How early stage startups can tackle product development

In our latest blog, Startup founder and AIN’s Head of Product & Growth Ching-Yun Huang looks at how early stage startups can tackle product development.

Developing and designing a product may seem like a daunting process for any startup founder. Indeed in AIN’s recent research on startup sentiment, we found concerns about building a product ranked as the second biggest concern for entrepreneurs, behind raising investment. 

First of all, although you might have aspirations and aims to create the next tech giant and become a unicorn business in 5 years, your main focus should be toward the very first stage of the funding process – the early pre-seed round. The good news is that at this stage, you will not be expected to have anything close to a finished product. It is the idea and the understanding of the market that investors will be interested in. 

So what are the first tentative steps in developing a product that is investable and potentially scalable?

  1. What problem is your product solving?

Any product has to serve the ‘needs state’ the startup has identified. The two questions that must be asked are:
a) Does what you have in mind solve your audience’s problems?
b) Would they pay for it? 

In respect to the first question – how do you establish a need for a product? Most successful product innovations will be based on the knowledge of experts in that market, because they have experienced it first-hand and know that enough people have the same problem. Having lavish technology is rarely the solution, but identifying the need and whether people might pay for it is. Investors will be looking at your experience of the market as well as your team and advisors.

If you can win early stage investors over with this proposition, you can then open the door to investing in the R&D and design to bring the idea to fruition.

  1. Research your market
    Market research is obviously a good way to understand and test the need for your product. A good example of this would be Beauhurst, the data platform that helps businesses discover, track and understand high-growth companies, accelerators and funds. Before launching their now very established platform, they spoke to many people in their target audience (i.e. startup founders) and found out the sort of information they might need about companies they might be looking to do business with.

Similarly with Angel Investment Network, the idea came about after the founders James and Mike had multiple conversations with startup founders globally and found a real barrier to funding for those who didn’t already have an established network of contacts. It is now the world’s largest online angel investment platform.

  1. Proving the concept
    The next stage is proving the concept. Looking at Beauhurst again, their approach was to gather all the information in a simple spreadsheet that they could sell to their audience. So the essence of the company was information, not a shiny platform to hold it in. Once they had feedback on the information, they could iterate in this basic format and build out the platform. Similarly for the developers of Google Sheets, they used Excel as their template and encouraged users to work with the BETA version. They could then see what functions users were using but also crucially not using. The engineers could then streamline things.

According to your box solution on how to choose the right soap box packaging, you can create a desire for your product with a few well-thought and well-placed words that pull the customer into a relationship with your brand and form a connection.

  1. Can you piggyback off existing technology and save money
    Thinking you need to invent a new Facebook or Uber platform is the wrong starting point for bringing your idea to life. The early stages for any business are about survival. What is the simplest way to bring an MVP to life while you are pre-revenue? If you look at the development of Slack – this was based on an iteration of existing technology, MSN.

    Slack began as an internal tool for Stewart Butterfield’s company, Tiny Speck, during the development of Glitch, an online game. It was based on an identified need; using a specific messaging channel for a topic using an established technique – a hashtag. It is of course far easier to build things that people are already using and then iterate. 8,000 customers signed up for the service within 24 hours of its launch in August 2013.  Just 1.5 years later, they had 135,000 paying customers spread across 60,000 teams. 

Similarly, Ant Group’s platform offering financial connectivity to billions as the world’s largest mobile and online payments platform just required a mobile phone and a QR code on any product or service, anywhere. QR already existed and didn’t require a lot of infrastructure associated with electronic payments cards, networks, terminals and merchant accounts.

  1. Develop a road map
    Finally, while early stage investors won’t necessarily need to see a developed product, they will want to see that you have done the work on the stages from idea to activation. One approach can be to develop a goal-oriented roadmap. If you set it up, you have to follow it through, so they will hold you to this. There would be several elements of product strategy implementation:

Date – A deadline or timeframe for achieving a certain product goal.
Name – The name of the digital product version you’re developing over a particular timeframe.
Goal – An achievement your product should accomplish over a specific period of time.
Features – A list of high-level features you need to implement to meet the product goals.
Metrics – Success and performance indicators used to check if a certain goal was met.

