Gary Piazzon founded Porter after becoming frustrated finding a suitable hotel. He shares some of his key learnings from fundraising and his biggest mistake in this edition of #BehindTheRaise.
Tell us about Porter and how you came up with the idea
It was a nightmare, timely and stressful booking experience that led me to the idea of Porter; I visited one of the large online travel agents, entered my search criteria and was hit with a pretty intimidating 2,000+ results.
I wrongly assumed the hotels near the top of the list would be a great match for me. They were nowhere near where I wanted to stay and only appeared higher up as they were clearly paying a higher rate of commission.
That got me thinking, why see the results you’re not interested in?
Porter is designed to make booking a hotel simple and fun by learning about the elements that matter to users so it can assess the thousands of potential property options to help recommend the right places to stay.
In a nutshell, Porter simplifies hotel booking, by only recommending your best matches.
Why did you decide to raise investment?
Raising investment was pretty much a necessity to really get things off the ground.
As we’re building a very technical platform leveraging various levels of machine learning and artificial intelligence, we needed to ensure we could attract the right talent, as well as pay the bills for hosting etc. so raising investment was really important from that perspective.
Beyond the technical aspects, it’s also been crucial in helping us raise some initial awareness of the site, and further we purposely targeted ‘smart money’ and ended up with a collection of very experienced, knowledgeable investors, all of whom have contributed advice, support and knowledge to the business.
What is your top tip for anyone raising investment for the first time?
My top tip would be to ensure you have a clear story, and think about the traction you can show to demonstrate interest.
From a story point of view, I think it’s really important that when investors look at your pitch, or speak to you, they come away with a really clear understanding of what you’re trying to do, why you’re doing it, and how you’ll do it better than anyone else.
You should then be able to support this with some sort of traction that demonstrates people being interested. This could be in the form of users signing up to your pre-launch page, user engagement on your MVP, revenue numbers etc.
What attracted investors to your company?
I’d say there were a few key things:
· All of our investors resonated with the problem we’re trying to solve. They’d all experienced the frustration and wasted time of endlessly searching for the right place to stay when going on holiday. This immediately put us in a good position when discussing the business.
· Secondly they recognised that there’s an enormous opportunity to go after, and the market has proven itself capable of supporting numerous large players. Globally, the online travel agent market is worth c£440bn, but in the UK alone, the market is worth around £35bn. That means, even if we were to capture 1% of the market, we’d be achieving £350m of revenue.
· The final thing that attracted investors to our company was our strong founding team, and the interest we’d demonstrated through our pre-launch page. We built an initial team with experience spanning Development, UX, Product and Marketing and built a pre-launch waitlist of over 3,000 users. The combination of these two points gave our investors the confidence that we were the right team to try and tackle the problem.
My biggest fundraising mistake was…
Initially failing to adapt pitches and conversations for my audience. I quickly learnt that different types of investors were looking for different information from our discussions, with a big difference between angels who were much more interested in the vision and team, versus VCs who were much more focused on the quantitative side of things.
Why did you choose to use Angel Investment Network?
I was actually recommended to AIN from a fellow founder who has previously raised a number of rounds through the platform.
AIN was a no-brainer thanks to its ability to connect us with such a large number of investors. Not only did using AIN help us successfully close our pre-seed round, but it also helped us meet some really interesting industry experts.
What is the main focus for Porter for the year ahead?
We’ve actually recently started raising our next round of funding to allow us to accelerate product development, grow our team and reach more people.
This is a really exciting time for Porter. As travel restrictions start to ease, we’re already starting to see an uplift in people wanting to travel. Our focus now is ensuring we’re best placed to help as many users as possible discover and book their best matched trips.
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.
Each month our team selects some of the companies raising on Angel Investment Network that really stand out, as part of our #StartUpBuzz feature.
This month’s picks includes: Smart Container Co – real time tracking for beer kegs, Bx Technologies, a platform facilitating carbon offsetting by connecting corporates with farms, and ARQ, an investment platform for personalised wealth management using AI. Smart Container Co
Enabling Transparency and a net-zero draught beer supply chain.
Smart Container Co turns traditional kegs into ‘smart’ containers, so that breweries, distributors and pubs can monitor the state of the beer inside, by combining a small waterproof IOT device connected to each keg (a KEGTRACKER), with their BEVEREDGE software.
It means that relevant parties can track the location, volume, temperature and motion for the liquid inside, reducing the risk of wasted stock, helping obtain more accurate shipping information, and gaining granular information about which product is being consumed where and when.
– UK patent pending – Chairman with 30 years experience including SAB Miller – Piloting technology with Brewdog.
Sam Louis, Head of Consultancy, Angel Investment Network shared why he is most impressed by Smart Container Co:
“We’ve known the Smart Container team for a while now and have been incredibly impressed with their progress. What we like is that they have a product that integrates smoothly into an exceptionally large existing market, giving significant opportunity for fast scale.
Since we first spoke with them, they’ve built strong relationships with some of the largest brewers and keg owners in the world, all of which have approached them cold. The timing is also very good – the pandemic has meant pubs and bars have become increasingly open to technology, something that was previously a hurdle, and many breweries have seen strong profits from retail sales.
All in all, it sets the company in a very strong position going forward and we’re excited to see where they go next”.
Helping farms prove carbon emissions and offsetting – connecting farm to corporates.
Farmers are incentivised to maximise crop yields, but are rarely accountable for their carbon footprint. However, there is enormous interest in carbon offsetting from corporates to help them meet their ESG goals.
Bx Technologies is the first two sided marketplace that connects corporations with farms and agriculture, reversing climate change through carbon offsetting and economic service investment.
Bx Technologies use a farm management SAAS system with a trading platform powered by blockchain to create a carbon credit investing platform, allowing farmers to see both their carbon position and the profitability of their orchard. At the same time, Bx offers Ecosystem Service Investments for corporates, securing a long term supply of carbon offset tokens.
– 1st SAAS client signed – paying $200k per year. – Expected to hit profitability by March ‘22 – Pipeline of over 12k hectares established
In terms of what excites him about Bx, Sam Louis explains:
“We were drawn to Bx Technologies for a number of reasons, the first of which was the boldness of their mission – remove 500m tons of carbon from the atmosphere per year. They’re operating in an exceptionally important and exciting vertical, with the opportunity to make an incredible impact on the planet as well creating massive growth potential.
They’ve tied these lofty aims to a strong underlying business model, with profitability within sight, and they aren’t expecting any altruism to make their business work. They’ve aligned the incentives of all their stakeholders, making it genuinely robust model. All in all, it’s the type of business we love – exciting, impactful and pragmatic.”
A wealth management app using AI personalised insights and comparisons.
ARQ is an investment platform that creates a personalised wealth management experience using AI and deep science.
The intelligent tools rank your investments performance using huge quantities of data and gives insights that can be used to improve your portfolio. ARQ are making tools that are only available to the super rich to more mainstream investors.
– A team with over 100+ years experience in financial services
– ARQ are offering white label services for wealth managers
– In house tech team behind leading fintech apps.
Xavier Ballester, Director of Angel Investment Network’s Brokerage Division shares why he is particularly impressed with ARQ.
“What I love about Arq is that I have this very issue: an Excel sheet with my various investments that doesn’t really give much insight after I have made my initial decision to invest. The beauty of this platform is that I can see my net worth and how my money is working for me and I imagine it will be a huge hit with financial advisors too.”
At Angel Investment Network, we strive to partner with pioneering organisations that support startups in ecosystems around the world, Silicon Roundabout have a mission to help get more young people into work at exciting startups, whilst helping unblocking some of the challenges in hiring that startups incur.
Franceso Perticariari, Managing Partner of Silicon Partner Ventures explains more in the guest blog post below:
At Silicon Roundabout we are working with the UK Government to help youngsters from all backgrounds and who are eager to break into the startup industry to get their feet off the ground and venture into their dream career.
As part of the programme, we help companies by offering a diverse pool of junior staff, aged 16-24, at no cost for 6 months, whilst helping these candidates gain work experience, so they can get their foot in the door in the tech world.
Our mission is to help increase diversity in tech by being the pathway for young people from all walks of life and varying backgrounds to find work with cool tech startups and develop the skills needed to build a career in today’s digital market.
We would all like to see an exciting, diverse tech industry! ?
Here are the jobs we currently train for:
– Junior Marketing Executive
– Junior Business Developer
– Office Executive
– Junior Graphic Design and Video Editing
– Junior Programmer
– Junior Bookkeeper
– Junior Project Manager
– Junior Data Analyst
Business qualifying will be able to apply for and hire candidates through our new, easy to use, platform and receive 6 months worth of wages for them! This includes NI & minimum employer contributions.
