News About Startups, Entrepreneurs & Angel Investors
You can read all the latest news and updates from the Angel Investment Network. You can check out our recent press releases and also find special offers for startups, along with all the latest news for investors.
The angel investment and entrepreneurship marketplace are extremely fast paced sectors, and it is a good idea to keep up-to-date with all the latest developments that you need to know about to help make informed business decisions. At the Angel Investment Network, we are here to help support all your business activities.
In this week’s #SixtySecondStartUp we catch up with Alpaca Coffee who are making ‘better coffee for you and the planet’:
A ceramic coffee mug is great for sipping hot drinks like tea or coffee, go to Spice Kitchen and Bar to take a look to the 11 Best Ceramic Coffee Mugs of 2022: Reviews & Top Picks.
What does Alpaca Coffee do?
Alpaca Coffee looks to bring better coffee for you and the planet. We are working towards being UK’s first fully sustainable coffee brand by promoting sustainability at every touchpoint:
Ethically-Sourced Specialty Coffee: Traceable sources to support family businesses that adhere to international standards on sustainability, better pricing, and quality
Zero Waste Roasting: Roasted via circular technology with biofuel instead of fossil fuel
100% Plastic Free & Compostable: 100% plastic-free, from our labels and our bags, all the way to our shipping boxes and compostable tape.
Offsetting Our Carbon Footprint: For every 10 bags of coffee sold, Alpaca Coffee will plant one tree in the Amazon Rainforest.
Why did you set up Alpaca Coffee?
I fell in love with specialty coffee during a trip to South America, but soon became aware of the negative environmental impact of the coffee industry. Due to this, we decided early on to become the new industry standard and to put sustainability at the core of what we do, making quality and sustainable coffee accessible for everyone.
How did you get your first customer?
We validated our idea with a Kickstarter campaign. The featured by Kickstarter and our >200% oversubscription jump started our initial customer base and we are fortunate that a lot of the customers from then have stayed with us since then. Despite the fact that we have grown since then, I will never forget the moment my best friends tried our coffee and their amazed look.
We knew we were onto something when?
Kickstarter was a start, but when we were featured by the UK Government as part of the SMB Climate Hub, among other publications such as Goodfind and Wherefrom, we knew we were onto something.
Our business model:
B2C with a focus on e-commerce. We are rapidly expanding into the retail and B2B space so hit us up for a chat ?
Our most effective marketing channel has been:
We are currently organic-heavy with our marketing, and so far has offseted >1,300,000 grams of carbon with >3000 bags of coffee sold. Social media has brought in great ROI, from word-of-mouth through user-generated content to collaborations with brands with similar philosophies. The team is working hard to further our presence by strengthening our branding and unboxing experiences. Stay tuned for our launch in December ?.
What we look for when recruiting:
We look for people who share our values in sustainability and understand our mission. Being a challenger brand, we want to recruit fearless, passionate people. Diverse backgrounds, perspectives, talents, and ideas are important to us and we are driven forward by this diversity.
The biggest mistake that I’ve made is:
Saying yes to too many things. I’ve learnt that it’s important to approach any part of our business with a clear goal and understanding of the return on investment. We now approach anything we do together as a team with a clear understanding of how it fits with our mission and vision, and how it drives the business forward.
We think that there’s growth in this sector because:
We are part of the “fourth wave of coffee”. As one of the most consumed drinks in the world, the quality of coffee as well as its impact on the environment and society, has become increasingly important to people around the world. As a specialty coffee company with sustainability at its core, we hope to become the new industry standard and push for better coffee for you and the planet.
We worked with AIN because:
AIN democratises angel investment and offers an unprecedented access to a supporting ecosystem and community of entrepreneurs and investors. This helps level the playing field and empowers entrepreneurs like us to grow.
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.
Angel Investment Network, the world’s largest angel investment platform, surveyed the views of startups in the USA and UK to see how they have responded more than a year and a half after the pandemic first hit. This involved interviews with 1,205 startups in the USA and 667 in the UK. The key findings in the overall report we have published are:
1) Confidence returning Similar numbers in both territories are now positive about the next 12 months. In the USA 76% of respondents are now confident about the next year, with 72% confident in the UK. However more US startups are very optimistic about the future, 52% against 42% in the UK. This could of course be down to a naturally more upbeat mindset but the research also reveals some particular challenges in the UK – for example the impact of Brexit. Meanwhile 70% of respondents in the USA are confident about the country retaining its status as a ‘startup hub’, versus 65% in the UK.