So in summary, there are several steps that startups should consider in tackling product development. Focusing on the very pre-seed stage is crucial with investors not needing a finished product but instead  a strong idea filling a gap in the market. This gap can be identified through research of peers, ideally from experts with a strong and established understanding of a particular market. The idea will need to solve the identified problem and be something people will be prepared to pay for.

If the idea can piggyback off an existing technology, this can be hugely effective and has been the proven approach for a series of tech unicorns. Finally, make sure you develop an effective product road map so that early stage investors can see a pathway to scalability.

Good luck!

Ching-Yun Huang is AIN’s Head of Product & Growth and is also CEO and co-founder of the Moment App.

EdTech startup Vygo raises £1.5m supported by Angel Investment Network

Funding will help accelerate global borderless education support in higher education

Fast growing EdTech startup Vygo has raised £1.5m in a pre-seed funding round supported by Angel Investment Network, the world’s largest online angel investment platform. Vygo is a Saas platform reinventing the conventional social support ecosystem in higher education.

Offering 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 raise will help it expand in the UK and Europe and fuel its ambition to build borderless social education for every student.

The round was led by EdTech VC Sparkmind and supported by Angel Investment Network. Other participants include EdTech accelerator Supercharger Ventures and the Australian Catholic University. The funds will be used for platform development and expansion of its UK and European presence. 

The demand for Vygo has soared in the past few years as a result of the increased demand for HE institutions to extend their support services digitally. A recent JISC study estimates that up to 96% of university students require additional access to support during their undergraduate degree. This demonstrates the need for support services to be more accessible than ever to ensure that students are getting the best educational experience possible.

Ben Hallett, Vygo CEO & Co-Founder, comments: “At Vygo, we believe that every human deserves a world-class education and that social experience is at the core of impactful learning. The Vygo platform gives every learner a social education community filled with their peers, mentors, tutors, advisors and other supporters. With Vygo, education institutions are able to reinvent their social support ecosystem online and ultimately improve their student outcomes whilst scaling their impact. We were delighted to work with AIN to find amazing investors and individuals through a well-streamlined process.”

According to Sam Louis, Director, Angel Investment Network: “We’ve worked with some fantastic EdTech startups in recent years – Ben and the Vygo team are right up there with the best of them. Their focus on the social and pastoral side of education resonated with us right away and, combined with significant international traction, investors within our network from right across the globe felt the same. The need for this platform has only accelerated in the past few years with so much learning being done remotely and we’re delighted to have helped Vygo on their journey.”

The perfect storm: Why investors are backing green and clean tech startups

Olivia Sibony, AIN’s Head of Impact, looks at the rise in interest in green and clean tech startups and why we have seen a ‘perfect storm’ of conditions for their growth.

Over the past few years we have seen the perfect storm of conditions that have rocketed investor interest in green and clean tech startups. Looking at the patterns of investor keyword searches on the AIN global platform we have seen impressive growth for green business terms, including ‘renewables’, ‘greentech’  and ‘environmental’.

In the last three years these business ideas have gone from niche to mainstream with investors hungry for standout solutions for our manifold environmental challenges. The COP 26 conference further committed Governments to carbon reduction targets. As was acknowledged in Glasgow, it is private enterprise and nascent businesses that will provide many of the solutions. 

Factors such as the recent surge in gas prices have made us more aware of the need to find alternative and renewable energy sources, alongside smart ways to reduce energy consumption. 

Reasons behind rising interest

There are several reasons for the rising interest among investors. 

  1. Firstly, the increased global natural disasters with floods and wildfires closer to home have really brought this home to everyone. Including consumers, business leaders and governments.
  2. We then saw COP 26 turning up the volume on the dialogue. This included recognition of the need for the ingenuity of businesses to come up with the solutions to the challenges we all face. 
  3. A third factor at play has been covid reframing people’s values on what really matters and the increasing interconnectedness of the planet. 

