Digesting 2020

In many ways there were two sides to 2020. On the one-side, there has been a monumental personal loss to so many families, we’ve all been taking the strain mentally due to our daily lives being uprooted, even if we have yet to admit it to ourselves, and many good businesses have been torn apart by COVID. 

But though searching for positives might seem futile, there have been some, and they are noteworthy.

Change = business opportunity

When people have a problem that needs solving, that is often when there is an opportunity for a new business to emerge. 

When life is stable, people incur major problems relatively infrequently; most people’s problems have been solved, and there are less opportunities for businesses to be created.

When COVID happened, simultaneously putting the population at risk, disrupting the supply chain and dampening demand for many products and services, suddenly there were a lot of problems that needed solving.

For prospective entrepreneurs this is actually a good thing – people needed to:

  1. Keep safe whilst out and about during Covid
  2. Communicate effectively with their team whilst WFH
  3. Make childcare work when nurseries and schools were closed.

These new problems and others are creating opportunities for the businesses of tomorrow to emerge. 

Talent 

This might sounds counterintuitive, but in the good times it’s hard to create a great business. Why? A lot of the top talent gets sucked into corporates, and consumers are less inclined to change their behaviour, because, well, they don’t need to. 

Economic shocks mix things up – Thomas Vosper was made redundant at the beginning of the COVID crisis, he’s recently completed an investment round for an innovative new retail concept that he since started – you can read about it in his recent blog

Efficiency

And whilst COVID undoubtedly has caused huge disruptions, some companies in some industries were quickly able to shift into the ‘new normal’. 

Working from home was something that was alway going to happen, probably in a decade or so. When COVID happened, almost everyone had to do it, straight away. 

But this had a few benefits that weren’t necessarily foreseen, people by way of being forced to do it – actually became good at using video calls. 

Meetings where people would have travelled across town and back, and set up 1 hour meeting to justify the time, suddenly became more efficient half hour Zoom calls. A huge time and efficiency saving. 

Investor Outlook 

When the pandemic first hit, there were signs that investors were being more cautious – some had taken hits on their portfolio and dropped back on the number of the investments that they made, and pushed harder on valuations.

However, investors have adjusted to the new normal, for each in person meeting they have given up, there are many more Zoom and virtual meeting that they are taking. 

Lockdown enforced many people to become savers, as there were so few opportunities to go out and spend money.  Investment activity has rapidly obtained new momentum.

The upshot is that we are fortunate to just had our record ever month at Angel Investment Network, and feel well placed and optimistic to enter 2021, despite the continued uncertainty. We’re mindful that it remains a challenging time for many.

Wishing you a happy festive season, even if it’s not what you hoped for, we hope that you at least get the quality downtime that you deserve. 

See you in 2021.

#Behindtheraise with aisle 3

We spoke to aisle 3 co-founder and CEO Thomas J. Vosper about his business revolutionising the online shopping experience. He talks to us about bouncing back from redundancy, what he learnt from pitching to investors and his passion for ensuring we have #nomoretabs.

Tell us about aisle 3?
Like most people I find it super easy to find a car insurance provider, book a hotel in seconds or find availability on a flight based on what matters to me. So why is it so hard to find out all of my buying options for a set of wireless headphones? I am not alone in having to open endless tabs across multiple retailers and marketplaces when I shop online.

At aisle 3 we are building a brand and destination site so that shoppers can see all of the relevant product information, price and availability all on one screen. We are obsessed with a #nomoretabs experience that works for both shoppers and retailers.

Right now on aisle-3.co, shoppers can discover colour and size variations on one page for our launch products – trainers. We are actively looking for new commercial and investment partners to increase our offer.

What is your background?
I’ve been fascinated by ecommerce and both the shopper experience and the retailer relationship since I started as part of a small team in Amazon’s nascent UK marketplace in 2007. It’s crazy to remember that there was about a dozen of us occupying half of the 5th floor of a Slough office block!  I was lucky to launch thousands of merchants across the full range of categories and products over 6 years.

After learning a very different corporate experience at Tesco for a couple of years I joined a price comparison start up and grew its retailers from 6 to 45,000 in three years before it unfortunately went into administration.