What happens at the end of the 6 month placement? Businesses have the opportunity (but not the obligation) to offer the junior employee a job at their company.
We already have 300+ employers on board and have successfully delivered the scheme to help 100+ youngsters with little to no experience and from all backgrounds, gender, and beliefs get training and join these employers. In fact, we’ve recently hired four junior members of staff ourselves who went through this very same process and training, which we designed as startup founders ourselves for startup founders. So far everyone is enthusiastic about the results and we really think this can have a profound impact for both companies and people.
Startups can sign up to Silicon Roundabout’s here .
The T&CS:
Companies will need to pay these junior employees through their own payroll. We will then refund them using the Government funding after only 4-6 weeks from each payroll paid. No claiming needed. As long as the candidates are paid via the company’s payroll, We will automatically receive funds from the Government and transfer them over to them.
During the first month of our 6 month programme, candidates will be trained through our top digital bootcamps, which are also funded through the scheme.
Nicholas Phair shares why he thinks online voice messaging is the future in this month’s #SixtySecondStartUp.
What does your company do?
Online voice messaging. We help businesses build trust with their audiences using the most powerful tool they have… their voices. Our online voice recorders can be added to websites, workflows, social media and more, and used in online and offline campaigns to hear from customers, followers and fans and engage in two way asynchronous voice conversations.
Why did you set up this company?
To go back to basics. Voice has always communicated far more than typed text alone – emotion, emphasis, connection – and we saw an opportunity to bring the same ease and utility of voice messaging found in consumer apps such as WhatsApp and FB Messenger to help businesses better engage with their own customers.
How did you get your first customer?
By asking them to pay! It seems like an obvious point but it’s a lot harder than you think. Believing in your product means putting a price tag on it, and asking people to pay. Thankfully our first customer, a prominent podcaster in the US, saw the value immediately.
We knew we were onto something when?
… we received this early testimonial: “I’m just massively impressed with this entire thing. I’m kind of shocked that it doesn’t really exist to this level, and we can see this being extraordinarily helpful for us.”
Reading these words, after months of hard slogging in product and planning was golden. When our next 10 customers signed up organically and mirrored the above, we knew that if we kept going we’d succeed.
Our business model:
Freemium self-serve SaaS with consultative sales to the enterprise. In short: people sign up free on www.telbee.io to experience what voice messaging can do for them and their businesses. We limit the amount of voice messages that can be sent and received to 60 minutes per month and the service remains free (forever) until you decide you need more features, or want unlimited messaging minutes. And for larger businesses and enterprises we offer custom white labelled solutions and integrations specific to their needs.
Our most effective marketing channel has been:
Hands down it’s been word of mouth – which shouldn’t be a surprise since we’re all about speaking and listening!
What we look for when recruiting:
We ask why they want to work with us, and listen keenly to the answer. When the whys are strong enough the hows take care of themselves – or so the famous saying goes. We look for people that want to build something truly unique and grow personally and professionally with the business.
The biggest mistake that I’ve made is:
Putting the cart before the horse, and investing in sales and marketing capabilities before breaching that elusive threshold of comfort in finding product/market fit – and while that threshold keeps shifting, mistakes keep coming, but ultimately they are there to make us grow!
We think that there’s growth in this sector because:
Our voice is what makes us human – and in recent times the rise of automation, artificial intelligence, and lockdown-inducing pathogens, have highlighted the importance of building and cultivating real human relationships. We’ve seen an explosion in voice applications across the board, from podcasts, to voice assistance to new types of short and long form voice-based social media. Whilst we are still in the exploratory stage of this nascent sector, what is certain is that businesses everywhere are beginning to see the trust-building benefits of asynchronous voice communication for sales, support and retention. This is only the beginning – and there is so much to be excited about.
We worked with AIN because:
We worked with AIN because they gave us access to investors globally. As a UK company but with a product relevant worldwide, we knew that part of what we wanted from investors was to extend our market reach beyond our existing network. AIN allowed us to speak with investors from the US and Asia as well as the 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.
It’s not actually exclusively startups that raise on AIN, there’s a growing number of funds too. We caught up with James D’Mello from EIS Fund SideBySide to hear about their experience:
Who are SidebySide?
SidebySide is run by a management team responsible for over $1.5bn in exits to date. We have worked with younger companies for a number of years and concentrate on adding benefit to help these companies scale from startups to larger, growth businesses.
The UK management team is formed of our founder, John Bailye. Our Junior partner, Ben Ashworth. Our Portfolio Manager, Alicia Taylor, our portfolio company mentor, Sheli Gupta, and James D’Mello, who heads up our investor relations function.
John Bailey, Founder
Our investment thesis
“Although we score third globally in an OECD ranking of the number of start-ups created, we don’t make it into the top ten when it comes to businesses that grow into established, medium-sized companies that have a lasting impact on our economy” – The Independent, referring to the UK in the OECD Global Rankings 2017.
This is our focus and why we formed the SidebySide Partnership. We want to help founders take their business to the next level.
James D’Mello
What types of companies do you invest in?
We invest in fast-growing technology-enabled businesses with £1-10 million in revenue. These more established companies will usually be at least several years old and typically have over 30 employees. We look for companies where there is evidence of a strong customer acceptance of the product and service offered, and where we believe we can add value to them in the long run.
Tell us about your portfolio
We invest in “tech-enabled” companies. That translates to companies who use tech to change the way we do something by a company that is looking to define the way future companies in their sector will operate.
As an example from our most recent round. We invested in a company called Laundryheap.
Laundryheap offers door-to-door laundry and dry-cleaning services to consumer and business customers, including major brands. The platform allows users to have their laundry collected, washed, ironed, and returned to them in a guaranteed turnaround time of 24 hours.
One of the main reasons we love them is the fact that they are able to scale into new markets without the capital heavy constraints that have held back their competitors. Across its US and Asian markets, Laundryheap has seen particularly rapid growth since March 2020. In the US, where the platform is now operational in multiple cities, the business is reporting month-on-month growth between 50 to 100 per cent. As for the Middle East, where, customer growth is hitting between 60 to 80 per cent month-on-month.
What is it like raising investment as a fund? How is it different from raising for a single company?
Raising as a fund is very similar to raising as a single company, except, instead of talking about one company, we talk about many. Typically investing in 3-5 companies per round, there is a lot to talk about. We pride ourselves on the amount of time we spend with our companies each month, therefore can go into as much detail as a potential investor wants to go into.
What are your tips for raising on AIN?
Our first campaign with AIN received a lot of interest but the interest didn’t lead anywhere. We took things back to think about what we could do differently, One of the main things we changed was the points that we highlighted, less of the traditional X amount of revenue, aum etc – more of what made us different to other investment funds they may have seen. We were very upfront and frank with potential investors and made sure to schedule zoom/phone calls after speaking on AIN to allow them to meet us and ask their questions in a more conversational manner.
What are your plans for the funds? How are you deploying them?
We have invested in 6 different companies now over our last few deployments, in our most recent round we invested into a fashion marketplace that is changing the way retailers and brands sell their old season and discounted stock, a travel courier company that picks your bags/skis/golf clubs up and takes them to your holiday home/hotel for you so that you don’t have to worry about checking them all in and carrying them around.
How does SidebySide help startups? And what experience do you bring to the table?
Whilst a lot of UK VCs come from an investment banking/accountancy background, SidebySide is a team built from entrepreneurs and operator types. They have been responsible for founding, investing in and running over 30+ companies, one of which was founded and grown into a billion-dollar exit. The early mornings & late nights, the stress of running a company, the hurdles to overcome to scale your business, the team has been through all of it before, rather than just financed it and watched from the sidelines. We help the companies in our portfolio by spending time with them, a couple of times a month, going through whatever the company needs support on.
Any tips about pitching investors over Zoom?
I used to love nothing more than speaking in a room full of people at pitch events/industry talks. When Covid hit, these events were all moved to Zoom, Which as I’m sure many of you will have experienced by now, Is a whole different ball game. It’s very hard to read peoples body language and facial expressions when there are 50+ people in a Zoom call, you also don’t know if anyone is laughing at your bad jokes if they’re all on mute!
One of the main things I have tried to focus on and has seemed to work well so far is to try and concentrate on talking into the camera lens, it may seem like a small thing but it is the closest thing to eye contact you can do over Zoom. I also set out a couple of bullet points on my screen on a notes app to prompt me to go through set points on the call.
