In June 2022, MASTER Plant Holdings (“Master Plant” or the “Company”), an emerging force in the European cannabis industry, raised £500,000 in a seed funding round with Angel Investment Network (AIN), the world’s largest online angel investment platform.
Following this investment, Master Plant will aim to licence and redevelop a pharmaceutical distribution facility in Guernsey designed to develop high quality medical cannabis, unique strains and wider products for European distribution.
The European cannabis market is rapidly growing with Germany leading the way. Currently, the market exists via medical channels with limited psychoactive THC quantities (Cannabis Light). In fact, 89% of cannabis use cases involve this product for medicinal and therapeutic purposes. The European market is predicted to reach €13bn by 2027 according to Market Data Forecasts. In comparison, the United States market was estimated at approximately $65bn in sales in 2021, of which $21bn were from legal sources creating $4bn in tax.
After the first £500k round of funding, Master Plant is intent on remaining ahead of the curve. The Company is in the process gaining their cannabis licence for research, development and manufacturing of 300+ strains and formulations on the Island of Guernsey. Already, the company has consolidated decades of research and development into its proprietary cannabis genetics bank. This research will provide diversity in major and minor cannabinoids, as well as other beneficial molecules that will contribute to a vast assortment of future products. The licensed facility is set to distribute high quality medical cannabis, launch unique strains and products and develop deep tech enabled growth.
AIN’s funding will also enable the expansion of Master Plant’s senior team with seasoned experts joining from the North American cannabis industry. The commercial operations of Master Plant and Mee CBD, with groundbreaking water-soluble formulas, will also see wider development.
According to Master Plant CEO, Oliver Osgood: “We are delighted that angel investors have backed Master Plant’s vision as we continue to break new ground in the cannabis industry. As we look forward to the future, we are confident our cannabis licence and market proposition is unique. Combined with our proven track record and global cannabis credentials we are ambitious to become a key player in European cannabis.”Master Plant will aim to launch their next round of Series A funding in 2023. The £2m Series A funding will go towards retrofitting the Guernsey facility and developing commercial operations. Sign up for further updates here.
A pioneering Australian payment platform for hospitality called Payo has been named as AIN’s Startup of the Month. The platform was singled out from close to 150,000 startups currently raising on the AIN platform for having ‘a winning formula’ as an investable proposition. The business was given the accolade after a judging process involving AIN’s expert panel, combined with a high number of connections from investors.
Payo is a payments and software solution for small and medium restaurants. It solves the problem in hospitality of venues needing to use 4-6 different payment systems with an all-in-one solution enabling venues to make payments more simply and cheaply. The Payo founders came up with the idea following more than 10,000 conversations with venue owners and operators over the past decade in various roles.
Startup of the Month is a new initiative from AIN to champion and celebrate businesses on the platform with great potential and to help raise their profile. In showcasing these startups, AIN’s aim is to highlight the qualities of investable businesses to inspire and educate others. The team at AIN were impressed with Payo’s innovation, clear evidence of traction and experienced founding team.
The Payo team are looking for funding to complete the front and back end development of the platform, as well as supporting sales efforts to further growth. The startup has more than 1,000 venues signed up so far.
According to Mike Lebus, co-founder of Angel Investment Network: “AIN is the world’s largest online angel investment platform and Startup of the Month is about showcasing businesses that have a winning formula to gain investor interest. Payo demonstrates that in spades, with a solution to a real world problem for many smaller hospitality businesses, genuine traction and an experienced founding team. We hope other startups seeking funding can learn from what they have achieved and we wish Payo well on the rest of their fundraising journey.”
According to co-founder and CEO of Payo, Taf Chiwanza: “I’m extremely grateful to AIN for this recognition. It is testament to our hard work and the problems we are solving in the hospitality industry. A lot of the problems we are solving are certainly not just an Australian problem. This is a global challenge and we look forward to scaling this and helping restaurants save time and money.”
In our latest Guest Post, Justin Eames, Head of Innovation at digital product development studio fish in a bottle discusses how startups can create an ideation process to boost innovation.
Many studies show that startups who adopt an ideation process are more likely to succeed than those who don’t.