Companies have realised they need to nurture their customers and the younger generation who have the most to lose are the most vocal in advocating for change. So they’ve shifted their focus which has opened up the supply chain market for a lot of B2B Climate Tech opportunities.

A further spur to action comes from companies also realising their employees increasingly care about the environmental impact of the companies they work with, so has also stimulated growth in this space.

Case study examples

This means more entrepreneurs are stimulated to build companies in this space as more investors see great commercial opportunities. As well as the obvious motivation for passion driven angel investors in investing in something that will provide a better future for them and their children. Over the past year through AIN, we have seen some impressive cleantech businesses being backed by our experienced angel investors.

Exciting businesses who have raised including cleantech business, eleXsys Energy who successfully raised £5m last year. They have developed a unique, enabling technology that will drive the transition of global energy grids to a clean energy future. Investors bought into their vision for their technology which enables commercial and industrial rooftops to become grid-connected, solar power plants.

Another business that has seen a great deal of investor interest is Zero Carbon Farms. They are a cutting edge AgTech company that builds and operates Controlled Environment Farms, providing a future-proof and sustainable solution for growing. They solve the problem of carbon generation in farms by providing up to 90% less water and a fraction of the space compared to conventional farming.

While Zero Carbon are dealing with sustainable production, GreyparrotCo-founded by CEO Mikela Druckman, are applying cutting-edge deep-learning AI computer vision technology to the formidable problem of waste recycling. Their solution analyses waste on moving conveyor belts to allow monitoring, audit and sorting of waste at scale. Greyparrot have trials ongoing at 12 facilities with leading waste management companies, and are now raising a £10m Series A to scale their commercial product and become the category leader in waste analytics.

Seeing the success of these businesses can inspire the next generation of entrepreneurs to come up with their own solutions, offering the chance to marry profit with purpose. In turn many will go on to become investors themselves creating a virtuous cycle to help power the circular economy that must become the future of the planet if we are to avoid the worst ravages of climate change.

Who owns what?

In this guest blog, Carine Schneider, President of Astrella, providers of leading cap table management software, gives a 101 on understanding your cap table, and some of the key risks to avoid when it comes to share ownership.

WHAT YOU NEED TO KNOW ABOUT PRIVATE COMPANY OWNERSHIP 

So, you’ve got a game-changing idea that’s going to disrupt your industry and you are ready to raise funding and change the world. Congratulations! You’re ready to move fast and break things, to turn it up to eleven, to do what most won’t, to live like most can’t. You’re ready to build your very own rocket ship

And we love that about you. But take a breath. 

The startup landscape is a wild world. Sobering statistics are often tossed around about the single-digit percent of startups that make it, with relatively few companies receiving venture capital funding. 

But there are steps you can take from the start to significantly increase your chances of success, from negotiating the initial agreement that lays out the foundations of your partnership with your co-founders to your five-year road map. Decisions you make now will determine how sustainably you grow, the quality of investors and investment you attract, and the level of control you maintain. 

Let’s build that rocket ship on rock-solid foundations. 

WHO OWNS WHAT? 

“A lot of entrepreneurs don’t really 

understand how the pie is divided,” 

Carine Schneider, 

President of AST Private Company Solutions. 

Too many founders think it’s just slicing up the company and distributing (or selling) the pieces. They think ownership is locked in with a one-time decision that lays out clear-cut, unchanging percentages (maybe they’ve watched too much Dragon’s Den…). They may think they own half the company and will always have the final say in decisions that affect it. 

All too many learn the hard way that things change. 

Even in the simplest scenario, where you and a co-founder are splitting company ownership 50/50, you’ll need to put aside 10 to 15 percent for the employee equity compensation plan. So, the slices have gotten more complicated before you’ve even thought about accepting investments from multiple rounds of investors. 

What’s more, regardless of share types and percentages, your board will make important decisions about your company’s finances, strategy, and even ownership (more on building your board in a future post!). 

