here.
In this week’s edition of #SixtySecondStartUp we catch up with Leah Zabari, founder of CheckMates, an app to connect you with anonymous support during difficult times.
What does your company do?
Checkmates is a mobile app designed to help individuals connect with anonymous support during difficult times.
Checkmates uses algorithms and a dating app “swipe right” style in order to help the individual find profiles they can relate to.
Our focus on imagery and metaphors to describe each user’s story erases the need for potentially triggering language. Therefore putting the user in control of their information and how they would like to receive support.
Why did you set up this company?
In 2017 my mother was diagnosed with breast cancer. Although she received fantastic treatment and support from the NHS and Macmillan cancer support, I really struggled as a carer and a family member to find the support I needed. I was receiving therapy at the time but what I really wanted was to meet someone who was going through the same thing, someone I could relate to and who knew how I was feeling.
This sparked my idea of Checkmates; and the more I went through my vision and values for Checkmates, the more it became evident that this was a platform for everyone; loneliness and the need for support and help is not just an issue for children. Statistics show this to be an increasing worry for older adults. Everyone needs to be heard and listened to, and to feel supported.
The MyCheckmates App
How did you get your first customer?
We are currently undergoing a testing period of our first version of MyCheckmates app with our community. Until we have refined the last final details we want to make we haven’t launched our paid feature Checkmates+. We are aiming to launch MyCheckmates to the world mid 2022 after our upcoming seed round.
We knew we were onto something when?
We did a lot of market research before we began developing MyCheckmates; we shared a survey asking everyone if there was a time in their life they would have used MyCheckmates had it been available; this had a 100% positive response. The following question was asking them to share what the challenges were they were facing, the answers left me speechless.
Everyone was going through such different experiences and yet everyone felt alone. Addiction, bereavement, mothers with daughters battling eating disorders, unemployment struggles, breakups/divorce, nurses suffering mental health issues due to their work through the COVID 19 pandemic.
No matter who you are, everyone needs support, everyone needs to be reminded they are not alone.
Our business model:
MyCheckmates is working on a freemium model meaning a basic version of the app is free for all, however a paid version with many more features is available and strongly encouraged in order for users to get the most tailored support to their needs.
We currently have a monetised weekly mental health check-in newsletter and a biweekly podcast breaking down the stigma around emotions.
MyCheckmates has huge room to expand into many different areas of mental health; including mindfulness and meditation features within the app, and in person events to find support within small communities, both of which we are working on currently.
Our most effective marketing channel has been:
Social media! When Checkmates started out as scribbles in my notebook one of the first things I vowed was that the service Checkmates was offering was to be accessible for all. This has mainly shown itself in the form of a free version of our app but has also come through in other aspects of the company’s profile; such as its community services. All our social media is free, interactive and allows everyone to feel like part of a team. We share resources, testimonies and tips and tricks to check-in on your friends mental health as well as your own.
What we look for when recruiting:
Enthusiasm, honesty and flexibility. As a startup things change all the time, we are a small team currently doing a little bit of everything; filling in gaps when needed and constantly learning new skills in areas some of us haven’t studied since highschool!
With our app having such a huge focus on mental health we want everyone in our team to be passionate about improving the services that are offered to those struggling. We are a business, but a business created to help our users. Passion and a desire for positive change has to lie at the forefront of all decisions.
The biggest mistake that I’ve made is:
Assuming I needed a technical co-founder before I could get started.
As a solo founder the first thing you read online is *ALERT ALERT* you need to find a technical co founder to be taken seriously. This is not true, being a non-technical solo founder isn’t easy, don’t get me wrong, but I was the one with the ideas and vision so why not get started straight away? If partnership is the right thing to do then I strongly believe it will happen. Working with business partners; whether that is investors, co-founders or employees you work closely with does not work unless your personal relationship is solid too. You have to have the same vision and trust each other; you can’t fake or force either of these things.
We think that there’s growth in this sector because:
In total, 45% of adults feel occasionally, sometimes, or often lonely in England. This equates to twenty five million people.