If coming up with great ideas is key to the success of your startup, then considering how you can manage and improve that can give you the competitive edge.
This is particularly true for digital startups, where the complexities of software development makes getting from ‘great idea’ to ‘great product’ especially challenging.
In this short article I want to encourage anyone leading a startup, whether they consider they are inventing something new or not, to build an ideation process into the fabric of their business.
To get that off the ground you don’t need to make a big investment in time or money, or adopt complex processes. The benefits of a structured approach to innovation can come from just a small number of easy to implement steps.
The typical picture of a digital startup has a visionary founder – the entrepreneur – at the helm, driving the direction of a product while a team around them are tasked with delivering it.
The visionary founder usually works at the highest level of the concept while the team around them are responsible for making decisions about technology, design, customers, marketing and finance.
For the product to succeed, each of those areas must align and have input into the ideas that drive the business. Doing that without a process can be very challenging.
For startups, success requires them to identify where the needs of their users, the requirements of their business and the possibilities of design and technology meet. Once they find that point they are on their way to finding success. This is where an ideation process comes into play.
84% of executives say that innovation is important to their growth strategy, according to a study by McKinsey. Given that statistic, it’s surprising that so few identify it as an activity that someone within their business should own. So all businesses should consider assigning someone to the role of Head of Innovation. Even the most resource-poor startup can do that as this doesn’t have to be their only role, or a major time drain. All that’s required is that there is someone with the authority and responsibility to ensure that the process of generating ideas is managed, in the same way that any other mission critical aspect of a business are managed.
Setting this up need not be a daunting task, there are tried and tested ideation processes from which to draw on and plenty of case studies demonstrating their success. For a long time, organisations that rely on ideas for their success have recognised that ideation, when untamed, is a chaotic and time consuming activity with hit-and-miss results.
As far back as 1942, Alex Osborn (the O of famous advertising agency BBDO) proposed techniques and strategies for generating creative ideas. His book, “How to Think Up”, argues that creativity is not an innate talent but a skill that can be developed through methods and practice. More recently, IDEO (famous for inventing the first computer mouse for Apple) coined the term “Design Thinking”, applying it to their set of ideation methods.
Any ideation process for digital products will do well to draw on those “Design Thinking” methods including empathising with users to understand their needs and experiences, formally defining the problem, ideating and prototyping possible solutions, as well as testing and iterating on those solutions based on user feedback. This approach has proven to be highly effective and there are many case studies to support that.
For instance, Airbnb used design thinking to completely redesign its website and user experience, turning them from a failing business to a thriving business. An ideation process for digital products should segway comfortably into project management methodologies like Agile Scrum, joining up the complete digital product development process from vision to ideation and through to production and iterative delivery. It’s certainly never too late to build an ideation process into any business, but there is no doubt that doing so from the earliest stage brings huge advantages.
My advice is to keep your ideation process simple and appropriate for the outcomes you need. As your business grows you’ll find you naturally add stages and people to the ideation process. As your business grows, you can start viewing it as a part of a wider innovation function of your business. — Justin Eames is Head of Innovation at digital product development studio fish in a bottle. He’s the creator of The Ideation Framework, an open methodology that’s designed to improve innovation within startups and small teams.
At AIN we believe that promoting female entrepreneurship is central to economic growth and meaningful innovation.
This IWD we wanted to celebrate female entrepreneurs and at the same time, acknowledge the need to boost both the number of female startups and also female investors to ensure we can truly democratise angel investment.
According to research from Pitchbook female-founded companies in Europe have received just 1.3% of VC funding since 2017.
Having more diversity across the whole startup ecosystem would help. Research by Beauhurst and the UKBAA found just 14% of female angel investors are women, but having more women investors could help to shift the dynamic.
AIN Head Of Impact and exited founder of GrubClub Olivia Sibony launched our Female Founders page to provide our audience with access to companies led by one or more female founder on the UK Angel Investment Network.
This is the first step in our journey to bring together a community interested in funding and supporting women-led businesses. Check out some of the innovative startups currently looking for funding.