2) Networking and bootstrapping have been ways of mitigating stalled investment 62% of US startups have seen growth negatively impacted with 59% in the UK negatively impacted. The research also reveals the similar approach to mitigating the impact of stalled investment. The top strategy adopted in both countries was focusing more on networking. Other strategies adopted included delaying launch plans, holding back on marketing and hiring and bootstrapping businesses as far as possible..
3) Raising investment is biggest challenge goingforward Raising investment remains the biggest challenge going forward and there is a firm belief in both countries that government has a key role in making the conditions more favourable through tax relief. The report also looked at the biggest bugbears for startup founders. Number one in both countries was investors demanding too much of a stake in the business. Time consuming due diligence was also a pressing concern as were very slow rejections.
As we look forward, startups in the US and UK can be the engine room of economic recovery in both countries – nurturing their growth is vital.
Derek Van Tonder shares the story of Euclideon Holographics and the key learnings from taking it through multiple rounds of funding, including the importance of benchmarking your company for investors and building meaningful relationships:
Tell us about what got you into start ups:
Euclideon Holographics was founded because we tried out traditional Virtual Reality helmets and we really didn’t like them – we hated the cord, the screens in front of our eyes were awful because we couldn’t see anything, and most importantly, they gave us motion sickness. So we decided to solve that problem by removing the screens in front of your eyes and moving them onto the walls around you to solve all these problems with VR, and Euclideon Holographics was born.
Why did you decide to raise investment?
Our products have been very successful and many customers even purchased them before they were properly finished (in beta) – we are using this success to prove to investors that their funds can make a good profit when we use investment money to set up warehouses and showrooms around the world. 95% of our customers have seen our holograms in person before committing to purchase, so it makes sense to put showrooms closer to our customers, and that requires investment capital. We are also using fundraising as a way to network with new partners. Many of our investors end up working with us in the business, for example by becoming a representative for our products in a far-flung region of the world that we normally would not easily be able to access. Since they are shareholders, they are passionate about our company and it works very well.
What is your top tip for anyone raising investment for the first time?
Be careful of scammers, using a service like Angel Investment Network greatly reduces the number of shady people you will have to deal with. Make sure that you understand your market very very well – investors don’t just want to know how much you could sell if only 1% of the market bought your products – they need better and more realistic estimates than that. Ideally, you should have proved that people want to buy your product/service before raising investment. Investors may love everything about your company and technology but could be scared away by the risk factor – you have to be absolutely transparent about risk with investors. If you have debts, disclose those. If you are at all cagey about disclosing financials, many investors will see this as a big red flag. The gold standard is to have an independent, 3rd party accountant sign off on a copy of your balance sheets before you raise capital. Every serious investor will ask for this, and rightly so. Investors also like you to be very clear about what’s in it for them – you should not give “pie in the sky” and overly optimistic projections and forecasts. Instead, try to find companies similar in size and scope to your own and use them as a benchmark for comparison purposes. For example, we use the company Tritium, they are literally in the same street as our HQ, with a similar number of employees, and they are also an Aussie technology manufacturer with their own factory. Because they are very similar we can show them to investors and talk about their great success story.
What attracted investors to your company?
Shareholders of Euclideon Holographics are interested in a long-term pre-IPO Intellectual Property play, they are investing with us because we have a lot of unique IP and patents, we have proven that customers want to buy our products, and we are offering new Hologram products not seen before that solve a lot of the problems with Virtual Reality. And we also support popular 3D simulation engines like Unreal and Unity. Manufacturing our products in Australia is also seen as a big advantage to our customers, particularly with regards to our military clients, Australia is seen as a “safe” and friendly country by military buyers. Australia is viewed favourably as a hi-tech and very stable Western democracy so that also helps us.
My biggest fundraising mistake was…
At first, only emailing investors and not touching base with them in other ways. You should reach out to them on LinkedIn, send text messages, phone them, everything possible – otherwise you will never know whether your important email got stuck in their spam/junk filter. The absolute gold standard is to have a Zoom call with every investor. Investors like to invest in people. You need to meet them somehow, ideally in person if you can.
Why did you choose to use Angel Investment Network?
AIN has consistently delivered quality investors to us over the years as we have expanded our operations. We now have an excellent shareholder list and many of our shareholders are actively involved in helping us distribute our products and find new opportunities and clients all over the world.
What has the funding enabled?
We use our funding for expansion and to fund R&D on new products. For example, our first foray onto AIN netted us $700,000 (AUD) of investment, which we subsequently used to refine and commercialise our Hologram Table product, which is now our 2nd most popular bestseller.
Keen to hear more?
Listen to Derek in the extra video for #BehindTheRaise:
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.