I’ve spent the last 14 years trying to understand and support both sides of the purchase journey. I’m obsessed with learning more about how I can support shoppers whilst delivering value and growth to help retailers in the face of ever increasing commercial challenges.

How did the idea for the business come about?
My ecommerce baptism at Amazon fanned the flames of my shopper obsession but having worked with thousands of retailers and brands I’ve become increasingly aware that there is a struggle on the other side of the purchase journey. 

Showing shoppers all of their buying options needs to work in parallel with supporting retailers and brands.  

Finding myself unexpectedly redundant a couple of weeks before lockdown was the forceful kick that (thankfully with some amazing co-founders support) was needed to look at how we could tackle a fragmented online shopping experience.

We looked at the current price comparison incumbents as well as Amazon and Google and were staggered that no-one was able to aggregate information that means we would see all of our buying options on one tab. Given the resource and scale of some of these businesses we wanted to stretch ourselves to see if we could take on the technical challenge of #nomoretabs that no-one else has solved.*

*12 days after our pre-seed round we deployed our own three algorithms that means you can now see all the sizes and colours of a particular trainer.

How have you overcome challenges during COVID?
Our entire business has been built throughout lockdown which has meant we have had to work hard to hire and adopt a new company culture without ever meeting each other.

The shift to remote working has made it much easier for us to find talent to join the team from across the world, however this has impacted us in other ways that we didn’t consider in the midst of our own personal bubble of a global pandemic. 

Outside of the disruption of Covid our team has been affected by Floods (India), Government disruption (Belarus), political tension (Armenia), Black Lives Matter riots (USA) which highlights the challenges of a diverse international team.

We’ve tackled a lot of this by working very transparently, putting trust in each other to hit clearly defined goals whilst making sure that we have a growth mindset that encourages constant feedback loops and support. We shot through the free tier of Slack in just a few weeks!

What would you say to others who have faced redundancy during this difficult time?
We’re all in this together. It is very easy to reach out to friends, family, professional networks across calls, WhatsApp, LinkedIn, etc. and my experience is that people are actively looking to support anyone in a difficult position financially or emotionally.

I’m also personally very wary of perceived success on social media. I’ve been very proud of the grit the team and I have shown and our achievements this year but I’m not satisfied that I’ve made anything yet. Personally and with aisle 3, we are still at the very start of a journey that started in challenging times amongst an incredibly specific set of circumstances.

For every story of someone building a business on a credit card there are 99 that fail. What really motivated me was the outreach of support when I was openly discussing my personal challenge (no job) and the ambition I had to create a company that could impact every Shopper on the planet (aisle 3).

I’d encourage anyone who has been made redundant to reach out to their network and ask for support. It might just be that someone suggests something that you hadn’t considered and from difficult circumstances comes your next big personal development.

Why did you decide to raise investment?
In March I was made redundant and wondered how I was going to settle the credit card bill for my hotel in a month that I wasn’t going to be paid!

My personal financial circumstances were not prepared for a new business, even if I knew that my career and personal development had been leading up to this moment. 

I took out a £25k Virgin Start Up loan to get aisle 3 started but we knew that bringing in smart investors from a diverse background would elevate the business and we could relentlessly focus on growing a world-class consumer offering in a massive market.

I’m a big believer that we are better working together and knew, however capable the team was, that we couldn’t take on such a technical growth challenge alone. Our investors help us make the right commercial decisions whilst providing the financial support to build a shopper obsessed product that no-one else has mastered.

What are your top tips for anyone raising investment for the first time?
Even if you feel very clear on your mission and execution I’d recommend drawing up a list of ideal investors and then flip the order so you are saving the most relevant till later. You have to practice your pitch so that it evolves naturally. I remember the pride we felt with the version of our deck but cringe now at some of those early conversations as we found our feet.

Make sure that you can explain enough of your business to friends and family so they can get a general snapshot of your business and what you need the cash for. If you can’t do that you might find you struggle with the elevator pitch to potential investors.

The questions that caught me out, certainly at the start of my journey, were the simple ones that I expected an investor to know and made me doubt my own answer. I sometimes found that the savvy investors would often ask quite a direct and/or simple question to see how you react and answer rather than to hear the details.