5.0% (1 in 20,) of people in the UK(2.6 million adults) reported that they felt lonely “often” or “always” between 3 April and 3 May 2020, about the same proportion as before the national lockdown due to Covid-19. Of those asked, 30.9% (7.4 million adults) reported their well-being had been affected because of their loneliness in the past seven days.
This figure is ever growing, especially with the effects of the COVID-19 pandemic and its aftermath. As well as the heartbreak and isolation that the pandemic has brought many individuals more broadly, the social distancing measures and the limitations of household bubbles has denied many people the opportunity to meet new people and find the support they need.
We worked with AIN because:
We are about to embark on a first fundraising journey that will allow MyCheckmates to be taken to the next step and start providing support to the people that need it. We have all the ideas, the passion and the projection. All we need now is just a little extra help from investors to make this happen. When Drummond got in touch it came at the perfect time with our BETA launch, it is a fantastic way for us to be able to share MyCheckmates with the people who can help make this happen.
Keen to hear more?
If you would like to see what other companies are up to on Angel Investment Network, or are interested in raising funding yourself, you can find your local network here.
Up next for #SixtySecondStartUp we have Matthew Billington, Co-founder of Society. Matthew noticed that student usage of Facebook was falling off a cliff and set up a startup to help student societies manage their members with their own branded apps.
What does Society do?
Society is your own branded community app in an instant. With over 1,700 clubs with group chats in over 217 Universities in the UK and worldwide, Society is now the fastest growing app at University for clubs and societies.
App features include push notifications direct to all your members for instant alerts and updates for events and announcements. It has your club’s calendar of events, an instant searchable network, personal profiles, direct messaging, group chats, free e-tickets and much, much more. And, it’s completely free for students.
The Society App
Why did you set up Society?
When I entered my 4th year as a dental student at King’s College London, I soon discovered that being elected President of the KCL Dental Society of 800 members came with its fair share of problems. Engagement was falling and falling, Facebook was becoming increasingly outdated especially with freshers. Year on year, we were seeing a progressive decline in engagement with university students.
With popular event booking platforms such as Eventbrite and Fatsoma, having high transaction fees, I wanted to create a platform with the lowest possible ticket transaction fees for students, whilst remaining free for free events. WhatsApp groups were also a terrible way to manage a society and events.
How did you get your first customer?
After engaging with Presidents from other dental schools I soon discovered that nearly every new President of a university society is in the same boat, re-creating the wheel, each and every year.
I originally came up with the idea of the Dental Society app to have a profound and positive impact on committees and society members at all 16 dental schools. Helping committees to save time through automating event management, certificates, ticketing/e-tickets for events, whilst having the committee displayed and available for all members to directly contact through the chat.
We knew we were onto something when?
Suddenly, the Presidents of King’s College London Medical Student Association wanted to use the Dental Society app. Then 18 months ago when the app was re-engineered and relaunched as “Society” for all student clubs, Aston’s African Caribbean Society wanted to use the app. That’s when we experienced exceptional growth from 12 clubs to 800 clubs to now over 1700 clubs in the last 18 months.
Our business model:
Society co-founders chose pre-monetisation to maximise and prioritise viral growth without friction. Over the next 12 months, we are proving multiple revenue streams to find optimal ways of aligning monetisation with viral growth.
Our most effective marketing channel has been:
Word-of-mouth with students. The new academic year saw more than two hundred Society Ambassadors attend Freshers Fairs at Universities across the UK to promote the Society app to clubs, societies and students. All ambassadors wore the Society hoodie while spreading the word about the features and benefits of the app. The awareness campaign was a huge success.
Society Brand Ambassadors
What we look for when recruiting:
Insanely great people with ideas and raw talent, passion and energy that don’t need to be managed. They have to believe in the Society app, our vision and be fun.
The biggest mistake that I’ve made is:
Not immediately realising the full potential of the Society app as an instant community app for absolutely everyone in the world. ESN UK is set to digitise the student exchange experience with their new Society App partnership. Formally the Erasmus Student Network, ESN is the largest student-led organisation in the world in over 1,000 Higher Education Institutions in 42 countries.