A majority of US startups (52%) are now ‘very optimistic’ about the next 12 months, despite 62% seeing business growth negatively impacted by the pandemic. This was a key finding of a new study of US startup sentiment 18 months after the start of the pandemic, by Angel Investment Network (AIN). The study of 1,205 US based startups found 76% expressed optimism overall with 19% quite optimistic and 52% very optimistic, versus just 24% who were pessimistic. It followed on from a similar survey we conducted of UK startup sentiment last month.
The results show the extent to which confidence has returned to early stage businesses Stateside, who are emerging strongly from the downturn. Of the 62% of respondents who revealed they had been negatively impacted by COVID, 37% had been ‘very negatively impacted’. Meanwhile 63% of those who had been planning to raise funds said they had delayed a raise as a result of COVID.
Top strategies to mitigate the impact of stalled fundraising were: Focusing more on networking, favoured by 46% of respondents, holding off launch plans (38%) and bootstrapping instead (32%), with a similar number delaying marketing.
Entrepreneurs were also asked what their biggest challenges were going forward. The top result given was raising investment (84%), hiring/recruiting the right talent (22%) and product development (22%). Ongoing COVID issues were a problem for 13% of those polled.
US startups also believe more Government action is needed to encourage investment and help startups flourish. 57% favour making tax relief more generous to boost angel investment, 32% making R&D tax relief more generous and 22% lowering corporation tax. 70% of respondents are confident the US will retain its place as a startup hub.
AIN has seen surging growth on its platform with connections between entrepreneurs and investors up by 23% since the start of the year. Meanwhile revenues have increased by 40% to a new record, indicating the huge pent up demand from startups now seeking funding.
According to Mike Lebus, founder of AIN: “It is encouraging to see how US startups have shown their mettle to ride out this really difficult period and emerge battle tested and with high levels of confidence. Many have been negatively impacted but have used their time wisely to build up their pipeline of contacts and bootstrap their businesses as far as they can go. RaIsing investment remains the biggest challenge going forward and as the world’s largest angel investment platform, we have been encouraged by seeing a record number of connections between investors and startups.”
How did you respond to the pandemic?
Focused more on networking: 46%
Held Off launch plans: 38%
Bootstrapped instead: 32%
Delayed marketing: 32%
Held off making hires: 27%
Had to let staff go: 20%
Relied on business loan: 19%
Pulled back from R&D: 12%
What could the Government do to help?
Make tax relief more generous to boost angel investment: 57%
Make R&D tax relief more generous: 32%
Lower corporation tax: 22%
Offer more clarity on COVID restrictions: 14%
Make it easier to provide VISAs for recruiting the right talent: 13%
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.”
Richard Romanowski is co-founder and Executive Director of eleXsys Energy. eleXsys has developed a unique, international award-winning, enabling technology that will drive the transition of global energy grids to a clean energy future.
Tell us about eleXsys and how you came up with the idea? My co-founder, Dr. Bevan Holcombe, was a senior engineer at an Australian distribution utility with 30 years’ experience and was working on how to decarbonise the local suburban grid. I was a cleantech angel investor, looking for fabulous ideas.
The biggest issue to local decarbonisation is that the grid was designed as a one way grid. Bevan was trying to find a way to solve this problem, that is, the very limited grid hosting capacity of renewables due to the one-way grid design. He could not find a solution anywhere so in 2012 we decided to team up and started a company now called eleXsys Energy to solve this problem.
eleXsys in simple terms turns the one-way grid into a two-way grid in a cost effective manner enabling a huge increase in local renewables that the grid can host or accommodate in each suburb.
When we started eleXsys, Bevan and I had a vision that discovering a way to turn the one way grid into a two-way grid would be our contribution to saving the Great Barrier Reef by speeding up global distribution grid decarbonisation.
Over the last 9 years eleXsys developed a unique, international award-winning, enabling technology that will drive the transition of global energy grids to a clean energy future.
Why did you decide to raise investment? The co-founders, Bevan and Richard, are the initial high net worth investors. We invested over $7.5 M USD of our own money. Then some friends and close associates also invested almost another $4.0 M USD. We had developed an MVP (Minimal Viable Product) and a few field demonstrations and planned a slow organic and affordable commercialisation, starting in Australia. Then slowly going global as we knew Australia was a few years ahead of the rest of the world in terms of grid hosting capacity problems due to so much rooftop solar we have Down Under.
Then we won the World Energy Council (WEC) global start up award in 2019. When we won the award, the WEC Secretary General at the time (Christoph Frei), challenged us as follows, he said:
“This technology is game changing; you need to think 100 time bigger” …. that is, we need you to help speed up global decarbonisation and fast!