According to Sibony: “Women represent 51% of the population. By far the largest under-served population in the world. In an increasingly uncertain world, we cannot succeed if we carry on with the status quo. A key to change, is to bringing new voices in to the narrative. Women have such a powerful voice that can help balance the perspective and help bring about fresh thinking.”
Over the past year we have been thrilled to support exciting businesses with female led founding teams including Period care and sexual health brand Here We Flo who raised £1.7m in an angel funding round, supported by AIN.
Here We Flo’s mission is ‘shamelessly natural care for life’s messiest moments’. The brand intends to challenge, shame and disrupt the period, bladder and sexual wellness markets with organic and vegan products. Here We Flo was created by university friends Susan Allen and Tara Chandra. (pictured at the top of the article.)
We also saw another incredible business, Birmingham-based smart-EV and energy storage startup WAU (We Are Universal) raising £650,000 in a pre-seed funding round. Crystal Drury (pictured above), co-founded the business alongside Linas Pozerskis.
When asked about the importance of gender balance in founding teams they said “Diversity allows you to see the same situation from multiple powerful angles.”
Meanwhile sisters Katie and Amanda McCourt are co-founders of sustainable underwear disrupter Pantee. They raised successfully on the AIN platform last year, with investors buying into their creation of the world’s first underwear brand made from deadstock t-shirts. The duo are currently raising again. Check out their pitch.
We hope these successful startups can help inspire other women to launch their own businesses and potentially go on the become angel investors themselves.
According to Head of Marketing at AIN, Marisa Scullion: “We understand platforms such as ours need to help push the dial and make funding and supporting women-led business accessible and achievable. There are now many fantastic fundraising platforms made for women, led by women, inspired by women which is motivating. Women have a huge role to play in the growth of the tech industry and we want to help bring together our community interested in funding and supporting women-led businesses. It will benefit the whole startup ecosytem”
Becoming an angel investor can be a hugely rewarding way of using your experience and capital to support innovative startups and potentially earn a return on your investment.
As this involves deploying your own personal capital this is of course, not something you want to tackle lightly. We’ve spoken to a series of experienced angel investors and investment experts to give you the low down. Here are their top tips for anyone considering the high octane game of backing early stage startups.
1) Educate yourself
Before going down this path, it is really worth taking the time and effort to learn about the startup ecosystem. Also learn about the different types of investments available, and crucially the characteristics of successful startups. This can include doing online research, reading books, attending conferences, and talking to other investors. It also means really understanding the minutiae of the various Government schemes to support investment like EIS and SEIS and their global equivalents. Particularly given there will be significant changes in April.
Once you have educated yourself, it is crucial to then think about the types of startups you want to invest in, the amount of money you’re willing to invest, and how involved you want to be in the company’s operations. It is crucial to consider whether what you want to bring is a sector expertise that would lead your investment strategy or whether you will become more broad based.
According to Matthew Louis from the AIN brokerage team: “According to investors I speak with, I would say most investors are involved in 6-8 projects. However those more involved in specific industries tend to be 2 or 3. With F+B it tends to be broader. With software there will be more of a specific criteria.”
Having a broader base for your investments rather than a focused expertise can provide more opportunities for areas of passion, which can be a great motive. However it is imperative to not let this cloud any judgement in your cool headed investment strategy.
According to experienced investor Noel Duigan: “I think you really need to be paying attention to both the head and gut, I don’t tend to invest with my heart, at all. I will always look at the business case first to see the potential. If that checks the box and my gut is off then I pause and try to work out what the problem is. If I can’t find it, but still keep that feeling that something isn’t right, I don’t usually invest.”
Building relationships with other investors, entrepreneurs, and industry experts is crucial for any investor in learning about new investment opportunities, conducting due diligence, and getting insights into the startup ecosystem. Angel Investment Network was set up as an online platform to shrink the globe and connect investors with the exciting businesses of tomorrow and others in the startup ecosystem. There are a variety of online and offline forums for meeting people in person.
