Mobile banking startup, Movivo, closes circa £200k through angel investors

Mobile banking startup, Movivo, one of our portfolio companies, just officially announced the successful close of its funding round on the UK Business Angels Association.

Movivo is a potentially life-changing app for mobile phone users in emerging countries. It provides an invaluable service for the 2.5 billion people who still don’t have bank accounts because of infrastructure issues.

They previously secured financial backing from Microsoft, a leading Silicon Valley investment fund and top British VC firm. Their investment was based on the strength of their idea and its potential to help emerging countries.

But the experience of the founders was equally important. The team comes first on my list when it comes to deal evaluation for investors – you can read the whole article here.

At Movivo, the team had experience working at Huddle.com, a collaboration platform used by the UK government, US Department of Homeland Security and large corporations including KPMG and Deloitte.)

How did we help this promising mobile startup?

As an insight into the way we work at Angel Investment Network and how we raised £188k for Movivo, I wanted to show you how we launched them to our network.

The first part of our strategy is always a carefully curated mailout. This is sent to our network of angel investors and investment funds.

This mailout is designed to build leads from potential investors. We entice them with the main impressive pieces information; they can then get back to us with questions and requests for introductions.

I have copied below a screenshot of the mailout we sent last June. This ultimately raised close to £200,000 for Movivo:

Angel Investment Network's fundraising mailout

What do you think?

Is Growth the Best Measure of Startup Success?

Startup Growth & Traction
Growth gets a lot of attention in the startup world. A lot of attention. If you Google “startup growth“, you’ll find a plethora of articles, blog posts and tools all suggesting that growth is the most important measure of your startup.

Paul Graham, the founder of Y Combinator, asserts that “The only essential thing is growth“.

In some sense, this attention is well-deserved. But it is often misunderstood and taken out of context.

Growth is, of course, important. Growth is a telling measure of your product/service’s popularity; and, as such, strong growth metrics are invaluable when you’re trying to raise money from investors.

But growth can, and often does, flatter to deceive. And this is something both entrepreneurs and investors should be wary of.

Entrepreneurs need to be careful because “…many founders hurt their companies by focusing on growth too soon“. This is what Sam Altman, the founder of Loopt and President of Y Combinator, wrote in a recent article on the topic of growth.

His reasoning is simple: if you focus too much on early growth and not on actually building a product people love, then at some stage you will encounter the leaky bucket problem where the customers you worked hard to onboard, leave in droves ne’er to return!

But, if you focus on building a great product then you will have better customer retention and, as a result, growth should become increasingly easy as word-of-mouth spreads.

Consider the example of AirBnB who worked and iterated for years before they got the product just right; and then it spread like wildfire because people loved it.

Equally, investors need to be careful because there are often more telling metrics indicating the potential for success of a particular company. An app, for example, may have achieved 100,000 downloads in its first week, but if 95,000 of those users had stopped using the app by the second week, then the impressive early growth suddenly appears deceptive.

So there we have it. Growth should always be important, but it is also important that entrepreneurs and investors espouse a more nuanced attitude to it than believing it to be the ultimate measure of potential and success.

FinTech Connect Event in London

FinTech Connect Live
FinTech Connect Live

We recently partnered with FinTech Connect, a company that was launched with the vision of building a platform and community for the global FinTech industry.

As part of this partnership, there are discounted tickets available to their next event in London (6th & 7th December 2016) for our readership. If you’re interested in the FinTech industry and think this might be of interest then check out the event brochure here.

If you want to attend use the code FTCL1627 to get a 25% discount on your ticket. Just head over to https://register.iqpc.com/SRSPricing.aspx?eventid=1002786

The Lean Startup Revisited – Does it really work?

The so-called ‘Lean Startup’ methodology, coined by Silicon Valley entrepreneur Eric Ries, has come into vogue in recent years and aims to address the problem of heavy cash outlay during the early stages of your business. In other words, it advocates proving your concept as far as possible without building the finished product. It aims to take the financial risk out of building a startup (as far as that is possible!).