Since 2019 that is what we set out to do, and in that vein, we needed much more investment to speed up commercialisation and go global faster.
What is your top tip for anyone raising investment for the first time? It’s never easy, the 1st time or the 10th time. Be prepared to spend a large amount of time raising funds and listen and learn from every pitch. If they say no, ask why. Always be raising and expect to pitch to 50 or more before you hit any jackpot.
What attracted investors to your company? The IKEA flagship project in Australia which helped investors realise how eleXsys can radically speed up global decarbonisation in the local suburbs. The IKEA project represents a microgrid at up to 10 times bigger than what current Smart Invert technology and grid constraints would allow. So up to 10 x greater energy savings for the tenant, up to 10 x more rooftop rent for the landlord, plus up to a 10 x larger $ project for the asset owner (e.g. solar and battery power plant) to earn a secure, uncurtailed ROI over 20 years.
My biggest fundraising mistake was… Not listening at first to potential investors.
Why did you choose to use Angel Investment Network? A very supportive, understanding, and innovative group with a focus on ESG (Environmental – Social – Governance) investing. We are now raising our Pre IPO round.
What has the funding enabled? The main focus was fine tuning our global expansion plans through our planned licensing model. Licensing allows us to scale global quickly as opposed to originating, developing, and building microgrid projects ourselves, which would be a very slow and cumbersome process.
Through licensing our vision is that eleXsys becomes the “Intel Inside” of the global local renewables supply chain. That is, almost everyone is using eleXsys in their local suburban renewables projects to speed up global decarbonisation.
Did you know that filling every roof with solar could generate > 120% of Australia’s total electrical needs? Same should apply across the global sunbelt ≈ 75% of world’s population.
Cannot be done – local distribution grids will not integrate this much distributed energy due to grid physics limitations (curtailment) due to one-way grid design
Grid curtailment of DER (Distributed Energy Resources) begins to occur when the utility hits ≈ 15% of customers with DER, making projects non bankable .eleXsys cost effectively solves this fundamental problem one-way grid problem.
So far, we have one Master Licensee MOU signed and are negotiating with four more. Plus, established a few Alliance Partners licensees within Australia to be the sales channel and EPC of projects. Some of the Alliance Partners are global multinational using Australia as a test bed eleXsys licensee, with the intention to then become a global licensee.
Plus the funds are being used to enhance our manducating capability along with recruiting more staff to support the faster growth.
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 .
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.
eleXsysEnergy has raised £640,000 through Angel Investment Network, the world’s largest online angel investment platform. eleXsys Energy has developed a unique, international award-winning, enabling technology that will drive the transition of global energy grids to a clean energy future. The eleXsys® technology enables large commercial and industrial rooftops to become grid-connected, solar power plants. eleXsys® is the critical enabling technology being installed to build the IKEA eleXsys Microgrid at IKEA Adelaide, which will become 100% powered by renewable generation by 2025.
The raise took four months and was part of a larger £5m funding raise, including a Series A round of £3.55m, with the funds allowing the business to continue its investment as it rapidly grows its global reach. eleXsys Energy’s innovative technology unlocks the full potential of electricity networks to host multiple times more clean, distributed energy without expensive network infrastructure upgrades. By providing services that enable a two-way flow of electricity on grids, the platform supports the most efficient, low-cost means of delivering clean distributed solar or wind energy.
The company originated in Australia but has now reorganised and is headquartered in London. This is eleXsys Energy’s first raise overseas and marks a significant step for the company. The company has over 270 customers including 11 industrial rooftops across schools and government, agricultural and commercial buildings. The raise will allow the business to continue to invest in its technology as it rapidly grows its global reach.
According to Richard Romanowski, co-founder and Executive Director, of eleXsys: “We are delighted to have completed a successful round of fundraising with Angel Investment Network. Our technology is critical for the transition to clean energy – one of the world’s most pressing challenges. Funding from investors across the world confirms the transglobal appetite for investment opportunities in new cleantech solutions, aiming to tackle global carbon reduction targets. We are a rapidly growing business and with the capital raised, we will be able to further drive our strategic plans for expansion and deliver on our goals for our new and existing investors.”
According to Sam Louis, Head of Consultancy at Angel Investment Network: “We are excited to be working with eleXsys Energy in this period of significant growth for the company. This raise ensured that eleXsys secured the backing of strategic and experienced investors as they expand their global reach and make their mark on international markets. Our passion-driven investors want to support businesses that solve real problems and there’s arguably few greater problems to solve than how to dramatically scale the move to clean energy.”