Roxane Sanguinetti is an experienced investor who works with Alma Angels and is co-head of the London chapter of Women in ETF’s. She advises: “Ask loads of questions and ask for help from experienced angels – what do they look at? What questions do they ask during due diligence? From my experience, angel investing is a collaborative environment. I am yet to meet an angel who hasn’t been open to discussing their journey or their investments. As a first step, joining a community or a syndicate can be of great help for those who feel they need an organised structure. You get to ask your questions in a safe space and see dealflow more easily.”
4) Do your due diligence
Once you are at the point of backing a startup, doing due diligence on any startups is essential. Evidence suggests that investors who spend longer on DD get higher returns. Indeed UKBAA research has shown that at least 20 hours due diligence has a positive impact on the likelihood of a multiple investment return.
AIN has produced a series of check lists on how to do your due diligence. The key areas of focus should include the team and management, business, market, technology (if applicable), finance, tax and legal. Red flags should be front of mind at all stages. The more experienced you become the quicker you can spot them.
For Noel Duigan the founding teams’ experience or lack of it is key: “Often you are investing in the founders rather than the company. If the founders don’t have any skin in the game, that’s pause for consideration. Lack of traction in their space will often mean stalled growth and is a red flag.”
Meanwhile according to investor Addy Windsor-Clive: “Red flags include a pitch deck that isn’t in a suitable format, failing to cover the typical questions a VC would ask. Also not knowing their market size or having a product fit.”
5) Think how you can add value
Finally (and to slightly mangle a famous quote by JFK) an investor should ‘think not what a startup can do for you, but what you can do for the startup.’ As someone with experience in either building a business or some deep sector knowledge you can offer your invaluable knowledge to a startup building the next game-changing business.
Xavier Ballester, Director at Angel Investment Network’s Startup and Property Divisions has worked with hundreds of angel investors over the past 17 years. He says: “Over the years I have seen the different ways angel investors can bring more than money. This includes: Industry contacts, Industry know-how, business skills (many have been CFOs, CMOs), help with strategy and potentially other investors.”
Meanwhile according to Stephens: “Adding value as an advisor/angel is always complex – there have been many examples of angels adding considerable value. For example, someone I worked with helped an FMCG business, as he already had a company that runs one of the UK’s largest warehousing facilities for Ebay. So he helped with supply chain and logistics leveraging his existing assets. More broadly, investors should and normally do always make intros, roll up sleeves and much like charity trustees pitch in where their skillset permits.”
To summarise, if you are thinking about becoming an investor ensure you first educate yourself with the wide variety of online and offline resources. Next define your investment strategy based on your skillset andnetwork with others (in particular experienced angels). Once you are ready to invest, do your due diligence and really think about how you can add value.
In January 2023, AIN hosted a webinar with Anna Gordon from HubSpot on how startups can use a CRM to manage your fundraising process and investor relationships. If you missed it, here are the top takeaways.
View the investor fundraising process as a sales proces One common mistake that startups often make is not treating the investor fundraising process as a sales process that needs to be managed.
Deal pipelines aren’t just for sales Deal Pipelines aren’t just for sales. Indeed you can use a pipeline to track your fundraising process.
Leverage a CRM to facilitate your outreach You can leverage a CRM to facilitate your outreach to investors by using tools such as templates and sequences.
Quality investors early Similar to sales, you should quality investors early on with Sales Methodologies such as BANT. The questions you need to ask are: Does the investor have budget? Do they have authority to make the decision and are they willing to spend time with you?
Use CRM tools to establish regular email updates with your existing investors. Finally, in addition to helping you communicate with your prospective investors, remember to use CRM tools to establish regular email updates with your existing investors.
The new year offers everyone a great opportunity to reset and renew. For startups seeking investment this could be the perfect time to evaluate your approach and see if it needs tweaking.
After all, we are in a very different climate in 2023 and investors are being far more careful with the deployment of their capital. To boost your chances of a successful raise, ensure your strategy is tailored for now, not last year.
So what key resolutions should startups focus on in 2023?
1) Revisit your elevator pitch
The life of any startup is varied, stressful and relentless, wearing so many hats and juggling so many balls. All the while, trying not to let any drop or run out of cash. However in this maelstrom of activity it remains crucial to not lose sight of the eureka moment that led you to quit the day job and come up with the idea in the first place. The start of the new year offers a great chance to refresh your core pitch for investment as clearly and articulately as you can.