Equity is all the same… OR IS IT? 

“Shares” sounds simple enough. 

Except that the shares you and your employees hold in your company aren’t necessarily the same as the shares your investors will own. It’s important to understand the variables among different shares and share classes; the powers and responsibilities that come with them can vary significantly. 

“Say you and I each own 100 shares of a private company,” Schneider says. “We can’t really compare that value until we understand when we each bought the shares, what kind they were, and the rights and privileges that came with those shares.” 

Although this can get far more complicated, the first key distinction to understand is between common and preferred shares. Broadly, common shares – the kind you issue in your own company – come with voting rights and low or no dividends, while the preferred shares, which are what you may typically sell in priced rounds, usually do not have voting rights and pay higher dividends. In a private company, there is a lot of flexibility on the rights and privileges that can be assigned to different shares. 

Experienced investors will negotiate preference items that affect how the shares are handled in the event of different outcomes, including at exit, which could be an acquisition or stock-market flotation, or maybe a liquidation. 

Think of company ownership as a line of shareholders. You and your co-founder and your early employees were there first, so you will always be at the front of the queue, right? 

Wrong. 

The thing is, the people who set up chairs and camped out from the start (holders of commonshares) can get trampled by the investors (holders of preferred shares / share-classes) who showed up much later with more money. 

Savvy early backers will try to negotiate anti-dilution clauses to keep their percentage from shrinking, even as later investors line up preference items to ensure their full amount is returned to them. At your company’s exit, you may be surprised to find yourself at the back of the line. 

In short, ownership can be complex and not intuitive. 

You need to make sure you always understand who has what type of shares, what the terms are, and what the implications are for your ownership. 

You will be well served by lining up expert advisors who
can help you make sure you are making the best decisions for your company from the earliest steps. It’s also important to have access to a system that provides you with both exit as well as “next-round” modeling tools. Real talk: the incredible disappearing stake. There 

OK, so seriously… WHO OWNS WHAT? 

With all the complexity involved in ownership, how do you keep track of everyone’s place? Enter the capitalisation table. 

The “cap table” is a tool that tracks company ownership data. In short, it determines that line of stakeholders by tracking their equity stakes over time. A good cap table means
no surprises. 

A common mistake new founders make is waiting too long to create a cap table. Nearly as common—and just as harmful—is creating a poor (or inaccurate) one. 

While a simple spreadsheet may give a snapshot of a moment in time in ownership, it can be dangerously inadequate. Spreadsheet files can get lost, or a simple typo can change your billion to a million. It’s important to use a robust tool. to store, track, and model ownership data that tracks the changes to ownership over time. 

The cap table is one of the first things any potential investor will request when considering an investment. In addition to showing constant, real-time ownership data, it will model the changes to your ownership under different potential investment scenarios. “A smart investor is always going to want to look at the cap table, and a smart investor is not going to want to look at a cap table that comes from a spreadsheet,” Schneider says. 

Companies raising capital through Angel Investment Network benefit from complimentary access to Astrella for up to 15 stakeholders, with the following code used during registration: 

LAURENCE15


For more information about Astrella please click here.

About Carine Schneider

Carine Schneider, FGE, is the President of AST Private Company Solutions. She was honored in 2019 with the ProShare Award for Services to Employee Share Ownership, in 2017 as one of the 100 Influential Women in Silicon Valley (Silicon Valley Business Journal) and one of “17 Women to Watch”​ in 2017 by Brown Brothers Harriman.

Carine was invited to become a Fellow of Global Equity (FGE) in 2019. An experienced and well-connected leader in private market & global compensation industry. Carine was formerly the President, NASDAQ Private Market Equity Solutions

For any equity related queries or cap table assistance contact Laurence@Astrella.com.