Lastly, A great tip I read in a guide from Sequoia capital – One of the mistakes most people make is thinking because you have a 60-minute meeting slot that you have that persons attention for 60 minutes – Spoiler, You don’t. You should use the first 5 minutes to earn their attention for the next 15 minutes which in turn will interest them enough to listen for another 30 minutes.
Where do you plan SideBySide to be in the next 10 years?
Unlike traditional VCs, SidebySide limits the number of companies that we invest in at any one time. We do this so that we can actually spend important time with each of them and make sure they have the best chance of success. So whilst most VCs would say in 5 years we want to have backed another 50+ companies – that is not us. We want to continue backing great management teams and working closely with them to help them scale their businesses to the next stage and become the type of company that defines the sector in which they operate.
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.
Each month, we share a selection of stand out companies that our team have picked out as particularly exciting, or high potential. This month we have selected the following:
Immersify Education
Immersify Education is a learning app, initially creating a totally novel experience for dentistry students, but ultimately a comprehensive solution that makes it much easier for students to learn across disciplines.
Immersify fast tracks the pace of learning by combining rich multimedia content and an AR experience that gives the students the sensation that they are working on a patient right in the dentist’s chair.
– The founder is an award winning edtech entrepreneur with an exit in the dental education space
– 100% recommendation for the B2B offering
– Rated 5 Stars on the app store
Immersify Education are raising £1.2 million and have SEIS and EIS relief available.
28 Well Hung are pioneering the regenerative restaurant concept in London.
All their food is chosen to help regenerate the planet, sequestering carbon and methane in the process and specifically working with farmers who are obsessed with regenerating the soil that they use.
Starting out as a street food stall, 28 Well Hung is now an established restaurant with £230k revenue that was profitable during Covid.
‘28’ are raising funding to expand, they have acquired a 9 year lease in Brixton and plan to open this summer, with a further London site due by the end of the year. Of note:
– Strong vegan and vegetarian customer base (50% of menu is veggie)
– Nominated for multiple awards including Best Street Food Trader
Scrubbingtons produce a range of bespoke personal care products perfect for kids, from hand sanitiser and soap to shampoo and bubble bath.
They use natural ingredients, perfect for sensitive skin, and make the product easy for kids to use themselves.
Why’s it special? It’s 98% natural, very soft, and has special foam that lasts twice as long as gel. It’s sustainable with refillable pouches and recycled.
– 4.9* average across thousands of reviews
– Already supplies 150 school and nurseries directly
– 400k revenue in 2020 with 200% Y-O-Y growth
Scrubbingtons products are widely available including in Tesco, Amazon and Ocado.
Matthew Sarre shares the story behind JumpStart in this month’s SixtySecondStartUp:
What does your company do?
Jumpstart is the UK’s only start-up graduate programme. We find exceptional graduates (the top 1% applicants), train them up, match them with start-ups, and then provide ongoing, mentorship and a peer network.
Why did you set up this company?
To stop the brightest and most ambitious graduates from sleepwalking out of university and into big corporate grad schemes to go ‘sell their soul’. Instead, we get them to go and have an impact in a start-up and build something meaningful. Basically, my co-founder (Kabir Bali) and I built a programme that we would have wanted to do when we left university.
How did you get your first customer?
We set up the company in the depths of the pandemic, so it was not easy to find start-ups to pitch to. But, at the end of every zoom call with friends & former colleagues, I would ask: “are there any start-ups that you can introduce me to” and follow it up with awkward silence until they made an introduction… Good advice for anyone who wants to build out a customer base.
We knew we were onto something when?
We thought we were onto something when we got 10 applications to our programme on our very first day live. This was, of course, very misguided. But, we are now trending upwards of 1500+ applicants a month and have carved out a niche that seems to work: we place graduates in Founder Associate roles to take B and C tasks off the founders’ plates so that they can focus on A tasks.
Our business model:
We’re a little like ambulance chasers in the sense that we operate a “no win, no fee” model! That means that we only charge a fee if the graduate is still in role 3 months after they have started.
Our most effective marketing channel has been:
Word of mouth referrals. Which, I am reliably told is a good sign!
What we look for when selecting our candidates:
It boils down to attitude. Sure they are smart, but we look for ‘hungry’ go-getters who have done something interesting like founding a company or society while at university.
The biggest mistake that I’ve made is:
I once allowed someone into my Zoom meeting who I thought was a founder and ‘pitched’ them as if they were a start-up. It turns out that they were a graduate applying for the scheme…
We think that there’s growth in this sector because:
There is a growing trend away from traditional career paths and a rapid acceleration of the start-up scene in the UK.
We worked with AIN because:
They have an exceptional network of start-ups.
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.
Alex Christodoulakis is co-founder of Wealthyhood, the app ‘to turn you into your own wealth manager’.
Alex shares his story about Wealthyhood, how he raised investment, and his advice for entrepreneurs:
Tell us about Wealthyhood and how you came up with the idea
A few years ago, together with Kostas, co-founder of Wealthyhood, we wondered how we could invest our money on a monthly basis. We were busy professionals at the time and couldn’t devote much time to research or execute any sophisticated investment strategies, and of course not in the position to actively trade the markets.
So, we spent time trying to identify what was out there to solve this problem. However, we soon realised we weren’t alone in that. The problem was everywhere around us. There was a typical question among our friends, family and colleagues: “How can I invest my money? I don’t have the time or the knowledge to trade…”.
But how will they do that?
Trading apps are usually too complex for beginner investors. They offer no guidance on how to get started or tools to create a long-term portfolio. They incentivise you to actively trade, by constantly notifying you for random price movements. Everyday investors get caught up on their emotions and end up gambling instead of investing. This was not the experience we were looking for.
So, we decided to build Wealthyhood to bridge the gap. Instead of just giving friendly advice to our friends, we decided to build a product that would guide long-term investors to build their wealth over time, by intelligently investing their money the way they want, with fewer fees.
It’s not only how our interactive guidance helps users to invest the right way, but also how we help them develop the right wealth-building mindset. You don’t have to be a millionaire nor an expert to have a successful and pleasant investing journey.
And this is how Wealthyhood was founded to become the first DIY wealth-building app for long-term investors.
Why did you decide to raise investment?
Unfortunately, Fintech is a very capital-intensive industry, even before you decide to spend aggressively on growth and marketing.
The initial costs have to do with securing regulatory approval and FCA compliance, even before you get started. And this is why we initially decided to raise some external money, alongside covering some operational costs and our plans to grow the team.
Apart from that, raising money from angel investors is a great way to validate your value proposition and showcase their belief in the vision of the company and the ability of the team to execute!
A successful angel raise doesn’t just get you money, but also access to the network and connections of your investors, so it’s a two-way process. The right investors can significantly accelerate our progress.
What is your top tip for anyone raising investment for the first time?
It’s always easier to approach angel investors, than early-stage VC funds. Start from your own network, pitch them your company and vision and then expand to your second degree connections, angel networks and of course the Angel Investment Network.
If you can’t persuade angel investors to invest in your company, then you should reconsider your pitch.
Always have a story to share; why you’re building this product, what’s the problem and why you’re the perfect team to succeed!
Any signs of initial traction are a great validation that you’re heading to the right direction.
What attracted investors to your company?
I think it was a combination of different things. Probably the most important is the problem we solve. Our angel investors immediately acknowledged the gap between trading apps and robo advisors and the need for a DIY wealth building app for long-term investors.
Our vision to create the wealth-building app not for the top-1%, but for the 99% fully resonated with them.
At the same time, our investors had faith in the team behind Wealthyhood and us as co-founders. The first angel investors were people from our close network with strong belief in our capabilities as a team. Then, friends of friends and finally professional angel investors, who got to know us better and believe in our determination and skills to execute.
Apart from that, we had already built some momentum, showcasing that we were heading in the right direction. We had more than 3,000 users signed up to our waiting list, over 10,000 followers in our LinkedIn and Instagram pages and had developed a community of 50 Wealthyhood Ambassadors across Europe.
Last, but not least, a few months ago we won 1st place on FinQuest Accelerator and are currently participating in the VISA Innovators Program, which for angel investors shows strong progress.
My biggest fundraising mistake was…
My biggest fundraising mistake was that we began by approaching early-stage VC funds, instead of angel investors.
This was wrong; it cost us time and money, but we soon realised it and switched our focus to angels, who were a much better fit for our stage and needs!
However, it helped us challenge our value proposition, improve our deck and positioning and make it more robust.