Together with Society App, ESN UK are launching a new app specifically for their members to help them to develop skills to a higher proficiency. As seen in The Daily Telegraph, the ESN partnership presents a global opportunity for the Society app and is one of the pathways to having a world-wide presence in 2022 with student brand ambassadors in every country.
We think that there’s growth in this sector because:
Significant traction has been made in the new academic year post covid lock downs. In the last 90 days, clubs have doubled and grown by 100% across 1,700+ Clubs, now also with 1,700+ Group Chats. Memberships have grown by 130% and engagement has grown by 700%. Over £50,000 has been collected via Society Pay, the in-app payment gateway. This exceptional growth since launch only 18 months ago, means the Society app has already cornered 13% UK market share and is expected to double in 2022.
The app’s success reflects UK University only, excluding parallel, international and enterprise markets. There’s still time to invest in the Society app (EIS approved) this year to support the team growth of student brand ambassadors and react native developers, which will allow greater scale and global ambitions to be achieved.
We worked with AIN because:
AIN was highly recommended and we found AIN to be one of the best ways to reach and communicate with potential investors.
Keen to hear more?
If you would like to see what other companies are up to on Angel Investment Network, or are interested in raising funding yourself, you can find your local network here.
At AIN, we celebrate connecting investors to back the great businesses of tomorrow, whatever they do. With this in mind, our latest round up includes a new form of property marketplace, a platform using AI to reinterpret education and a company making new types of soup!
Soupologie
Soupologie
Whilst you may think there isn’t much to differentiate soup, Soupologie would beg to differ. Soupologie makes award winning soups and ready meals that are driving a number of innovations including: the world’s first ‘5 a day soup’ and ‘first free from the 14 main allergens soup’.
Capitalising on the plant based movement, the company has achieved strong growth and has even released two cookbooks. With an exit focused management team and strong revenue growth, the company is on a fantastic path.
Key Facts
– On track for £3.2m revenue in Y/E May 22
– Products sold at Waitrose, Tesco, Ocado and leading supermarkets
– Over 21k+ followers on social media
“Soupologie have steadily built a strong business core around an innovative product range. Alongside executing the fundamentals of the business brilliantly, they amplify the brand exceptionally well through wide reaching media campaigns and an enviable following. The combination is powerful and we knew it was something that our network would be keen to see” Sam Louis.
Vesta is a marketplace for buying and selling rental property, and has sold over £50 million of property since it’s launch in 2018.
It’s the leading marketplace of it’s kind covering buy-to-let, student accommodation, and portfolio properties for example. The properties often come with a tenant in place – if you buy a property with a tenant in place, the tenant is happy as they don’t need to find somewhere else to live, and the buyer is happy as they have an immediate rental income.
Key Facts
– The rental market is expected to be £1.7 billion by 2025
– Vesta has a growing pipeline currently worth £100 million.
– Revenue currently > £20k a month
“This is a space that has been of interest to me for some time and Vesta clearly sets out what the investment options and how much I can hope to generate from the moment I buy the property” Xavier Ballester.
Habitat Learn is an ecosystem of products designed to remove the barriers of learning. With the ethos that ‘when online learning works better for all students; all students work better.’
Habitat Learns comprises a suite of products easily integrating into existing education technology. This includes:
– Video conferencing software, designed specifically for education, as well as providing high quality live stream content, there is AI captioning and translation, and digital watermarks to safeguard IP.
– Advanced analytics including everything from live recording, invoicing and student attendance records
– An option to get notetakers to take notes remotely.
Key Facts:
– Projecting £3m revenue in 2021, (£600k: 2020)
-185 customers (universities and colleges) including Harvard, Yale and Cornell
– Experienced team founding multiple successful startups
“With lockdown Edtech has seen a real surge but I also looked back to my uni days where I spent most lectures frantically scribbling and missing half of what was said… Oh to have had Habitat Learn!” Xavier Ballester.
If you would like to see what other companies are up to on Angel Investment Network, or are interested in raising funding yourself, you can find your local network here.