The US Government recently made a headline-grabbing commitment to a 50% reduction in carbon emissions, while the UK committed to an even steeper 78% carbon reduction by 2035. So the question on everyones’ lips is how to achieve this while ensuring economic growth continues? The solution to marrying a low carbon future with answering our continuing energy needs lies in innovation and the ideas of many brilliant startups now seeking funding.
For our latest in depth focus article, Olivia Sibony, CEO of SeedTribe takes a look at sustainability and the development of startups that have the power to help save the planet. Olivia has recently been recruited by the Government to advise on the impact-focused startups we should be encouraging to set up in the UK.
Size of market The global Green Technology and Sustainability market size is anticipated to grow from USD 11.2 billion in 2020 to USD 36.6 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 26.6% according to Report Linker
On the platform – Renewables became the 11th most popular keyword for searches in the past year, a rise of 37 places compared to 2018. – This trend is being replicated by other popular keywords being used at the moment. During the pandemic Greentech became the 13th most popular keyword, up from 47th two years ago.
What is the reason for the soaring interest in sustainable focused startups during the past year?
I think the change really started snowballing in 2019.The mood music had changed on the back of consumer activism and changes to government policy. From Greta Thunburg to the Extinction Rebellion there was a concerted effort to ensure climate change became top of the agenda. It worked. Governments and businesses suddenly started making dramatic commitments to cutting carbon. While it might have been expected that investors would be retreating from these categories in favour of safer investment opportunities during the pandemic, the exciting news was these businesses are actually generating more interest from investors.
Concerted government policy worldwide is certainly helping, along with increasing grants from the UK Government to stimulate innovation in this space. In order to hit these ambitious targets, innovation will be critical. Investors know this and so are backing the early stage startups with the vision to help governments and business in general hit these ambitious targets. We are also seeing something of a shift in the investor profiles, with some younger millennial investors coming to the fore who have purpose very much as their watchword. For many investors, rather than a ‘nice to have’ having purpose baked into their business plan is becoming a prerequisite for receiving backing.
What are investors saying about sustainability?
Investors are starting to see ESG measurements and reporting being embedded into listed companies and realising that the more they invest in companies that do this from the outset, the better chance they have of succeeding as they scale. It’s important to note that a lot of investors are interested in this segment but struggling to understand it, as there’s a sliding scale of shades of grey in what the “impact” and investment spaces, ranging from profit-first to impact-first.
Our belief is that there shouldn’t need to be a compromise, so that profit and purpose are perfectly aligned and inextricably intertwined. The key difference is that it’s important to take a long-term view as some of the growth may be slower, but in the long term it’s more sustainable so has a better horizon for long-term profit. So investors are interested in this space but need help understanding the change in growth curve. When investors understand that growing consumer demand (culture), coupled with an increase in regulation (policy, systemic change) are driving this growth, it’s a clear path for investment for anyone looking beyond a three year horizon for their investments.
What innovations are most needed to power sustainability?
The three key areas of focus should be circular economy, carbon-capturing technology and renewable energy. We need a big focus on the entire food and agriculture chain where farming needs to capture carbon, food should be produced as close to home as possible, vertical farming practices are further developed, food surplus becomes minimal and a resource to turn into energy. Where water from agriculture is clean and no longer contaminates our waterbeds. We need to focus on trapping heat emissions from carbon and methane in order to slow down the melting ice caps. The quicker the ice caps melt, the more gases and unknown bacteria and viruses will be released and the harder it will be to reverse. We’ve already seen the impacts of one single lone virus and this should be a good incentive for us to not release unknown ones that have been trapped in our ice caps for millennia and have potential to cause incalculable damage.
Zoï environmental network uses its technology to treat and monitor wastewater systems, especially cleaning fats from public drains and pipes. Their core product is an environmentally-friendly system which doses special bacteria to the wastewater system and degrades the fat molecules in the system. The system prevents the development of fatbergs in the sewer & wastewater systems, allowing cleaner water to flow through our systems. Check out this Video of them.
Bionat Solutions is a Certified organic solution applied in the waxing process of fruits, with the aim of providing a longer shelf life without using fungicides or artificial products. The novelty is in the circular alternative made from the same agroindustry residues to increase the useful life of fruits.
Biohm is a multi-award-winning research and development led, bio-manufacturing company. The company enables the use of healthy, environmentally friendly, circular materials like food waste and transforms it into building solutions which can apply across the design and construction industries. This eliminates the concept of waste, demonstrating how business can equitably and ethically work in collaboration with the natural world, industry, academia, government and community.