Why did you choose to use the Angel Investment Network?
Angel Investment Network was an amazing way to connect with the right investors for our company. It’s very time-efficient for founders and probably the best portal to share your story from a fundraising perspective.
It was first suggested by our advisors and we soon realised they were right to insist.
Our number 1 focus for Wealthyhood for the year ahead is:
To build the investing experience we envision and make it publicly available through a web platform, iOS and Android apps. We’ve already launched a beta version of the product and are onboarding the first users from our waiting list.
Over the coming months we want to onboard the whole waiting list and give instant access to new users in the UK and EU!
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 fundraising yourself, you can find your local network here.
Each month on the Angel Investment Network blog we feature some of our start-ups making waves. Here are some of the ones to keep an eye out for in June:
Vitabeam
Vitabeam has developed a patented LED technology that mimics the sunlight spectrum to stimulate plant growth, extend shelf life of food and kill unwanted pathogens, such as bacteria and mould.
Vitabeam has £1.72 committed sales, a pipeline of £6.5 million, and has received 2 Innovate UK government grants valued at £640k. Tests have shown biomass increase in herbs as high as 54% from using Vitabeam. You can click here to investigate on the best banking services available .
Mintago helps businesses save on their workplace pension tax bill, whilst improving the ‘pension well being’ of their employees. Mintago helps businesses to structure their pension in the most efficient way using HMRC’s salary exchange scheme reducing NI contributions, whilst rolling out pension optimisation tools.
Founded by the founder of Perkbox, and with the team ex RBC, BDO and Atomico, Mintago is growing at 100% MoM and saved customers over £250k despite only launching in December 2021.
KiKapay enables merchants to collect payments from customers in a manner that is typically 80% cheaper than card payments, by using their bank’s secure customer authentication process, and because it doesn’t require an app to be downloaded, KiKapay provides a frictionless solution.
With open banking payments increasing ten fold in 2020 and 25 billion card transactions having been processed in the UK alone. KiKapay has brought onboard an experienced team with 75 years experience, including a partner at Deloitte and the ex Head of Advisory for European payments at EY.
Addition offer a suite of financial services, from bookkeeping to growth funding. Their CEO Graham Davies explains in the guest article below how start-ups can benefit from having a portfolio CFO working alongside them.
When it comes to multi-tasking, entrepreneurs take the crown. Wearing a plethora of hats is pretty much a given. Not all roles can be juggled, however. A jack of all trades is a master of none – which is why a growing number of startups are choosing to outsource certain company tasks.
The average self-employed person spends an average of 12 working days a year on tax compliance alone. Time is golddust to entrepreneurs, and 12 days worth of drumming up new leads (or spending time with loved ones) is a lot of time to spend on something you may not even fully understand.
Accounts management as suggested by Archimedia Accounts and strategic outsourcing are beneficial in many ways. It isn’t only about saving time. Strategic outsourcing is usually a money-saver, too. This is especially true when it comes to accounting and financial planning. According to Glassdoor, the average CFO wage in the UK is £121,443 per annum. Taking on a full-time Chief Finance Officer is far too costly for most startups. However, they still look for these insights and advice to help them plot a course for growth.
This is why portfolio CFOs have started to become increasingly attractive.
But let’s take a closer look at this on-trend dynamic.
What Is a Chief Financial Officer?
A chief financial officer (CFO) is a senior executive who manages the financial actions of a business. Their duties typically include:
– Tracking cash flow
– Financial planning
– Analysing and acting on financial strengths and weaknesses
– Forecasting
Essentially, a CFO oversees every aspect of your company’s accounts, finances and compliance. Their job is to ensure informed decisions are made to support the financial wellbeing of the business.
What is a Portfolio CFO?
Many startups choose to outsource their financial management to a third-party CFO. These high-qualified individuals usually work with agencies or freelance, and will manage multiple company accounts – or portfolios – at once. They will typically have extensive experience in their field, and offer dedicated services at a much more affordable rate.
If you’re not growing, you’re not doing your job as a financial advisor. To provide the best possible service to your clients, you need to continuously learn and develop new skills. A financial advisor life coaching professional can help you identify areas where you need to grow and provide resources to help you improve.
Why are Portfolio CFOs so popular?
Startups are becoming increasingly attracted to Portfolio CFOs. But what is the chief driver behind this surge in popularity?
John Miller, Chief Operations Officer at Addition, links this rise to one simple factor: cost. Having previously served as CFO in green tech startup Spring, John now manages Addition’s CFO services. “Startups don’t require a CFO on a full-time basis,” He reasons, “as the cost is arguably not worth it. At £80k – £150k+ for a full time CFO in a startup to a medium company, this expense is often hard to justify.”
Of course, hiring a portfolio CFO is still an expense. However, the investment is well worth the cost. “The aim for all back-office roles, like finance, is to pay for yourself.” Says John, “Therefore, having a CFO on a part-time basis makes this easier in a small business. At £3k per month, it’s almost a third of the cost, whereas I would argue the benefits will not be a third of the size.”
Are Portfolio CFOs similar to Accountants?
As your startup grows, you’ll likely be advised to hire an accountant. This is definitely sound advice. Accountants will help with your tax compliance, bookkeeping and reports. But once the ball gets rolling faster and you’re looking to drive growth, a CFO can work wonders.
In order to appreciate what each of these roles brings to the table, you need to understand exactly what it is they do. “An Accountant or bookkeeper is focussed on implementing the rules and guidelines set out in the accounting standards for companies.” John explains, “This includes ensuring your company meets its statutory and tax obligations, accounts filed, returns processed etc.”
A CFO, meanwhile, is a strategic position in a company with the aim of driving the business towards its goals. “CFOs need a particular set of skills to do their job that accountants generally don’t.” says John, “One of the main skills needed is agile thinking – the ability to understand the ramifications from proposed or imposed decisions very quickly. For example: should business A start offering their online english tutoring business to China? The Portfolio CFO needs to quickly think about the ramifications of selling in China and the tax implications. They need to consider legislation, marketing the service in a different language, hidden charges and how to monitor progress. The role of a CFO goes beyond following the letter of the law – it involves creating strategic opportunities for growth.”
Portfolio or not, the CFO supports the startup on its journey and drives it forward in the most effective way possible. “Ultimately, an accountant and CFO work hand in hand.” John acknowledges, “It’s a symbiotic relationship, which is why at Addition we have a team made up of portfolio CFOs and bookkeepers. This gives our clients access to both elements required and is more economical to use both roles where they are best suited. There is no point in paying a CFO day rate to complete bookkeeping tasks.”
What does a Portfolio CFO do?
They might not be a full-time employee, but make no mistake: portfolio CFOs are definitely on your team.
During their contracted hours, a portfolio CFO will work as strategically and diligently for you as any of their full-time colleagues. Here are five of their main areas of focus:
1. Financial Management and Strategic Planning
Your portfolio CFO will implement controls so funds can be spent easily, but with solid regulations. They’ll help you determine where the business wants to go, and what it needs to get there. Finally, they’ll turn this understanding into a financial strategic plan.
2. Forecasting and Budgeting
This involves breaking the overall strategic plan into nuts and bolts. Your CFO might ask questions like, “How much are we going to spend – and hopefully earn – on all elements?” They’ll help adjust your budget to reflect this,
3. KPI and Performance Tracking
KPIs are vital to financial growth. A portfolio CFO will implement automated ways to periodically track performance to plan. They’ll help answer questions like, “What do we need to do more of – or less of? Do we need to do something completely different?”
4. Cash Flow Management
Cash is king for all startups. Staying on top of what is coming in and what is going out is vital for survival as well as success. Your portfolio CFO will help you utilise your cash-flow efficiently.
What Can a Portfolio CFO do for my small business?
While anyone can make use of a portfolio CFO’s services, the best fit are small to medium startups- especially ones who are focussed on operational delivery direct to customers.
You may wonder what scale ‘small to medium’ is operating on. “Once a business gets to a certain size,” says John, “let’s say 50 full-time employees and £25m+ revenue, getting a full-time CFO would be more economical.”
For John, this is due to the complexity of the organisation. “Someone who is fully focussed in the CFO role would be able to add the most value to that entity. Therefore businesses who are smaller than that, I would argue, may not get the full benefits for the cost of a full-time CFO.”
Establishing when the time is right isn’t always straightforward. For some helpful context, here are some examples of startups who’ve hired portfolio CFOS:
Example 1: A restaurant group with several sites. They’ll obviously have experience when it comes to running the restaurant profitably. However, a portfolio CFO could help with raising money to open a new site.