The Lean Startup for Entrepreneurs - Does it really work?

The lean startup methodology is all about experimentation, feedback and iteration. Or to use the vernacular of a school science teacher: hypothesis, evidence, synthesis and improvement. The idea is that rather than spending hours and hours writing a ‘perfect’ business plan, keeping your ideas hush-hush and finally launching a fully developed product in the hope that investors and consumers will be won over, you test hypotheses by collating customer feedback from your MVP (Minimum Viable Product).

The Lean Startup Experimentation Loop

For example, you could throw up a landing page selling a product/service that, as yet, does not exist, and measure the popularity and interest in it. By this means, you can calculate whether the idea is worth pursuing and how it can be optimised; or whether you should ‘pivot’ or iterate, or change the concept entirely. For more information on what lean startup means, you can visit www.theleanstartup.com/.

But in this post I want to address the question of how far this lean startup method has proven itself as viable. Ted Ladd is a professor and entrepreneur who has conducted research on this question and recently published his findings in an article for the Harvard Business Review. Click here to read the full article.

In a nutshell, he concludes that while the experimentation and customer feedback produced by following the method does impress investors and presentation panel judges, it does not necessarily indicate subsequent success. He states a number of possible reasons for this:

– Too much feedback erodes entrepreneur confidence
– Method may produce ‘false negatives’ when there is no clear rule in place to stop testing and start scaling. In other words, entrepreneurs are experimenting so much that they always end up with negative results.

This leads him to say that while the lean startup method has considerable benefits for entrepreneurs, it is important that the testing and experimentation on a micro-level is combined with a broader strategy. That way, only the priority areas are tested; and time and confidence are not wasted testing every aspect.

He ends his article with the following:

“The popularity of the lean startup method is well deserved. But, as is true of any business process, the method must be tailored and employed with reflection and constraints, not blind allegiance. Just like the new ventures it creates, it will improve as researchers and practitioners propose, test, and incorporate refinements.”

Food for thought…

How to get started on your business (for total Novices)…

I just got sent this simple infographic from our friends at www.personalicome.org. It’s a great reminder of all the avenues open to you if you’re starting out as an entrepreneur for the first time. Some should be pretty obvious, but there are a couple of interesting ideas.

Check it out:

7 Innovative Ways To Raise Money For Your Business

AIN on IntelligentCrowd.tv

Xavier Ballester, the co-director of our brokering division, appeared on Intelligentcrowd.tv offering some pearls of wisdom to investors and entrepreneurs alike, including:

– How we evaluate startups worth working with
– Why we exchange part of our cash success fee for equity shares in our clients
– Recent exits and hot prospects including Brightnorth, Superawesome and What3Words
– How we raise money for our clients

Check out the interview below:

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…

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…

Proposal Tip of the Week

Some very exciting news in this morning about one of the companies we raised money for last year. BIG news! Unfortunately, I’m not allowed to disclose anything yet, so will have to announce when permitted in a later post…so watch this space.

Anyway, I’m sure you’ve all been on tenterhooks waiting for the second in my series of 52 quick proposal tips. The wait is over…

Tip #2 “What Itch do you Scratch?”

Last week’s tip recommended grabbing investors’ attention by starting your pitch/proposal with your company’s most impressive achievement or traction metric to date. But what next?

You’ve hit them first with some proof and validation, but now you need to make the explanation of your concept as concise as possible. Remember, you no doubt understand your business extremely well, but you cannot expect prospective investors to have the same level of understanding. So what’s the best way to articulate your concept clearly?

Generally, we encourage entrepreneurs submitting a proposal on Angel Investment Network to start with the problem. What real world problem do you solve? What itch do you scratch? What pain do you alleviate?

If I were the Founder of Uber when starting out, my proposal would start by setting out the problems that people who want a taxi face e.g. long waits, high fares, needing to have cash etc…

If you do this well, you will get investors nodding along as they begin to see the value of your concept as they relate it to their own lives.
That’s all for now. I’ll cover the next step next week…