What’s the outlook for mobile app startups and investors in 2017?

“There’s an app for that”, or some variant of the phrase, is now one of the most common responses to anyone raising a complaint or bemoaning a problem, however small.

Rise and fall of man

The extreme sense of entitlement coupled with the profound idleness that characterises our age has created a market for apps which manage or assist with our dry-cleaning, our sex life, our tampon subscription, our polyphasic sleep-mapping, our pets’ bowel movements…I wouldn’t be surprised if somewhere in the murky depths of the App Store there’s an app for communing with the dead – or perhaps I’ve just been watching too much Black Mirror.

The last decade has seen the rapid and unstoppable emergence of the mobile application. And it’s not just quick-on-the-uptake millennials who are enamoured with this new way of being, by now nearly everyone is a smartphone-toting app addict.

But is this set to last? And what’s the outlook for mobile app entrepreneurs and investors?

The general consensus from anecdotal reports is that mobile app companies are finding it more difficult to raise finance. This requires some unpacking. Thanks to a report from our friends at Beauhurst, who track the funds raised by thousands of seed, venture and growth-stage companies, we can see that the amount invested in mobile apps in the UK reached its highest ever level of just over £560m in 2016 (that’s up from £67m in 2011 and circa £275m in 2015).

Mobile app deal numbers and amount invested 2011-2016
Mobile app deal numbers and amount invested 2011-2016

So what’s the problem? Clearly, there are enormous (and increasing) amounts of capital still being ploughed into the app industry by investors. But hold on, there’s a nuance to this.

The crucial change which gives credence to the consensus is that the stage of the app companies raising money has changed. In 2013, 70% of app companies who raised money were seed stage, but by 2016 that number had dropped to 62% with more investors opting for the more proven venture and growth-stage companies.

So from this, we can see that for early stage app companies the prospect of raising finance has indeed become marginally harder. However, the amounts being invested into the sector are still growing at an impressive rate so for apps good enough to compete, there’s still a world of opportunity.

With thanks to Beauhurst for permission to use their data. You can read their article here

Business Funding Show Event – Canary Wharf 23rd February

Angel Investment Network will once again be joining a host of other companies from the startup investment space at the latest Business Funding Show on 23rd February near Canary Wharf tube station.

PICTURE with Logos

Attendees will be given the opportunity to:

– Meet famous entrepreneurs like Mark Wright (BBC Apprentice Winner)
– Learn from Angel Investors such as Mike Greene (C4 Secret Millionaire)
– Meet a range of leading financial institutions
– Get free 1-2-1 with Top Investors & VCs
– Attend talks from industry experts

Wondering what it’s all about? Check out what it was like last year in the video below:
]

If I were an SME today and I’d just started a business or I was growing a business in my early days, I’d be here at the Show, because I want to learn more and more about all the different forms of funding available, meet potential funders every year, meet with fellow entrepreneurs and learn from them, learn from the speakers, who are very experienced.Lord Bilimoria of Cobra Beer

Picture Richard

My mission is to help entrepreneurs to set-up and grow their business. So, the Business Funding Show is a perfect event for this, as it’s all about helping entrepreneurs to learn how to get money and grow fast.Richard Reed of Innocent Drinks

Our very own Xavier Ballester will also be giving a workshop on raising money through angel investors!

You can get tickets here.

Success Story: Data Science marketplace Pivigo secures investment following rapid growth

Pivigo (http://www.pivigo.com/), a data science marketplace and training provider based in London, has announced the successful closing of its funding round with investment secured from high profile consortia including Angel Academe, Craigie Capital, Dubai-based Dunamis Ventures Ltd and London Co-Investment Fund, the Mayor of London’s early stage business fund.

Angel Investment Network is delighted to have made a significant contribution to this success story through its introduction of Dunamis Ventures Ltd.

You can view the full press release on the Pivigo blog here

Now that they are fully funded, they are well placed “to reach a much larger audience, help connect more people with each other and work with companies to gain value from data…” as Founder and CEO, Kim Nilsson, puts it.

We can’t wait to see the progress they make!

Proposal Tip of the Week

What’s the point of a proposal? Why use sites like Angel Investment Network? Why not just send your full business plan to people you want to invest?

Well, for a start, not everyone has the contact details of a large number of investors just sat in their inbox. Networking/Connection sites like Angel Investment Network hold the key to advertising your latest business venture to thousands of prospective investors so that you can find the right ones to suit the nature of the project. That sounds a little sales-y, I know, but it’s important to understand in order to realise the significance of the short proposal instead of the full-blown business plan.

When you’re marketing an idea to thousands of people, not just in the fundraising community but anywhere, you cannot simply take it for granted that people will actually take time to consider your idea; in any marketplace thousands upon thousands of ideas are competing to grab the attention of the onlookers. Precedence is not always, and certainly not necessarily, defined by merit, but rather by the ability to capture attention.

Don’t think ‘I know my idea is brilliant, so why wouldn’t investors read my business plan? They’d be stupid not to…’ That attitude will help you raise the square root of nothing. Think instead ‘How can I make it so that investors literally cannot wait to get their greedy paws on my business plan and start properly digesting my idea?’

Here’s where your short proposal comes in. It is meant to be pithy and concise. Something that can be easily understood and result in them wanting to know more. It is the first rung on the ladder towards them investing; and that can often be the hardest part – getting them to step onto the ladder. Once they’re on, of course some may fall off on the way to the top, but at least you’re beginning to win them over and it becomes progressively harder for them to get off.