According to AIN co-founder Mike Lebus: “One of the key mistakes entrepreneurs make is not explaining the concept clearly enough. Entrepreneurs are often too close to their own business, so don’t give enough information for a stranger to understand exactly what their business does.”
Why not start with a blank piece of paper and make sure you can get the pitch down to a paragraph? A clear articulation of a real world problem, how your startup solves it and what it actually does. You need to be able to story tell.
Having the right credentials, the perfect team and a beautiful pitch deck means nothing if you can’t explain to a stranger, simply and convincingly, why your company needs to exist. Test it out on more critical friends and contacts who you trust to give some honest feedback. Is it as straightforward as it could be?
2) Critically review your pitchdeck/ pitch materials
The new year could also be the perfect time to review your pitch materials and pitch deck. According to Lebus: “A common thread running through unsuccessful pitch decks is startups not focussing on their core product/service. Some business plans say “we plan to do this. and this, and this, and this…”, which can become very confusing for potential investors. Feel free to mention your long-term product pipeline towards the end of your pitch, but the main initial focus should be on your current/initial offering to keep things as clear as possible.”
Another reason many pitch decks fall down in Lebus’ view is the failure to differentiate what they do from the competition and how they’re going to gain market share.
Use this time at the start of the year to review your pitch deck and ensure there is a clear narrative, focus on the core product and how it stands out from competitors. Investors will want to see that your nascent business is learning to walk before it can run and that the promise of a decent future return is tangible.
3) Consider a lower valuation in the current climate
In the current climate many businesses are needing to alter their plans and potential funding pathways. Early 2022’s valuations already seem like a different era with layoffs in the tech industry and an uncertain medium term economic outlook. What was 8x early last year may now only be 5x.
According to Alexander Caparros, analyst from the AIN brokerage team: “We are seeing a lot of pushback from investors, less willing to back companies whose valuations are based on the uncertain promise of future revenues. It is vital that valuations are rooted in fact and not fantasy. Proof of concept is now a must have. You will be far more likely to gain the interest of prospective investors with a more realistic approach.”
It could be time to consider whether you might change your strategy and raise a smaller amount at a lower valuation. You will still be giving away a similar amount of equity but are more likely to get the investment.
4) Traction, traction, traction
With investors less willing to bet on unproved models, fabled traction is more important than ever, particularly in a more restrained climate for investment. Xavier Ballester is an experienced broker who has worked with AIN for 15 years and works closely with investors across the globe.
He says: “Evidence of traction is always critical for startups seeking funding, but in 2023 it is king. With investors less willing to bet on unproven concepts, it is crucial startups can demonstrate the viability of their proposition through evidence of success. All the more hard won in recessionary territory. If you can show there is appetite for your proposition now, this will show a clear pathway to future profitability and investor returns.”
Take the time to revisit your traction points and make sure they really stand out and are relevant.
5) Re-appraise your communication strategy with investors
January is a great month to connect with investors with a fresh update on your business. If you are reaching out cold, think how succinct you can be while covering off some vital points.
According to Matthew Louis from the AIN brokerage team: “Investors are busy people and likely to be inundated with pitches and proposals. Make sure yours gets to the point quickly with the information they need. Think top level information about the company and what you do, the problem you are solving for, why it is different, the traction, team, how much you are raising, the valuation and what you are planning to do with the investment.”
For investors already on your database is this the time to give that perfect ‘nudge’ on what has been going on with the startup. Perhaps it is a new product launch? New staff hires, new clients or traction point such as a revenue milestone. Perhaps something has happened in the news that provides a reminder of the need for your business. Something with context and relevance will ensure this isn’t just spam and likely to get your startup noticed.
The new year is a good time to plan a content pipeline for your investors and outreach strategy for new potential investors.
Following these five resolutions could help you supercharge your fundraising in 2023. Perhaps there are others you would add to this list. The key things is making sure they are realistic and that you can stick to them. Happy new year from the AIN team and good luck!