If you don’t know the answer don’t try and talk around it. One of my proudest achievements in our business is that we have been able to surround ourselves with colleagues, advisors and investors that complete our knowledge gaps. Investing is a two-way partnership and perhaps the answer to a question from an investor is ‘what would you do and how can you support?’.

What attracted investors to your company?
Investors understood the problems aisle 3 is trying to solve and they related to their own shopper journey – especially when I was able to walk them through the competitive landscape and how we had already exceeded the current incumbents. I think, as shoppers, we are too accepting of the status quo and the need to open multiple tabs on your browser even though hotels, car insurance or flights are easy to compare.

Whatever the type of product and size of purchases the investors I spoke with all shared their personal stories of difficult online shopping experiences – from struggling to find the best deals on Google, to an uninspiring functional Amazon experience or broken comparison-shopping sites that they’d stumbled across.

It increased our conviction knowing just how much our mission can change the landscape of online shopping both for shoppers and for the retailers that struggle to convert to sales on the other side of this broken experience.

I already knew we were fixing a big problem but when investors tell me that we could be creating a unicorn business here in the UK, during a global pandemic, I feel incredibly inspired to push the business even harder and solve problems. 

My biggest fundraising mistake was…
I’ve made lots of mistakes! The hardest questions are often the simplest and I cringe a little thinking about an early conversation with a VC that asked quite directly what my role in the business was. That was probably one of the easiest questions to answer and I could have picked any five of the spinning plates that I manage and have delivered results in but I turned into a waffling mess! I’d spent so long prepping the intricate details of the technical challenge that I was ready to answer any question other than then ones I had assumed the investor would know.

The lesson for me, was that you can prepare all of the details, but don’t forget your value, what motivates you and how you drive the business forward. It’s not about trying to learn everything to fill the gaps in your expertise or responsibility – that’s what I have an expert team for and the sum is greater than the individual parts.

I have also learnt to better read the signs after spending far too long entertaining conversations that I see now were never going to bring investment. I found it very difficult to push hard for a ‘no’ and walk away at the right time when all the signs were there that we weren’t a good fit for each other. Thankfully, we have ended up with a cohort of smart investors who care about our mission and have been incredibly helpful in assisting the team and I. 

Why did you choose to use Angel Investment Network?
Whilst we had a great pool of industry experts from over the years, we knew that reaching out to external investors would help validate our business ambition and the capability of the team without the personal validation. 

We’d looked at a number of different options and thought that AIN was a platform that would help us clearly demonstrate our ambitious, unlock conversations to new, smart investors and would also provide a good central location for investors to point to when sharing our details. 

We decided to launch with the homepage feature on Tuesday, by Sunday had issued docs to the interested investors and closed the round the following Friday on target.

Sector focus: Medtech market

This is the first of our new series focusing on sectors gaining interest and investment from angel investors. This month we take a look at the rapidly growing medtech market. This is a sector that has been thrust into the spotlight this year due to COVID and a worldwide focus on healthcare. More startups than ever are winning investment and developing solutions to mankind’s most serious problems. In fact it has seen the fastest growth in keyword searches from our investor database. AIN’s Ed Stephens takes a deeper look.

Size of MedTech market
The total global medical technology industry is estimated to be £457bn (Statista)

Number of companies
32,000 medical technology companies in Europe – 95% of which are SMEs.

Description
Medical technologies are products, services or solutions used to save and improve people’s lives. Startups in the sector have products and services to help with prevention, diagnosis and cure.

The three main categories of medical technologies are:
Medical devices (MDs)
Products, services or solutions that prevent, diagnose, monitor, treat and care for human beings by physical means.
In vitro diagnostics (IVDs)
Non-invasive tests to determine the status of one’s health and diagnose illnesses.
Digital health
The new suite of tools as well as services, using information and communication technologies (ICTs) to improve prevention, diagnosis, treatment, monitoring and management of health, both physical and mental and lifestyle.

On the platform
In the past year, searches for biotech on the AIN platform have increased by 97%.
Meanwhile searches for Healthcare/ health have rocketed by 86%.

What are the reasons for its huge success in the past year?