Example 2: A startup which has seed investment (before PE where it gets serious – a PE firm may want a 100%-focussed CFO to guard their investment and drive growth their way). This business is still in its infancy. The experience of a part-time CFO to guide the founders ideas will be vital to success.
Example 3: A hairdresser who is looking to expand into another site. A part-time CFO could spend some time working out a business plan for the new site. This would be presented to a bank to help raise the funds. The CFO could then track the performance of the site to make sure it is delivering the plan (and if not, help with what to do next).
Example 4: An online tutoring startup which may offer English courses all over the world. The tax treatments need to be carefully managed.
Example 5: A gym or fitness centre looking to sell. A CFO can support with financial reporting to give to potential buyers, as well as projections to support the valuation.
All of the above examples are in need of good financial management and leadership. However, they aren’t large or complex enough to require a full-time CFO within the business. Their main focus is on operationally delivering for their clients. This means a bank-office role such as a CFO isn’t needed daily.
“The CFO doesn’t help these example startups to cut more hair, offer more classes, or clean more flats.” John analyses, “Therefore in order to maximise profits, why not take on a part-time CFO?”
What Makes a Good Portfolio CFO?
When it comes to key traits and talents, portfolio CFOs and in-house CFOs fall under the same umbrella. Demonstrable experience and qualifications are obviously important. However, with portfolio CFOs managing multiple clients at once, commitment and dedication to each customer is more important than ever.
A stand-out portfolio CFO should be:
1. Transparent
“When it comes to numbers, the CFO’s analysis and guidance needs to be true and actionable for the client on the journey to achieving their goals.” Says John, “Due to the portfolio nature of the role, this is a challenge. Dipping in and out of several businesses means focus cannot be 100% 24-7 – unlike that of the client with their business. Therefore, it’s about building solid advice on the facts of the business.”
2. Experienced
A catalogue of prior experience with startups and goals similar to yours is key, according to John. “I’ve found that providing experience of how events have played out in historical scenarios really helps clients understand ramifications.” He says, “Failing that, it’s about drawing on the diligence disposition of a CFO to research, investigate and provide insight, as well as drawing on the network of contacts.”
3. A team player
As mentioned before, you’re not paying a CFO day rate for them to replace your bookkeepers. That being said, they should be working closely alongside your bookkeeper.
“30% of my day is spent with bookkeepers to ensure that all base financial data is strong, solid and makes sense.” Says John, “No analysis works without good foundations, which is why our Portfolio CFO’s are supported by a team of bookkeepers.”
4. A visionary
Once they have the necessary information, a good CFOs should make the most of it. “I use informed insights about my client’s business to give them actions that, when put in place, help them achieve their goals.” John explains. “Your CFO should be modelling out the future for your business, and helping set a course for the future. This could be help with raising money; working out which hires to make; whether to add a new product line and many other strategic decisions for small business.”
5. Clued in
A good CFO (portfolio or not) should always be aware of the latest financial guidance pertaining to your business. “10% of my day is spent researching the latest guidance from the government.” John states, “This is to ensure that we can provide insight on the latest legislation, as well as which grants could be claimed for.”
6. Ethical
Advising multiple clients calls for an extra set of scruples. This is especially true when it comes to any potential conflict of interest.
“We have one set of clients where there could be room for connection. In order to ensure ethical practices, we divide the work between myself and my business partner.” Says John, “Were either of us in a situation where we were working on our own, we would not take on the work if we believed there was a conflict of interest. Our integrity is worth more than the paycheck.”
A good CFO should also keep on top of their ethical and professional requirements – as part of their membership to the relevant accounting bodies.
7. Attentive
We all know how frustrating it can be to wait on a response from someone – especially where money is concerned. Along with the cost-effective perks of a portfolio CFO comes the fact that they can’t be on call 24-7.
“A portfolio CFO cannot serve all clients at the same time and immediately.” Says John, “Some startups value this more than the cost of full-time versus part-time. The biggest challenge as a Portfolio CFO is staying on top of multiple clients and prioritising effectively. The way we get around this at Addition is by having two portfolio CFOs to share the load. We also have a team of highly qualified accountants and bookkeepers to ensure the financial information is clean, robust and clearly presented.”
AIN members can obtain the following offers in our Perks & Benefits section.
1. Annual Budgets & Forecasting
Addition helps you plan your business’ journey for the next 12 months and transform your vision into an actionable finance plan. £1,500 per scenario – Angel Investment Network members get 20% off.
2. Financial Modelling
Every business decision has a financial impact. Addition creates a dynamic model for your company, based on today’s needs and tomorrow’s goals. £500 per scenario – Angel Investment Network members get 20% off.
3. Financial Pitch Deck Review
Addition has helped startups from pre-seed to to Series A and beyond. They know what investors are looking for when it comes to financial reporting and projections in your pitch deck. £650 per review – Angel Investment Network members get 20% off.
Up next, Ziglu, a digital platform bridging the gap between cash and crypto; Yang Li, Chief Growth Office, shares his story behind the company’s £6.1 million seed round:
Tell us about Ziglu and how you came up with the idea
Ziglu was born out of the realisation that both traditional and challenger banks were preventing their customers from having access to cryptocurrencies. With the rise of cryptocurrencies we could be seeing the biggest ever transfer of funds into a new asset class, and decentralised finance (DeFi) is providing unprecedented opportunities to grow wealth.
Yet the majority of consumers are unaware of the opportunities of cryptocurrencies and DeFi, or are confused by them, or have no affordable way to participate in them. To solve this problem, Ziglu has been designed and built to combine modern challenger banking features for everyday spending with safe, simple, affordable and insured access to cryptocurrencies.
Why did you decide to raise investment?
We saw some remarkable early customer engagement and wanted to accelerate our customer acquisition, particularly to coincide with the amazing bull run we’ve been seeing in the crypto market. Giving ownership to customers also gives them a chance to benefit in our growth and success too and that’s at the heart of what we stand for.
Furthermore, our product and tech team had built an innovative but aggressive roadmap of features that they wanted to deliver. Fundraising has meant we can now deliver new features and improve customer experiences pretty much as fast as we can think of them.
What is your top tip for anyone raising investment for the first time?
Don’t overly focus on how your product compares to competitors. Be clear about how your product truly delights customers. No startup has failed due to competition alone.
What attracted investors to your company?
Ziglu has an experienced team with a proven track record of building amazing startups like Starling, Monzo, Wirex, Meituan, and a product that provides a significantly better crypto-investing experience for beginners and aficionados alike. This combination of a proven track record and a visionary product and proposition has proven to be very attractive to investors.
My biggest fundraising mistake was…
Worrying too much about the aesthetics of the pitch deck.
Why did you choose to use Angel Investment Network?
Angel Investment Network stood out to us because of its superb track record of assisting innovative startups to find strategic investors: investors that provide us with first hand advice about disrupting huge industries, broaden our network of partners and add significant value beyond cash.
What has the funding enabled?
The funding has allowed us to significantly ramp up our marketing, build new features faster and accelerate our plans for international expansion. The team is currently very focused on Ziglu’s international expansion, with our first overseas launch slated for the second half of 2021.
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 fundraising yourself, you can find your local network here.
In this guest blog, James Taylor, Director at Dragon Argent, shares his top tips of how start ups can claim R&D tax credits, a useful relief or rebate from HMRC. Here are the key things that you need to know:
Many new businesses spend the first season of their existence researching and developing a concept or a prototype. They then prove their product market fit, secure their first customers and start generating revenue. What some founders don’t realise however, is that any project which advances the fields of science or technology are eligible for tax relief, through its annual corporation tax return.
This extra relief could be as much as 25% of the cost of the project. For a loss-making company, a cash rebate of up to 33.5% is available in lieu of tax relief, which is often paid within 4 weeks or a successful claim being made.
This relief or rebate could make a huge difference to a bootstrapping startup and as HMRC believe that 75% of business who could be claiming R&D tax relief do not, it is too often a missed opportunity.
Does Your Business Qualify?
According to various sources, you can claim R&D relief up to two years after the end of the accounting period of the expenditure. The following criteria are flags that you could be eligible:
You are innovating, improving, or inventing processes or technologies which are not currently available on the market.
To your knowledge, at the start of the project you have no clear answer of how the project will conclude. This uncertainty proves the first point that the development is producing new knowledge.