An Introduction to Litigation Funding

Out investment series continues with an exploration of litigation funding, with a guest post from Sophie Liu at Axia Funding:

AxiaFunder is an online litigation funding platform that connects investors with pre-vetted commercial litigation opportunities that we believe have the potential to generate attractive risk-adjusted returns. We are specifically targeting cases on the lower end of the legal market which, in our view, has been underserved by existing funders. 

To date, AxiaFunder raised £2,387,843 for 14 commercial cases, of which six have already reached a positive resolution, generating a 12-94% return to our case investors each over a period of 2-15 months (with an average IRR of 48%). The remaining 8 cases are currently ongoing. There are no losses to date. *

What is Litigation Funding?

Litigation funding is where a third-party agrees to finance the legal costs of a dispute in return for a share of the proceeds that would be eventually recovered by the funded party. Litigation funding is typically provided on a non-recourse basis, meaning the funded party has no obligation to repay the funder in the event the case is unsuccessful.  

What are the benefits of litigation funding as a new investment asset? 

Litigation funding can potentially generate significant returns to case investors. It is common for investors of a winning case to expect to double, triple or quadruple their initial investment.* This asset also has zero correlation with the fluctuations in the broader economy and other assets. In addition, each case is almost entirely uncorrelated with each other. Thus, this offers further diversification. 

What are the impacts of post Covid-19 economic environment on litigation investment? 

In contrast to other investment opportunities (such as equities or real estate), litigation investment has zero correlation with the fluctuations in the broader economy and other assets. This makes it a compelling investment in current economic environment plagued by volatility and ongoing uncertainty over the end of the Covid-19 pandemic. In addition, litigation itself is expected to increase during an economic recession due to a sharp increase in a number of business insolvency related claims.

What are the social benefits of litigation funding? 

Litigation funding helps to level the playing field by offering access to justice for those who need it the most. The litigation process is well known to be an expensive and often lengthy exercise with the final legal costs being uncertain. SMEs or individuals who enter contractual agreements with large companies often find themselves exposed to additional commercial risk due to the prohibitive cost of protecting their legal interests. Litigation funding offers claimants a means of pursuing a viable claim while preserving liquidity and minimising risk. 

Can you give any examples of your funded cases? 

• An unfair minority shareholder prejudice petition, where the defendant, the majority shareholder and a director of a company, allegedly diverted economic value from the claimant, a minority shareholder, who was instrumental in developing the business. This case has resolved successfully generating a 33.1% return to investors in 14 months.*

• An insurance claim by the builder, whose development was subjected to an arson attack, against both the insurance company for unreasonably seeking to avoid settling the client’s claim on its insurance policy, and the insurance broker for the non-disclosure of information on the basis of which the policy has been voided. This case has resolved successfully generating a 11.8% return to investors in 2 months.*


How do you select litigation cases? 

Cases have to satisfy the following criteria:

• Legal merit: The legal merits of the claimant’s case must be strong. Typically, independent legal counsel will have endorsed the case with a high probability of success.

• ATE insurance policy: Each case must have an ATE insurance policy in place. It protects AxiaFunder’s case investors from adverse cost risk and helps to eliminate low quality cases.

 • Case economics: The estimated damages normally have to be at least 5x the estimated costs of pursuing the case to trial. 

• Enforceability: There must be clear evidence that the defendant has the financial resources to pay the damages and that any court judgement can be enforced.

• Experienced legal team: AxiaFunder will only fund cases for which the claimant’s legal team are clearly competent and have in-depth experience in the relevant area. 

• Alignment of interest: The claimant and his legal team should share some downside risk in the event the case loses. 

Other considerations include regulation, security for costs, pricing, and funding strategy to trial.


What are the risks of investing in litigation cases and how to mitigate them?

Litigation funding is typically provided on a non-recourse basis. As a result, an investor stands to lose all or most of their original investment if the case is unsuccessful. However, the downside risk of losing the entire investment can be significantly reduced by investing in a portfolio of litigation cases. This is illustrated in the article Single case versus portfolio litigation funding.