As such you should consider your proposal as a ‘hook’, to use Nir Eyal’s term, or in internet-speak a CTA (call-to-action). In your proposal make them love your idea enough to take the next step. Tell them the best bits. Don’t swamp them in superfluous detail.

Proposal Tip of the Week

It’s funny what working near a beach for 3 weeks will do to one’s ability to keep their blog updated! But I’m back in the office now, back to the grindstone so your weekly dose of pitching/proposal advice is back up and running.

The previous 4 tips have talked in general terms about the ideal structure for your proposal: Tip #1 advised you to put your achievements first, Tip #2 encouraged you to then articulate the problem you solve, Tip #3 how you solve that problem and Tip #4 told you to make it clear how big the market opportunity is.

This week I wanted to talk about tone. How should your pitch come across? Funny? Serious? Detailed? Light?

When I arrived in the office this morning one of my colleagues was bragging about how he had re-written someone’s proposal for them after they had got no interest from investors after 90 days on Angel Investment Network. Now the business wasn’t bad at all, but it wasn’t an Uber or Facebook by any stretch of the imagination. The reason the guy had done so poorly was that the way he had written his proposal was about as exciting as watching paint dry in prison.

My colleague made no drastic changes – the fact of the business and its products (innovative power tools) were beyond his control. And yet his changes resulted in 82 investors contacting the entrepreneur. 82. When previously he’d got zero.

What did he change? He injected some life, some enthusiasm, some excitement into the proposal. The subject matter remained the same, but he gave the proposal a buzz. He infused it with a sense of success just around the corner; and that’s what intrigued the investors.

So give yourself a fighting chance and make sure you strike the right tone…

Proposal Tip of the Week

Tip #4 “How big’s the itch and is it spreading…like a rash?”

To continue the itch metaphor from proposal tips #2 and #3 (which dealt with the importance of giving a clear explanation of the itch you scratch and how you scratch it), in this post I’d like to touch on the size of the itch and how it’s growing.

For those of you beginning to find my strangled metaphor tedious, I’ll stop. I’m talking, of course, about the market your business operates/plans to operate in.

It’s no use solving a problem – even if you solve it unbelievably well – if it’s a problem only extant for a single hermit on the remote island of Tristan de Cunha, then it’s great for the hermit, but not a viable business (unless he’s sitting on pots of gold).

The problem you solve has to be one that a large and growing number of people suffer from without a solution; and are willing to pay for.

The more statistics you have to indicate this, the more prospective investors are likely to give your idea credence! There are plenty of websites available to help you with this, so don’t skip this bit…

Success Story: Atlantic Healthcare closes $24 million financing

Some good news came in over the weekend in a press release from Atlantic Healthcare. It’s encouraging to see our Pharmaceutical companies flourishing alongside their arguably more trendy tech counterparts.

We raised circa £350,000 for Atlantic Healthcare as part of their seed round. It’s taken a few years, but that’s nearly always the way with pharmaceuticals; and now they’ve just closed a $24 million round with funds coming from the founders of Salix Pharmaceuticals, Inc.; Fullbrook Thorpe Investments LLP (the family investment arm of Andy Leaver, founder of Clinigen Group plc); and LDC (the private equity division of Lloyds Banking Group plc); alongside their existing investors.

This round will allow them to complete the pivotal Phase 3 of their product development and will make alicaforsen market-ready for the treatment of IBD pouchitis which currently has no approved treatments.

Proposal Tip of the Week

So far in this series we’ve discussed 2 of my 3 recommended first steps for starting your pitch in a way that makes investors instantly grasp the value of your idea.

Third up is the natural corollary of the problem, that is, the solution.

Tip #3 “How do you scratch that itch?”

Once you’ve made the effort, as set out in Proposal Tip #2, to give a cogent explanation of the problem, and the investors have started to relate to the pain point, then you hit them with your solution.

How you do this will depend hugely on what your solution is, but the key point is to make it super clear. No one will understand your solution as well as you do – so don’t expect them to. Set out your explanation in as simple as possible terms as if explaining to a total novice.

Entrepreneurs often make the mistake of being too technical at this stage under the mistaken belief that if they sound like a genius then the prospective investor will fall head over heels and want to invest.

Wrong.

If someone doesn’t understand your idea quickly they’ll look elsewhere for an idea they can understand and relate to quickly.

You’ve been warned for this week…

Success Story: Reward Gateway acquires Yomp

Yomp • Engaging People • Rewarding Wellness from Yomp on Vimeo.

Yesterday Techcrunch posted an article announcing that Reward Gateway had acquired gamified health startup Yomp for an undisclosed figure. Techcrunch mention the £200k seed round that Yomp filled last year, but neglect to mention that £150k of that came through Angel Investment Network (the whole SEIS allowance) !

But that’s of little importance. Our investors are over the moon at such a rapid ROI. As you would be. The figure hasn’t been disclosed yet, but our £150k went in at a valuation of £1 million; and we’d expect someone of the calibre of Reward Gateway to be able to acquire for £3-5million. By that reckoning, our investors are getting a 3-5x multiple return in just over a year.

How Funding Works – Infographic Timeline

For many entrepreneurs, no matter what stage they are at in their fundraising journey, it can be difficult to see the wood for the trees and hold a sense of the bigger picture in mind. This helpful infographic, courtesy of Funders and Founders, gives a clear picture of the funding process from Day 1 to IPO.

To read the full article which gives a detailed analysis of all the stages follow this link