You can document evidence of your research and development, and the expenditure relating to these activities
Eligible Costs
If your company meet the criteria laid out above, you should endeavour to maintain detailed records of every cost associated with the project, including:
Staff costs associated with the project. Some staff may work entirely on the project. In these instances, it is straightforward. Other staff may work a proportion of their time on this project, or on things associated with the project such as recruiting someone to work on the project. Using timesheets or similar, a log should be kept of this proportion as that might be eligible. For example, a staff member who works 30% of their time on the project while on a salary of £30,000 can be deemed a cost of £9,000 on which extra tax relief is available.
Subcontracted staff. On the same basis as above, the costs associated with subcontractors rather than employees is eligible.
Software associated with the project. If software was bought or licensed entirely or in part to service the project, these costs are eligible too.
Consumables. Many utilities or materials used in the project are eligible for tax relief.
Ineligible costs. These include the costs of distributing the goods produced, capital expenditure, rent or rates, and the cost of patents.
R&D Tax Credit Cap
As part of the Finance Bill 2021, introduced in April, HMRC have announced a cap on the amount that a loss-making SME can receive in R&D tax credits to stop abuse of the scheme.
Currently, loss-making companies can reduce the cost of their R&D by up to 33%. However this amount will be capped at a maximum of £20,000 plus 3 times the total PAYE and NI paid by the company in the year.
HMRC have maintained that the aim of this legislation is to target those who are seeking to abuse the system, rather than genuine claimants. However, SMEs with very few staff, or with directors taking low salaries, may also be affected by this.
If an SME is loss-making, normally claims around £25,000 in R&D credit but whose only employees are directors being paid a non-tax attracting director’s salary will now only be able to claim £20,000, a loss of £5,000 on their previous expectation.
This means that it may become tax-efficient for the company to increase their director’s salary so that it attracts National Insurance so that 3 times that amount can then be reclaimed through R&D. There will be other implications of doing this so it should always be considered in conjunction with these other factors.
HMRC have also included an exemption for any entity who meets the following two tests:
The company’s employees are creating ‘relevant intellectual property’.
Expenditure spent on work subcontracted to a related party makes up under 15% of the total R&D expenditure
The tax relief an R&D claim results in can often make a big difference to startups and SMEs at a critical stage in their development. Its sensible to seek professional advice to make the process of claiming as efficient and fruitful as possible and also to ensure the business as a whole is tax efficient in respect to the new R&D Cap.
You’ve Got This is a talent marketplace for startups. We bring together experienced professional talent with the UK’s fast growing startup ecosystem.
We’re making it quick and simple for hiring teams to find mission aligned team members with the sales, finance, product and sector knowledge they need now.
We enable you to get to know each other on a project basis and hire on an employment basis when the time is right.
Why did you set up this company?
Covid has accelerated job losses but it’s also given us the opportunity to weigh up our priorities and how we allocate our resources. Many of us want to be more efficient with our time and to work on things that connect with our values and sense of purpose.
At the same time more mission driven businesses are being created. Innovative startups and SMEs are looking for ways to bring on flexible diverse talent, and that is harder to find through traditional channels.
They look for highly skilled individuals that can get them through the early years and establish shared values and trust before they hire long term employees. That’s where we come in. I felt there was an opportunity to use technology to help us find meaningful flexible work with businesses and become their early team members if there’s a fit.
How did you get your first customer?
Our first customer came through our co-working space. They’re a startup in the renewables space. They had tried platforms like Upwork but couldn’t find what they needed; someone with specific qualifications, who could work part-time, come into the office a couple of days a week and become their first hire down the line.
We knew we were onto something when?
We had a first degree connection with the first 50 professionals that signed up to the platform. After that we started to get referrals from individuals who we’d matched for conversations with businesses.
Similarly one of our businesses who we matched with a part-time Finance Director came and asked if we could connect them with a Sales and Marketing expert.
Together with my CTO Stephen, we’ve built a platform based on customer insight and a roadmap that positions us well alongside platforms such as Upwork and People Per Hour.
We’re now producing content for our user base on joining and building high performance teams. Our content has been reshared by NatWest business builder and venture capital funds.
Our business model:
We’ve looked to modernise the traditional recruitment model of upfront commission on annual salaries. Many of our startups find this prohibitive in the early stages. It’s free to search and start connecting with available professionals.
We apply a service charge on the value of bookings made through the platform. We also provide the process for getting timesheets approved and payments made once work is complete. You can read more about our pricing on our website here.
Based upon our conversations with our business users, we’re planning to launch a pay monthly service with a discounted service fee and extra features for our regular users.
We think that there’s growth in this sector because:
The gig economy is growing rapidly, with 50% of the workforce are expected to be full-time or part-time self-employed by 2025.
Automation is replacing the jobs of people who have worked in one sector for many years, pushing people to make a career change later in life.
There are 1.3 million SMEs in the UK (1-49 staff), currently spending an average of £6,000 per year on recruitment. This market is worth £7.9 billion. We’re looking at entering new markets in the future.
If there is one positive from the pandemic, it has been the sheer volume of innovation and exciting businesses that are forming and growing as a result, as markets shift and new trends emerge.
Each month we’ll select a few start-ups that we see as particularly exciting and worth a further look. Here are some of the current highlights:
Zero Carbon Farms
Farming needs to evolve. Urbanization, population growth and climate change demand it.
Food supply challenges are well documented – Covid-19 has seen empty supermarket shelves and highlighted the need for secure supply chains, awareness of the damage of pesticides and GMO crops is growing, and extreme weather events are making food production more unreliable.
Enter Zero Carbon Food (ZCF), a cutting edge AgTech company that builds and operates controlled environment farms, providing a future-proof and sustainable solution for growing. This innovative method allows them to use less water, less space and run on 100% renewable energy. Their first farm? It’s 13 storeys below London in a WW2 air raid shelter.
ZCF supplies brands nationwide including M&S, Tesco Whole Foods and is discussing an international licensing agreement.
Anatome is an innovative healthcare brand, founded by an exited entrepreneur. Built on the founder’s passion for apothecaries of old and combining it with cutting edge science. It’s already on track to turnover £1.3 million and is playing in the global wellness market,with a total size of $7.2 trillion.
It’s a digital first platform focused on online sales, but also leveraging real world stores to activate customers in premium locations, including Marylebone, Chelsea and Islington.
On top of this it’s FDA approved, has margins in excess of 70% and has developed partnerships with the Hug group and Space NK.
ClearWaste is the first platform of it’s kind offering a price comparison site for household waste – it’s effectively Money Supermarket for household waste.
Founded by a former EY Entrepreneur of the year, the business has gained traction by helping citizens report where rubbish has been illegally left, and councils link it back to the culprit. Each month ClearWaste submits thousands of reports to local communities.
ClearWaste has over 500 certified waste removal companies on it’s platform, has hit the top 10 on the Apple app store and is projecting £729k revenue this year.
The focus of the book is the need for companies to revolutionise how they create value to remain relevant in today’s world. A distinguished business academic and business leader, Joachimsthaler believes we are witnessing the birth of a new type of company that he describes as an ‘interaction field’ company.
These are companies that thrive on the participation in value creation by many different groups: from customers, suppliers, partners, and other stakeholders, but even competitors, observers, independent researchers, and government agencies. Companies that achieve this are able to create an unstoppable momentum and growth called ‘velocity’.
Joachimsthaler considers the different types of value creation that have until now dominated. For decades, it was ‘value-chain companies.’ He describes them as ‘structured as a hierarchy they organized its key activities along the value chain from sourcing to design, manufacturing, marketing, and sales and were optimized on a pipeline.’
Over the past couple of decades we have seen the advent of ‘the platform economy’. from Facebook to Amazon to Netflix, these digitally driven, asset light, and quick to grow companies have disrupted the game. They have made founders very rich and inspired the hopes of startup founders everywhere to set up and monetise new platforms.
Joachimsthaler argues in many ways the value-chain company and the platform company are more similar than you might think. ‘They are both highly transactional. They are focused on a specific exchange, which is typically the provision of a product for money.’
His belief is we are moving on from the ‘platform’ economy and instead nascent firms should focus on building a new kind of company, an ‘interaction field’ company. These new companies which include Tesla and Alibaba, facilitate, and benefit from interactions and data exchanges among multiple people and groups–from customers and stakeholders.
But also from those you wouldn’t expect to be in the mix, like suppliers, software developers, regulators, and even competitors. Everyone in the field works together to solve big, industry-wide, or complex and unpredictable societal problems.