There is also a risk of having to pay the other side’s costs in the event the losing party themselves lacks the capital to cover these costs. The adverse cost risk can be mitigated by having After-The-Event (ATE) insurance policy in place. It provides protection against the liability to pay the other side’s costs in the event the case is unsuccessful. 

How to invest with AxiaFunder?

Investors need to register on the AxiaFunder platform and complete the onboarding process which involves completing identity checks and passing the investor suitability test. Once these steps are complete, investors are ready to invest. 

Past performance is not indicative of future results & Capital at risk. Returns are not guaranteed

BehindTheRaise with Pantee

Tell us about what got you into startups:

A few years ago when myself (Katie) and my sister (Amanda) learned about the sheer amount of waste produced by the fashion industry, we knew we had to do something about it. So, we came up with the idea to launch Pantee – the world’s first underwear brand made from deadstock t-shirts. 

Raised remotely during the pandemic, we began bringing Pantee to life in late 2019 and after a year of research and product development we launched pre-orders on the crowdfunding platform, Kickstarter, in November 2020. 

Katie and Amanda McCourt, Co-founders, Pantee

Why did you decide to raise investment?

From day one, we have been on a mission to disrupt the fashion industry and build a brand that pushes the boundaries of what can be achieved with deadstock fabrics and by upcycling. We planned to raise the investment from the beginning, first with a crowdfunding round on Kickstarter and now with an SEIS raise with Angel Investors. We wanted to do this to give us the resources to further amplify our mission and set us up to create a greater impact in the future.

What is your top tip for anyone raising investment for the first time?

I think everyone would say this, but don’t be disheartened by the rejection. As first time founders, we found the process of raising very difficult and we rode extreme highs and lows from start to finish. You’ll hear so many no’s, but it isn’t necessarily a reflection on your business or your idea – you just might not have been speaking to the right person. 

What attracted investors to your company?

We were able to prove a strong amount of early traction that Pantee had received within the first few months since launching our D2C eCommerce store. 

Within a short time of launching, we had grown an engaged community of over 10,000+ women, were racking up 5* reviews on Trustpilot and had been featured by the likes of Vogue, Stylist Magazine, Drapers, The Observer and named a ‘Top Sustainable Underwear Brand’ by The Independent.

During the raise period, Pantee also received recognition from major global tech companies having been featured on Shopify’s ECommerce Masters Podcast and awarded Klarna’s Small Business Support Package.

This really helped us to prove to investors that the brand was not only resonating with early customers that loved the product, but that it was innovative and newsworthy – building their confidence in our brand awareness capabilities. 

My biggest fundraising mistake was…

Don’t underestimate how long you need and celebrate every win, no matter how small. 

Raising investment can be a long process.  It’s never too early to start building relationships with investors to instill confidence in both you and your idea. Get them excited about your business and take them on the journey with you, the more involved you get people early on the more likely they will invest, in my opinion. 

It’s really easy to get bogged down by the no’s which you will get a lot of, in most cases more than the yes’. Don’t let it slow you down – we were given some great advice by a fellow startup founder who advised us to ‘learn to enjoy the rejection’ – once you stop taking it personally it allows you to learn from it – in a productive sense! 

Why did you choose to use the Angel Investment Network?

We signed up to the Angel Investment Network halfway through our raise to expand our search away from our own network and connect with new investors from different backgrounds. It was a great decision as it led us to connecting with one of our biggest investors that was instrumental to helping us close the round.

What has the funding enabled?

We have just closed our SEIS raise and have already begun putting in place our strategies to further amplify brand awareness, build a core team, expand upon our lean product range and certify our sustainability efforts with accreditations.

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.

An Investor’s Guide to Key Startup Metrics

Angel investors generally invest early in a startup’s life, meaning that if they identify successful investments, there is potential for huge returns. One of the key steps for angels to assess investment opportunities is looking at metrics and benchmarking against other similar companies. 

To be clear, every sector, and indeed every startup, will have different relevant metrics, but these should be of use as a starting point:

Churn rate 

A company’s churn rate is the percentage of customers that cancel in a given period. It’s of particular importance, in that acquiring new customers is typically considerably more expensive than acquiring new customers. 