Zero Carbon Farms has developed a data-driven system 70x more productive than traditional farmland. It uses 100% renewable energy, 70% less water and reduces food miles/food waste. Not only is the produce consistent quality, highly nutritious and herbicide-free, it is also hyper-local and year-round, specialising in subterranean farming.
Join Olivia Sibony on Thursday June 3rd in the next AIN ClubHouse ‘Business as a force for good’ session where she will be discussing how startups can pave the way to a zero carbon future for food production.
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 with the help of Utilitysavingexpert.com Ltd 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 this website, 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
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. As you read more, it is evident that any 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.
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.
Liv Sibony, CEO of SeedTribe and Head of Impact at Angel Investment, recently spoke on the Coffees on Purpose podcast about how start-ups can marry profit with purpose, what we need to do to support the next generation of start-ups to address the UN’s Sustainable Development Goals (SDGs), and why female entrepreneurs are still underrepresented in this area.
From sharing with us some of the most exciting start-ups in the space, like Pinpoint, who are using big data and hundreds of thousands of blood samples to help detect early signs of cancer, to deconstructing some of the structural imbalances in the current investment space, Liv gives a comprehensive overview of the impact space, and what’s on the horizon.
Angel Investment Network (AIN) has revealed its latest ‘State of the Angel Investment Nation’ findings. It is based on the data of more than 125,000 UK registered businesses looking for funding and 35,000 UK investors over the course of 2020.
Technology remained the top category of interest for angel investors looking to back businesses in 2020. Meanwhile, finance closed the gap, climbing five places to become the second most popular category for searches. In the year of the pandemic, medical & science climbed two places with a surge in investors backing entrepreneurs focused on improving health outcomes. We also witnessed a huge growth in interest in agriculture which saw a rise of 63% in searches and climbed seven places to become the eighth most searched term.
For entrepreneurs, property is the most popular sector for pitch ideas. Entertainment and leisure is the second, followed by fashion and beauty. This highlights something of a mismatch between the sectors in need of funding and the sectors investors are interested in backing.
AIN has also revealed the UK’s top entrepreneurial hot spots. London’s share of all pitch ideas has fallen slightly, although it remains responsible for 36% of all pitch ideas. The South East is second in the list with the North West number three. Growth in both Wales and Scotland outperformed the rest of the UK seeing a rise in the number of pitches as the startup culture continues to flourish across the UK.
According to AIN co-founder Mike Lebus: “It has been an extraordinary year with so many lives and businesses impacted by the virus. However in the face of unprecedented challenges, we have witnessed the resilience and adaptability of UK startups working to bring solutions to the problems of our time. From innovations in finance, technology bringing people together during social distancing to the wonders of medicine and science. It’s no surprise these are the businesses gaining interest and investment from our investors.”
“We are also seeing the nascent development of ag-tech and brilliant technological solutions tackling the very real challenges we face of feeding the population and maximising efficiencies and yields. The challenges of climate change are undimmed and this is a sector that is at the forefront of that battle.”
He continued: “While London has been dominant in the past we are now seeing the comparative growth of other nations and regions in the UK as our embedded startup culture takes further root. We can look forward to a continuing resurgence across the country as we emerge from this difficult period.”
“COVID has pulled the transition to digital learning forward by at least 5 years.” These were the words of David Sherwood, CEO and co-founder of EdTech startup BibliU, commenting on the remarkable development of the EdTech market. In our recent look at the data from the platform, it was revealed to be one of the fastest growing sectors for investor interest. Up 56% since the start of the pandemic. AIN’s Sam Louis takes a closer look at the EdTech sector and why it is getting top marks from investors.
Size of Ed Tech market: The global education technology market size is anticipated to reach USD 285.2 billion by 2027 (Source: Grand View Research, Inc. Technology)
On the platform: Education and Training has steadily climbed the rankings to be the 14th most popular category for angel investors. investor searches have climbed an impressive 56% since the start of the pandemic.
Description EdTech (a combination of “education” and “technology”) refers to hardware and software designed to enhance teacher-led learning in classrooms and improve students’ education outcomes. It also incorporates the wider sphere of adult education and learning.
WHAT ARE THE REASONS FOR ITS RISE TO PROMINENCE IN THE PAST TWO YEARS?
Necessity There’s been no shortage of great EdTech companies over the years, but lockdowns and social distancing have changed the game. It has forced the hand of consumers because the usual in-person learning option was no longer available. Necessity is often the mother of change as well as invention.
The reason it’s taken a global pandemic to speed up adoption is that most consumers weren’t prepared to go through the hassle and the teething problems of full implementation of technology in traditional education. This is especially true of academic institutions and businesses and they aren’t unfounded concerns. It takes real time, energy and capital to bring step changes in how you deliver or receive education, and getting it wrong can have a very real cost. Until the potential benefits significantly outperform the current system (and these benefits have to be significant for most learners), the change is a genuine risk.