There are three key factors worth examining:

  1. The impact of the pandemic
    Firstly and most obviously, the worldwide pandemic has meant health has been pushed front and centre of people’s minds. When we think of our own well being, we now think of it in a broader sense. The pandemic has also been particularly problematic for those with underlying health conditions, raising a universal awareness of our own personal resilience, immunity and wellness. The pandemic has made us question medical regulation and legislature in a race to develop a vaccine and drugs to treat it. However, it has also made us think more about our general health with a renewed focus on the mental health fallout from months under lockdown. This topic is now a key part of the national conversation too and thus a ‘holistic’ look at health, it’s maintenance and/or deterioration.
  1. The explosion of big data
    This has also been coupled with a rapid and continuous explosion of big data and patient datasets which has of course been a  game changer for healthcare/medtech, particularly in the field of preventative medicine. We now know if we are theoretically able to get our hands on a big enough and robust enough data set for a given illness, we can make significant steps towards diagnosing it more effectively (with the caveat that our understanding of the causes isn’t too siloed). By looking at the data of millions of people worldwide with a similar risk profile we can predict someone’s likely susceptibility to that particular disease and develop treatments and solutions that may even be personalised to their demographic or patient profile. Which is another step towards the holy grail of personalised preventative medicine.
  1. Agile startups
    Agile startups are of course helping to drive this market forward, pushing innovation and continually getting the bureaucracies in healthcare to ask if there are new ways of doing things. It has been heartening to see the increased level of interest shown by the NHS in innovation. Their clinical entrepreneurship programme goes from strength to strength and there is talk of a £5m fund to support seedstage medtech companies. In the past routes to market were cumbersome and often controlled by large medtech/pharma companies. 

A draw for these startup founders and their investors is the ‘mission’. Clearly there are few greater missions than solving complex healthcare issues. Also embedded within medtech is the idea of global scalability due to the universal nature of human fragility, meaning the rewards for success are considerable. Naturally a continued dialogue needs to be maintained to ensure progress doesn’t come at the expense of ethics but the future’s looking bright in this country for healthcare. We face a unique set of pressures through socialised healthcare that create an environment ripe for technology export.

What types of companies are we seeing developing solutions in this sector?

Key players in the sector focus on either ‘longevity’ solutions, technologies that improve health, nutrition and ‘healthspan’ or solutions to medical diagnosis and downstream disease prevention or cure. Diagnostics companies are being well received on the AIN platform and Onsite health and mental health platforms are also in demand, businesses that typically have a B2B component. With models like this it seems the discussion around physical and mental health is inching ever closer. I haven’t seen anything that has a clear grasp on this yet but there are some interesting recombinations of datasets to explore this. The issue you have in a capitalist environment is companies can often compete in siloes e.g. one company to collect DNA data, one to collect blood samples, another to collect stool samples and the final one to collect patient mental health records. Unless the patient has access to all of these services and has a willingness to allow all the organisations to freely integrate and share data then building up a cohesive picture will remain evasive. One might say we are still in ‘investigatory mode’.

What are investors saying about this as a category?

It excites them but they are naturally wary as it is that much more involved and really does require a degree of specialism that other market sectors don’t. In a winner takes all market you have to be more aware of the competition and the market forces and regulation at play.  It has gone from lab based discoveries, pharmaceutical and surgical instruments into the realm of technology, data and AI. As a sector it is enmeshed with the future. This really is the most exciting element for anyone to be involved with – curing mankind’s most fundamental weaknesses. 2020 has brought home our susceptibility and weakness to disease despite our unparalleled technological ascendency. Medical companies battling to come up with vaccines or provide drugs for treatment have become household names. 

What are the fundamentals you look for in a med tech business?

The team seems to remain one of the most crucial elements. Investors will look to back the best in a field. Experts ultimately form an essential part of the social proofing of a business and their knowledge is and remains a huge component of the diligence that needs to be undertaken. You need to be able to trust in their domain expertise and real world experience of the problems they are solving. You also ideally want the business to be close to commercialisation – and to have gone through regulatory approval, which is a big barrier to realising potential. Typically early stage medtech investments will carry higher valuations due to the team strength, IP developed and often the value of non-dilutive R&D grants taken on. 

case studies


Occuity

Disease screening and diagnostics startup Occuity recently raised £1m and generated huge interest from investors. Occuity’s meters work by shining light into the eye and analysing the return signal. This enables chronic health conditions such as diabetes and Alzheimer’s Disease to be monitored. With hundreds of millions worldwide suffering from diabetes this has huge potential. Crucially in today’s world it can also be delivered at a social distance.