Furthermore, if a company has a high churn rate, it can be a sign that there are issues with the product, or potentially that the service does not provide long term value for the customer. 

Liquidity on the Balance Sheet

Looking at a company’s balance sheet to determine the spending power of a company gives a number of important insights: how long the company can cover expenses and continue to operate, a company that is overextended, for example, may give cause for concern about their management style, consequently having an impact on whether you wish to invest. 

Monthly Recurring Revenue (MRR)

Particularly relevant to subscription businesses that will have new customers signing up, as well as existing customers cancelling (churning). MRR gives you an effective way of evaluating the growth of a company and projecting ahead. 

MRR is calculated by multiplying the number of customers on a monthly subscription by Average Revenue Per User. 

Customer Acquisition Cost 

Customer acquisition cost (CAC) is the cost to acquire a new customer. Typically for new companies this will be high, as they only have limited insights as to how to target their customer and have yet to fully optimise their conversion funnel. 

However as they start to scale, there will be a competing factor, as you start to bid for more traffic in auctions on platforms such as Facebook and Google Ads, it will become more expensive on a per user basis to get more users. 

EBITDA

EBITDA is defined as earnings, before interest, tax, depreciation and amortisation are subtracted. EBITDA is a profitability metric that strips out expenses that might obscure how a company is actually performing and therefore gives a cleaner interpretation of how a company is actually performing.

A higher EBITDA margin (EBITDA divided by total revenue) indicates a more financially stable company with lower risk.  

Customer Lifetime Value (CLTV)

By measuring customer lifetime value (CLTV) in relation to customer acquisition cost (CAC), you can estimate the length of time it takes to recoup an investment to acquire a new customer. 

Customer lifetime value is calculated by taking the average purchase value and multiplying it by the average number of purchases that the company in question obtains. 

A predictive customer lifetime value model will take account of the fact that customers’ future behaviour might change, i.e their purchasing may become more frequent in the future due to certain factors.  

Break-even 

Getting to break-even is the point where total revenue reaches total costs. When a startup reaches break-even point, any money earnt above that is profit. As such, the startup becomes less reliant on raising future investment to keep growing. From an investment perspective, if the company is likely to achieve break even quickly, then it has the effect of de-risking the investment.  

Net Promoter Score (NPS)

Net Promoter Score is a measure of the overall customer experience. NPS is calculated by asking ‘On a scale of 0-to-10, how likely is it that you would recommend our service to a friend or colleague?’. Customer that score a 9 or 10 are classified ‘promoters’, those that score 0-6 are classified detractors. NPS is the total number percentage of promoters – the total percentage of detractors.

NPS provides an insight into how happy customers and is therefore a leading metric that can be used to understand the potential for revenue and value capture in the future.

Keen to hear more 

As your investment journey continues, you will become more familiar with the investment metrics that you should pay close attention to. If you are looking to learn more about investing, you can read our investing guides here.

Acing Due Diligence: Selecting Startups Like a Pro

Antonis Argyros is the CEO of Vesquad, in this guest post he shares advice about getting Due Diligence right – from setting up processes and using relevant tools, to getting to know the founders. Vesquad support investors by enabling them to provide hands-on support to their portfolio companies through an integrated approach.

As an angel investor, handpicking promising startups that actually do have the potential to succeed is one of the most challenging tasks you’ll have to undertake. Europe in 2021 had one of the best – if not the best- years in terms of startups’ revenue, which possibly exceeded $100 billion in total venture capital investment, according to a report created by Atomico for the investment firm Cambridge Associates. But how can you ensure that you’ll secure a piece of that revenue?

By creating a transparent and objective process of evaluating which ideas and early-stage startups are worth investing in, you’ll be able to identify the most profitable opportunities and increase your revenue through successful exits. Building and implementing such a process allows you to identify a startup’s weak points early on to evaluate which of these can be improved through operational support or which could lead to failure.