A new climate for innovation
The impact of the pandemic has been to move the market five years into the future in a matter of months, as outlined by David Sherwood. In time, EdTech solutions would have improved to the point that they provided significant improvements for learners and major adoption would have occurred. Instead the foundations of the existing system have been shaken with learners and educators forced to study remotely. Therefore the tipping point was reached far earlier than anyone anticipated. I think this will be to the benefit of the education system long term. The best educators have been able to take the most valuable parts of the old and blend it with the new, and hopefully retain a more open view on future innovations to improve further.
WHAT CHALLENGES HAs EDTECH NEEDED TO HAVE OVERCOME?
For Individual learners The challenge with individual learners is user experience, course completion and efficacy. People either struggle to engage with the tool, they struggle to stay motivated, or they don’t see the results they want. In all cases, they drop off. People are very used to traditional learning so this has been a big hurdle to overcome.
For B2B products For B2B products there needs to be a strong enough case for change that the business commits to the risk. Beyond that, all of the points about individuals also apply.
For Academic institutions Lastly you have academic institutions. Alongside the hurdles detailed above, they also face additional challenges, such as being influenced by broader regulation or controls. This might include the school board or government. Many EdTech ventures manage to capture a large number of individual teachers but never get the official adoption at school or at national curriculum level. This is where budget allocation and curriculum is dictated and without that stamp of approval, it is hard to secure wider market share. It is a similar challenge to that faced by the medical space. It is both a blessing and a curse. It makes the education sector a tough market to crack, but for those who do and are given the green light, the growth curve from there is very exciting.
Investor Challenges The pandemic has arguably been a Black Swan event in regard to investment. Institutions have realised the need to adapt and change which has forced educators to engage with these new opportunities. This change in consumer sentiment has been recognised by the investors, which in turn has given them the confidence to realise that startups can find a significant and willing market.
What types of companies are we seeing developing solutions in the EdTech sector?
a) Those digitally enabling existing learning This has probably been where we’ve seen the biggest change to demand – companies providing technology to enable learning that was already taking place. This has understandably been pandemic-driven growth, with the market responding to a particular crisis, but it’s also one of the areas with the least need to stimulate new consumer behaviours.
This gives it a strong chance of adoption and investors know that, shown by the capital deployed in the past couple of years. For example, BibilU, who digitise print text books and provide them seamlessly across all your devices, had to do an extension to their funding round due to the incredible demand for their product.
People were already at universities, the courses and textbooks were already set, you are just changing one component. They’re enabling an action people are already doing in an easier, cheaper and more effective way. You can see why the pitch resonates.
b) Adult education There has also been an on-going rise to prominence in digital solutions for adult learning. The pace of change in the world and evolution of job roles has created a need for lifelong learning. Time pressed adult learners are now able to get the same learning, sometimes even better learning, than available to them in traditional face to face institutions. This ranges from post-graduate degrees to language learning to brain training, with a new generation of smart apps able to offer them a tailored pathway.
People like DuoLingo have shown the heights possible with self motivated learners, while Coursera has done the same in the B2B market. Student motivation is still a concern, with course completion rates often low, but in comparison to younger learners, many adults actively engage with the digital structure and find that it opens up a world of opportunity.
c) Tech to boost efficiency With increased reporting and accountability, many educators are struggling with the added workload that comes on top of teaching time. There is a lot of work being done on technology to enable teachers to streamline their tasks and work more efficiently, giving them back the time to really focus on the important part, the students. Pango for example is a tool for planning lessons, sharing resources and managing curriculum. Whole schools can share and collaborate on lesson plans, keeping consistency while allowing teachers to design and plan lessons in a fraction of the time.
The past two years has highlighted the difficulties and stress teachers come under and this area is likely to grow strongly. As institutions and governing bodies welcome more digitisation, we will likely see the strongest supporting tools gain significant market share as the industry encourages consistency across teachers.
d) AI and personalised learning systems: The most exciting and arguably the most controversial is AI and personalised learning. Companies like Atom Learning have developed high-quality, teacher-made content with sophisticated AI driven technology to keep students on individual, optimal learning paths. This can have a transformative impact on pupils’ progression and can arguably help to reduce educational inequalities.
New methods of learning enabled by AI and machine learning have come up against some entrenched thinking in the education system, as it requires teachers to learn new systems. Another challenge in encouraging take up is that some of the gains can be incremental. This has meant it has been difficult to get wholesale buy in, particularly given the initial disruption and new learning required. However attitudes are changing, driven by a new generation of tech native teachers.