PinPoint


Another hugely exciting company who raised on the platform in the past year is PinPoint. PinPoint has developed a Test that uses AI/Machine Learning to rapidly ‘rule out’ cancer from a simple blood sample, and may be used for all cancer types. The potential for the business is simply enormous. Founder Giles Tully pointed out at the time that PinPoint had already achieved nearly 25% rule out, which in 2019 would have given over 500,000 patients peace of mind in a few days instead of worrying for a few weeks and saved the NHS over £150m.

Hexarad


Another company aiming to support the NHS with a different model is Hexarad. This doctor founded company helps support the severely under resourced radiology sector with access to a mobile team of fully accredited UK NHS consultants. 

From redundancy to start up success: aisle 3 raises £200,000 with support from AIN

The founders of ecommerce startup aisle 3 have bounced back after being made redundant at the start of the pandemic to successfully raise £200,000 for their new ecommerce venture, supported by Angel Investment Network.

aisle 3 is a new marketplace providing choice and control for shoppers across the globe, who are able to select from 600 retailers on the platform. By deploying Machine Learning and AI algorithms, they aggregate retailer offers and rich product information so shoppers are presented with all of their buying options on a single screen. It took the business three months to raise the funds after two thirds of the founding team were made redundant at the start of the first lockdown and created the new business. 

Founded in March, aisle 3 gives shoppers the complete view of all of their buying options so that they can make purchase decisions based on their personal values such as price, delivery, locality, sustainability or brand loyalty.  The team has developed their proprietary web crawler, feed processor, laravel site, serverless infrastructure and multiple product aggregation algorithms from scratch. The funds at this stage are primarily directed towards advancing the brand’s product and tech build.

The founding team of Thomas J. Vosper, James Valbuena and Justin Thomas have 30+ years of collective ecommerce experience at some of the biggest names including– Amazon, Tesco, Lastminute, VASHI. In a short space of time they have grown to serve 2,000 organic shoppers each day, 600 signed retailers, and 20 Digital Agencies with more than a million products and 3 launch categories – Trainers, Toys and Baby products rolling out over the next few weeks.

According to co-founder Thomas J. Vosper: “We’re obsessed with shoppers getting their best deal – whatever that means to them. We’ll achieve this by solving two fundamental issues in online shopping. Firstly, we want to give shoppers the complete view of all of their buying options so that they can make purchase decisions based on their values. Secondly, we’ll make it easier for shoppers to find new products whilst, in parallel, leveraging our two-sided marketplace to act as a conversion enabler to close the gap between shoppers and retailers with significant revenue upside and ability to scale.”

He continued: “Like so many others, I faced adversity in the pandemic. However being made redundant gave me the chance to realise my ambition to create my own business taking the learnings from 14 years in online retail and support of an incredible network of industry advisors and investors to create something better. We are delighted that investors on the Angel Investment Network platform bought into our vision and I hope our success will inspire others to think there is light at the end of the tunnel during tough times.”

Agile Funding can help you raise fast

We are delighted to welcome back Adam Blair, CCO at SeedLegals, for his second guest blog as part of our legal mini-series for start ups:

When funding goes Agile

In our first article we discussed some of the different fundraising methods available to you as a founder, and the impact and benefits of the SEIS / EIS schemes. See How to close your funding round before the end of 2020 if you missed it or need a reminder…

This month we delve deeper into the world of agile fundraising and share some practical advice that can help you raise money for your business before the end of the year.

Making the most of the Christmas rush…

The run up to Christmas is always one of the busiest times of the year in terms of fundraising activity and investment. This can be a great time to look for investment, as many investors are looking to move quickly and close investments before heading off on their well earned break (even if this year that will be at home…).

With less than four weeks until Christmas, there’s not long left if you’re looking to raise investment this year. But all is not lost – agile fundraising enables you to raise investment quickly and flexibly in situations just like this.