Furthermore by participating in these interconnected groups, interaction field companies can achieve a kind of unstoppable momentum and wild expansion ‘velocity’. He writes ‘It is a new form of multidimensional, constantly accelerating, explosive and smart growth that goes far beyond the traditional measures of sales increase, profit, or market capitalization.’
He also considers the four steps needed if a company is to become an interaction field company. These are:
1. Framing: It solves new problems and intractable challenges for multiple participants
Joachimsthaler argues that platforms and digital ecosystems typically focus on solving narrow or existing problems, challenges or pain points for customers. For example Uber and Lyft remove frictions of hiring a taxi or airbnb for having somewhere to stay without paying hotel prices.
Interaction field companies frame the challenges they are solving in a much more comprehensive way. These businesses solve complex challenges for customers, for an entire industry or even society. For example, Tesla solves for a lot more than just electric cars as a replacement of gasoline-powered cars. It solves for autonomous driving, lower CO2 emission, better utilization, lower cost of ownership of a car, traffic congestion, and so much more.
2. Designing: It creates shared value by designing for interactions, not just transactions
Platforms and digital ecosystems tend to be highly transactional business models. Ie. Airbnb between hosts and travelers, and Amazon between buyers and sellers. Because platforms or ecosystems are transactional, they typically benefit from the volume of transactions which generates learning and network effects. Interaction field companies however are not transactional, but rather interactional. Interactions are built on collaboration, engagement and participation. Interaction field companies focus on the quality and value of interactions as much as on the volume of interactions.
For example Alibaba is not in the business of disrupting small retailers. They are in the business of making them efficient, removing frictions and enabling them to sell more.
3. Building: It isbuilt to beopen and comprehensive by deeply integrating into the lives of participants
Interaction field companies are inclusive and compete in a world without walls. This is contrary to digital ecosystems and the current discussion around “ecosystem competition,” the notion that ecosystems compete against each other and you must decide which ecosystem to join if you can’t build your own. Companies should be wiser and reconsider the focus on extracting value through competition.
An interaction field company designs the interactions, architecture and governance in such a way that it solves problems and challenges of customers and many participants – including competitors who participate in other ecosystems.
4. Sharing:It is built to share out value with the participants in the interaction field
The goal of the interaction field company is to solve for problems and challenges in the nucleus, the ecosystem and in the overall market. The goal is not just to solve for the cheapest ride or the fastest grocery delivery, but rather to enable fair value distribution. As one leading platform academic, Marshall van Alstyne says, a situation where you create more value than you take.
Given the huge challenges created by the pandemic, this call for companies to focus on interconnectedness and solve deep rooted global problems has particular resonance. As he concludes: ‘Given the fragility of the planet and our global interdependence, interaction fields are the future, not only of business, but of the world.
We caught up with Riaz Moola, CEO and CoFounder at HyperionDev. HyperionDev are aiming to close the global tech skills gap by enabling education as an accessible alternative to more traditional university degrees. Doing this through specialised mentored coding bootcamps, offered online and on-site at its Johannesburg and Cape Town campuses.
What does your company do?
At HyperionDev we teach people to code. Not give lessons. Teach. Intense, immersive courses that get completed in 3 – 12 months (course dependent) with a unique human led mentorship that is built upon our unique codebase. A meld of automation and human touch that scales and works.
At our core, HyperionDev teaches people the essential skills they need to find fulfilling, rewarding careers in tech. However, we do way more than just teach: over the course of 3 to 12 months, we immerse our students in a high-pace dedicated coding environment that takes them from total beginner to a job-ready industry professional.
Our meld of automation and human mentoring gives us the power to give each student in-depth and personal attention, but in a way that we can scale to students in over 40 countries.
Why did you set up this company?
We didn’t go looking for a problem to solve, we found a problem that really needed solving. At university in Africa, a group of friends and myself were shocked at the extremely high dropout rates that affected not just our classes, but classes across the country.
We decided to do something about it: we started a mentorship program to help students to master the fundamentals of coding. We added mentor after mentor, until our network spanned dozens of universities across two continents.
Later on, I realised the difficulties people faced with learning the skills that could get them rewarding, fulfilling careers – and so HyperionDev expanded to teaching people even outside of university..
How did you get your first customer?
A government-run research group that carries out AI research actually approached us, saying that we were the largest trainer of the Python programming language in their region, and asked us to train for them.
We initially thought we’d have to raise money to do the training, and were surprised when they offered to pay us. In the end we charged 10 times less than we should have for the service!
We knew we were onto something when?
We just didn’t have people stop signing up for our courses every day, and didn’t have a month where we didn’t make revenue from our online courses. At the start you think it a temporary, short-term demand, but when you see the continual interest, it feels like you’ve unlocked something completely new.
Our business model:
There are essentially two, B2C online immersive courses that are cost effective, and accessible from anywhere in the world that we built to scale. The courses, while cost-effective for students, are profitable to us as we grow. We reached profitability in Q1 2020.
Our Code Review base is a B2B SAAS product under the CoGrammar brand, used by tech companies and even other leading software schools internationally
Our most effective marketing channel has been:
Our alumni network – we still see word of mouth driving a huge number of new students. The network effects from this group has been critical to our growth.
What we look for when recruiting:
A-players. People who can work in an intense environment and are driven by our mission to create people who can take up the vacuum in the global tech skills gap.
The biggest mistake that I’ve made is:
Not realising that we could build a really good profitable business , as well as create awesome social impact, sooner. You don’t need to be a non-profit to truly help people.
We think that there’s growth in this sector because:
Nature abhors a vacuum! Every startup is facing the same problem, where to get talent. The group of startups is growing, the talent pool isn’t keeping up. Know what that is? We call it opportunity. And with that opportunity we solve real global socio-economic problems and make a difference in people’s lives. It is one of the best problems worth solving that we know about.
We worked with AIN because:
Networking is perhaps the most important part of any future-facing business or campaign. It’s what got us started as a grassroots organisation of coding mentors, and it’s what grew us into the continental tech education leader we are today.
You can only get closer to the success you envision if you surround yourself with the right people, with the same vision and goals: and the AIN networks are one of those alignments.
How are you coping with lockdown? What is your strategy?
We have moved to a remote first way of working, from a previous policy of a remote friendly. And the positive response had been fantastic. Execution and productivity are actually up.
Is there anything your business is doing to help in your community or with the wider crisis?
South Africa’s biggest problem is unemployment. The numbers are staggering. We are actively supporting communities directly with scholarships, education and the resultant access to the global shortage of coders in the market. The knock on effect is heartwarming to say the least.
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 our latest edition of #BehindTheRaise, we caught up with LifeSaver Co-Founder, Archie Wilkinson, about setting up a B-Corp, the importance of a great team and why getting your documents in order is so important.
Tell us about Lifesaver:
We sell & return power banks to charge your phone. With more smartphones than toilets in the world, we are focused on providing power on the go in a sustainable way.
The power bank market is estimated to be worth $27bn by 2024 and we want to change this industry to be cleaner, circular & greener. We are the 199th certified UK B-corp, with a hire & return model across events and venues reducing battery waste as we recharge and reuse.
We fill all our power banks with renewable energy saving 13 grams of CO2 per charge & recycle our batteries to areas with no electricity by making off-grid solar lights with Liter of Light.
Why did you decide to raise investment?
To scale.
We had proven a number of unknowns and required investment to accelerate our growth. We are an ambitious company with big goals to change an industry to be more sustainable, raising investment helps us to develop our product, hire the best people thus driving further sales.
What is your top tip for anyone raising investment for the first time?
Keep at it. Listen & adapt as you go. You will have multiple pitch decks and always try to get feedback from investors that say no, and evolve. It is also important to have good documents (i.e. articles of association, shareholders agreement, term sheet etc.) SeedLegals is a brilliant and cost effective platform to streamline super slick documents and integrate your cap table. They also offer completely free support & advice on top of this.
What attracted investors to your company?
Team, vision and a real problem that needs solving in a better way. Ultimately they are buying into the team & vision of the future. They say investors will invest in a great team with an ok idea over a great idea with an ok team, it is important to have people around you that make you feel like the weakest link! If you don’t have people you are learning from then you don’t have the best team. Don’t rest until you do.
My biggest fundraising mistake was…
Possibly not having watertight company documents to start with, this delayed investment. SeedLegals helped us out on this and now we have very good documents with articles that align to our B-Corp status.
Why did you choose to use Angel Investment Network?
Angel Investment Network is a great way to reach multiple angels in an automated and simple way to engage and inform investors. The network will open you to more investors and thus help in improving your business.
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.