We are also seeing the development of new solutions outside of curriculum learning. This includes championing social education, with startups like Vygo, a SaaS platform, reinventing the conventional social support ecosystem in higher education with their innovative platform and support network.
what are investors saying about this category?
Traction – Unlike nascent markets, EdTech firms can build significant traction and product-market fit at an early stage, even when bootstrapped. We like to see strong uptake and engagement, that they’ve really tested the product or service with consumers and that the feedback has been encouraging. Not just they like the product, but that it delivers real value.
We’ve seen so many fantastic ideas but this shows when someone has really found something that has an impact for educators.
Core or ancillary – An important consideration is whether they are doing something core or ancillary. Is the solution enabling the student’s core interaction with either a teacher or subject material? While the demand has been very much ‘core’, as the market evolves we are seeing supporting technology, efficiency products and those driving social education really starting to gain momentum and attention.
Passion of the founding team – The passion, insight and drive of the founding team are key factors determining success in this industry. Despite new consumer willingness, there are still entrenched hurdles to overcome on the growth path within the sector. In B2B enterprise software, just having the best product might be enough to win a significant share of the market, but in education there is a trickier path to navigate and the leadership team is often the determining factor here.
WHAT IS THE UNICORN POTENTIAL VERSUS OTHER SECTORS?
CB Insights expects 2 of the next 50 unicorns to be in the EdTech sector. To build a unicorn you need a large, willing market that’s growing fast, and this is certainly the environment evolving where education meets technology.
With vast numbers of people in education of one form or another, there’s the potential to become a unicorn while staying within just one country’s market. This isn’t the case for every sector and so when you then consider the global opportunity, things get really exciting. Many of these technologies have both real scalability and the market opportunity for significant size, so we may see EdTech start to make up more than just 4% of the new unicorns as time goes on.
BibliU is a digital education platform that provides students with digital access to their textbooks and libraries across all their devices.
Founded in 2014, the company now has over 100 university customers including Oxford, Imperial, University of Phoenix and Coventry University. The company has digitised content from more than 2,000 publishers including: Pearson, McGraw-Hill, Oxford University Press. The content is licensed directly to universities, who can then provide access to students and include the costs in their existing tuition fees.
HyperionDev is an edtech startup that is dedicated to closing the global tech skills gap. The company achieves this by integrating human mentorship and code review into the world’s leading tech education brands. The company integrates quality and affordable review of developers and aspiring coders using the top 0.6% of African tech talent. It has been backed by Facebook, Google, Python and the University of Cambridge.
Vygo offers personalised support services beyond the physical campus. The business already works with a third of Australian Universities and is rapidly growing in the UK. The Vygo platform gives every learner a social education community filled with their peers, mentors, tutors, advisors and other supporters
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.
This is the first of our new series focusing on sectors gaining interest and investment from angel investors. You can see my review here to get more details. 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:
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.
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.
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.
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.
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.
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.
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. You can find the best ecommerce business broker from here!
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.”
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 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:
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.
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.
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.
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.
If fundraising is dragging on, or you just want to move faster, agile fundraising could be just what you have been waiting for…
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.
The Silicon Roundabout team are developers themselves and have attracted some of the UK’s best technologists to build their community. They have already helped the likes of Monzo and Treatwell find new employees.
Shreet discusses Silicon Roundabout’s journey over the past ten years. What started as a tech community meet up for developers to discuss opportunities, has grown to now have a community of 15,000 people. As well as matching startups with the right talent to help them survive and thrive, they host hackathons, Tech Talks and a variety of different events.
Shreet says: “Silicon Roundabout is a community. It’s not just connecting startups with people, it’s about connecting them with the community.”
Shreet discusses the fact a lot of startups have traditionally had bad experience with traditional recruiters and so are turned off by the whole process. He says: “Many developers have negative feelings toward recruiters. Most recruiters don’t have the specialist knowledge.”
Shreet lays out a lot of the things that are going wrong. He says: “The challenge for startups is how to translate on paper what you are doing and ensure it appeals to developers. And decide who to approach.”
Angel Investment Network is partnering with Silicon Roundabout to help connect our community of startups find the talent you need. You can find out more at the interim landing page.
Startup Microdose is one of the country’s leading startup business podcasts. It is hosted by Ed Stephens and Electric car subscription company Elmo co-founder Oliver Jones. It features conversations with people startups can learn from with guests are at the forefront of their fields with practical wisdom to impart on entrepreneurship and beyond. Check out the interview below.