What is agile fundraising?

Over the last couple of years at SeedLegals, we’ve observed that many early stage companies are moving away from go-big-or-go-bust funding rounds every 12 to 18 months in favour of agile fundraising where they raise small amounts frequently, taking investment opportunistically (e.g. when you meet someone who wants to invest) and as needed.

We now see the savviest founders use agile fundraising to grow their businesses faster, spend less time holding up the business while they look for investment, and give away less equity than founders relying solely on the traditional go-big-or-go-bust funding rounds.

The two main agile fundraising methods are SeedFAST (Advanced Subscription Agreement) and Instant Investment.

Advanced Subscription Agreement (ASA)

An Advanced Subscription Agreement is the UK equivalent of the SAFE (commonly used in the US) and is SEIS/EIS compatible – great news for you and investors.

An ASA allows investors to give you money now, in exchange for shares in your next funding round. Your ASA investors will receive their shares, generally at a discount compared to other investors in the round, because they invested early, when you close your next funding round. 

Instant Investment

Instant Investment allows founders to close an initial funding round like normal, and then top that up anytime, within limits agreed in the initial funding round.

This enables you to raise only what you need or are able to raise right now, and get back to growing your business. Then, as you find additional investors, you can quickly and easily add them, effectively topping up your last round. At SeedLegals, we regularly see founders close a funding round and continue raising using Instant Investment for 12-18 months before doing their next round.

You can read our comprehensive agile fundraising guide here

Is agile fundraising right for me?

There are a number of scenarios where you can use agile fundraising to your advantage, whether you are going out to investors for the first time or have raised multiple rounds of funding already.

Here are a few of the most common use cases we see at SeedLegals:

  1. You’ve found your first investor…

First investor on board – now to find the rest, right? Yes and no…

While one option is to keep your round open as you search for other investors, a better way could be to use ASA to get that money in ASAP, rather than keeping those investors (and their investments!) on hold while you line up all the other investors for your round.

With an ASA you get investment there and then, which can be used to invest in growth or extend your runway, and the investor generally receives a discount on the upcoming round in return.

The fact that one investor has already committed and transferred funds will also typically be viewed positively by other investors you’re speaking to.

  1. You can’t agree on / don’t want to commit to a valuation…

Is my valuation £500k? £1m? £3m? £5m? Agreeing a valuation for an early stage business can be a minefield. Luckily, we’ve written this article about how to think about valuing your startup…

Great! So you’re good to go… But there are still lots of cases where investors and founders simply can’t agree on a valuation or may strategically not want to agree a valuation at that time.

An ASA can help both parties here, giving you up to 6 months to finalise the valuation. As a founder, this not only gives you much needed cash, but also time to grow the valuation to a point where you and your investors are both happy.

  1. You’ve got your key investor(s) on board…

When fundraising, founders will often have certain investors they really want to get on board. Perhaps they’re writing the biggest cheque, have a great network, or are able to provide unique advice and insights.

You’ve landed your dream investor(s) and have a decent chunk of your target raise committed – now what? 

This is a great time to consider closing your round and continuing to raise using Instant Investment. Negotiations around valuation and key terms are likely to be finalised or close to finalised by now, meaning that other investors are likely to be signing up to the same terms. 

This approach means you receive funds and can put them to work immediately, whilst continuing to fill and complete your round.

  1. You’re just waiting on the last investor(s) to sign…

Everybody has signed, except one or two investors… One is going on holiday for two weeks and the other is dragging their feet. What do you do?

You could wait until they get back, but this just means more time thinking about fundraising vs. growing your business. Instead, you can let these investors know that you’re going to close the round without them, but (and very importantly) they will be able to invest at the same terms once they’re back, or ready to commit.

This approach can sometimes lead to investors suddenly being available to sign and transfer funds, meaning the round closes as initially planned. Either way the round closes sooner, without losing investors, a win/win.

Summary

If fundraising is dragging on, or you just want to move faster, agile fundraising could be just what you have been waiting for…

SeedLegals

Questions about agile fundraising, or fundraising in general? You can book a call with one of the SeedLegals experts, who will be happy to help.