Julian Seydoux is a rare breed in Europe, an entrepreneur who has set up a company, scaled it, exited it, and is now investing and advising the next generation of start ups. As Julian has experience of Angel Investment Network, both raising funds and investing, we decided to pick his brains.
What impresses about his story is the belief that having completed his market research with intense focus and determination, he could take on the ultra competitive Chinese market, launching Vai Milno, a chain of gelato stores, and enter an industry that he had no prior experience of.
He explained how he arrived in China with ‘two bags and nothing else’. That sense of determination clicked with investors, but also tying in the traction and a word that keeps coming back in our conversation ‘momentum’.
‘We explained the story of all the achievements we had made until then, which in hindsight was extraordinary fast. We signed several partnership agreement, persuaded the chef to join us from Italy. So investors when they saw this, could see that something was moving fast, something was happening.’
Switching to being an entrepreneur, seemed a natural next step for Julian after his job in M&A, working in emerging markets, he learned where there were exciting opportunities. In the city he had honed the skills necessary to evaluate quickly whether there was a business opportunity.
Julian was finishing a part time degree at London Business School ‘One of my classmates approached me and said why don’t we set up a company? I think China would be a great place to start a business. And I thought if I’m working 18 hours a day, I might as well do it for myself!’
As Julian’s gelato business gained traction in the Chinese market, opportunities to exit began to appear. ‘‘I had a prior opportunity to exit, but we didn’t take it, I thought this is working, let’s just continue what we’re doing and focus. But at some stage life happens. You just need to decide whether to move on.’
Julian then thinks logically about how you determine when is the right time for a founder to move to on from his business. Splitting entrepreneurs between those who have the skills and desires to start a business, and those suited to growing it.
‘For the founders you need to decide what kind of founder you are – are you more interested in the startup craze at the beginning, or are you a later stage managerial founder who can get the processes right?’
In fact Julian has seen later stage VCs frequently appoint new CEOs, bringing new people to the board and key hires into the company, ensuring that they have the right skillset to grow the company. In Julian ’s words: ‘At one stage you have to think could someone else do better. One of the challenges for founders is acknowledging there’s a limitation of what they can do.
And all these considerations came to mind when I decided it was right for me to leave the company and exit.’
In terms of getting your company so that it’s in a position to exit, researching who are the potential buyers early on pays dividends . ‘Something that I was keen to do early on was two way partnerships with people who could potentially be acquirers.’
How do you ensure that you get the deal you want? ‘Just remember – at the end of the day, don’t be afraid to negotiate, everything is negotiable!’
Julian is sanguine about his success on selling his business, he describes the emotions he endured as ‘part of me sadness and part of me relief I had gone through the process, and other parts of me were thinking about what to do next. I have seen some very sad people who have exited with plenty of cash, they are just struggling afterwards’.
Now an Investor, Julian is often shocked by how bullish founders are before remembering that he too was like that. He feels that he can quickly get a sense of if there is a fit – he looks at spaces where there are potential and where his skills can add value, and when talking to founders quickly gets a sense as to whether the team can execute.
His parting advice for founders ‘if someone offers you money, take it!’ he says, before laughing.
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.
Saima Duhare is the founder of Halal Fresh, the UK’s first halal non subscription meal kit service predominantly catering for the Muslim community.
What does your company do?
Halal Fresh is a meal kit service providing freshly preportioned ingredients, with an easy to follow recipe card to cook great tasting meals. Making dinner times stress free and enabling our customers to be adventurous in the kitchen, as well as supporting their healthy lifestyles.
Why did you set up this company?
My vision was to bring back the joy of cooking by offering every Muslim household the opportunity to cook homemade fresh meals from around the world, making dinner tables exciting to sit at.
I grew up in a household where food was the catalyst of bringing people together, my Grandma, Mum and Aunty are amazing cooks and would cook foods from around the world and we would always have family and friends over. I felt we were losing the importance of having a home cooked meal which gives an opportunity to spend quality time with family and friends over a great meal.
Given the rise of fast food and the ease of it, coupled with the busy lives we lead, I felt this aspect of our life was slowly disintegrating. So Halal Fresh was born to make people’s life easier and offer varied, healthy delicious meals they cook from scratch at home, in addition to being mindful of our carbon footprint since everything is proportioned so there is no food waste and all of our packaging is recyclable
How did you get your first customer?
We had no budget for marketing and when we launched we pretty much prayed we get customers, lucky for us people were googling for a halal meal kit service, thus, my first customer was a Dr who kindly posted our service on Instagram, result of that we approached various influencers from different professions, and and from that we organically built and grew ourselves this is going back in April 2019 and still we haven’t spent any money on marketing apart from a offering a recipe box in exchange for a shout out, plus our lovely customers a promote us
We knew we were onto something when?
We were approached by a journalist from the Independent and at the time we had no clue which publication she was from until I delivered the box and we were included as being one of the best recipe boxes in July 2020.
Our business model:
We are an online non subscription business model, which people enjoy because they can use the service without feeling tied in, and that works for us and them.
We’re currently only serving the London region, however, we are looking to expand nationally. We are growing slowly but surely and organically. And the interest we receive daily in bringing it to other parts of the UK is promising and exciting. We are learning as we develop, progressing and improving our offering and service.
Our most effective marketing channel has been:
Instagram and word of mouth from our customers and being in several reputable british and British Asian papers has helped us and put us on the map as a 5* Halal Recipe Box.
What we look for when recruiting:
We are a very small team, and the team we have are very passionate about food and the industry. We look for people who are creative and open to learn as much as we are, and contribute to what we are trying to achieve, to make people’s lives easier, and can work on their own initiative.
My graphic designer for instance has had very little experience but her work excited me. I tend to go with my gut feeling, of course they need to have the skill but not necessarily the experience.
The biggest mistake that I’ve made is:
Having no experience in opening a business I have made lots of mistakes, but one of them for instance, when we had our soft launch I spent £6,000 to test the model on 40 people, in hindsight I could have tested the model on 20 people and tested it for much less.
I created the MVP as if though it were a fledgling business, with 9 recipes, 2 chefs, all the packaging and pre portioned ingredients from suppliers, which I could have easily pre portioned myself and less recipes and 1 chef.
We think that there’s growth in this sector because:
The halal sector is booming – in 2019 it was valued at £31bn, considering there are only 4.1 million Muslims in the UK, that staggering. It’s very exciting times for the food industry despite the current climate. We are becoming more mindful about what we put into our bodies and becoming conscious consumers.
Is there anything your business is doing to help in your community or with the wider crisis?
We are heavily involved with our local food bank which was set up by a friend of mine, and have volunteered, distributed food as well donated food. This is something we are also passionate about, which is giving back and helping those that are vulnerable in our community, so much so we are working on embedding this into our business model.
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.
We first met Rav Roberts, CEO of Pharma Sentinel, at one of the virtual events that we hosted. He recently successfully closed his investment round, and we are pleased to hear the learnings he has to share:
Tell us about Pharma Sentinel:
Pharmasentinel.com is a UK Consumer & Business healthtech helping each person to lead a safer life, by leveraging AI to provide trusted, timely & personalised medicines and medical conditions news, alerts and medicines data intelligence.
PharmaSentinel launched its consumer app ‘medsii’ (Medicines information for Me) in October 2020 on the App Store & Playstore and already has over 15,000 app downloads in 150 countries.
Medsii provides information on side effects, drug safety alerts & recalls, and clinical trial opportunities for participation, in an engaging, patient-centric Twitter-style interface.
Why did you decide to raise investment?
2reasons:
1) To accelerate our launch into the USA, our key market.
2) To accelerate the launch of our Business SaaS data product.
What is your top tip for anyone raising investment for the first time?
Persist.
It took us months of pitching to get our first investor, then bit by bit, the floodgates opened.
Secondly, use Twitter to link with very experienced USA VCs, e.g. Brad Feld, Jason Calacanis, Elizabeth Yin, who will give you tons of *free* advice AND *free* training on pitching, negotiating with VCs etc.).
What attracted investors to your company?
1) Very experienced founding team (we all met in Business School 16 years ago).
2) Healthtech very topical, even before Covid-19, with more people living longer & taking personal responsibility to manage their health to live quality lifestyles.
3) Great business model, with globally scalable consumer & business products.
My biggest fundraising mistake was…
Initially not being succinct during pitches. (Second mistake was not using an ethernet cable to pitch).
Why did you choose to use Angel Investment Network?
I got a couple of tips from friends, then tried it and, (to my surprise), angel investors started to contact me and actually invest!