For a VC firm with multiple investors, one profitable exit for every ten investments might be an acceptable ratio. For an angel investor, however, a thorough due diligence process is essential in decreasing investment risk as much as possible. Bonus points, providing constructive feedback to the founders of startups that were not selected for funding, gives them the opportunity to improve any weak points and emerge again as a candidate startup with more potential in the future.

However, handling an entire portfolio of companies and at the same time evaluating new investments can be very time-consuming. To make things easier, we’ve gathered the most important steps that will help you during the due diligence process, and the things that you should look out for before investing.

Build a structured process

Before moving on to financials, you probably already have certain basic criteria that a candidate startup needs to meet before investing in it, such as a specific area of focus or a specific market both in terms of technology and geography. If not, make that your number one priority.

Assuming that you have, in order to better examine if those criteria are met, you’ll need to build a structured and transparent process that will ensure there will be a careful evaluation of all the desired parameters before a startup becomes part of your portfolio. The best way to do that is by dividing your process into stages and identifying what you need to examine during each stage. This will help you to quickly eliminate any startups that you don’t think would be a good addition to your portfolio and focus on the ones that seem fit.

Get to know the founding team

We’ll start with the basics, as this is something that is often overlooked, usually due to everyone’s hectic daily schedule or due to the fact that we tend to focus on business and forget about the people. Dedicating some time to grasp a founder’s vision can reveal a lot about the startup they’re trying to build. What their background is, what skills they have and what value they can bring during later stages, what inspired them, and what drives them are all questions that will help you establish a relationship with the people you’ll possibly be in contact with until that much-coveted exit.

Enrich your inventory with the right tools

To gather all the necessary information that will guide you in the right direction and help you conduct the due diligence in the most effective way, you’ll need a series of different tools for each stage of your process. You could start with simple tools, such as an extended questionnaire with targeted questions that will give you an idea about the basics, such as the vision, the value proposition, the market size, and the KPIs. Keep in mind that the entire process should be guided by a positive attitude since the goal is to find the ideal fit for both the investor and the startup so that there is a win-win situation.

At Vesquad, we’ve developed a series of tools exactly for this purpose, that can help you automate the due diligence process by going past the basics and defining in precision the maturity level of each venture.

Adopt the best negotiation tactic for your personality

When negotiating financing, it is important to aim for a result that will be fair for both sides, keeping everyone content, and that the relationship between everyone involved remains intact. The composition of a legal term sheet that will be beneficial to you and at the same time attractive to the startup’s founders, can be achieved through the right negotiation tactic that matches your personality. These tactics have analogs and can be useful or ineffective in reaching a negotiated agreement. It’s crucial to understand how different styles complement one other, how some conflict, and how some have inherent advantages.

Being prepared in advance of the meeting and having a specific plan is crucial. This will give you the opportunity to be prepared about which terms you will be willing to accept and when to abandon the deal, which if it is left to be decided during the meeting can lead to mistakes and ruin the relationship with the founding team. This is why building a relationship beforehand, as mentioned earlier, is crucial. Knowing the people who will attend the meeting could reveal their strengths, weaknesses, motivators, and insecurities, which can give you valuable insight and ensure a better deal.

Venture Building Framework

After the deal has been sealed, what’s next?

We said that selecting the right startups that will lead to a successful exit is one of the many challenges an investor will face. The next big challenge is everything that takes place during the interval right after the investment is made and during the startup’s exit. Maintaining a close relationship with the founding team is equally important even after the investment has been made. There is more and more data showing that founders expect more than money from all their funding sources. So how can you stand out and satisfy that ever-increasing need?

By offering an added value that goes beyond capital itself and focuses on the operational needs startups and their founding teams have in order to grow. This is exactly the value we offer both to investors and entrepreneurs at Vesquad. We can help you adopt an operational model and provide hands-on support to your portfolio companies in order to accelerate their growth and minimize failure rates. From sourcing new ventures to supporting your existing ones, we’ll connect the dots for you so that you can focus on the cool stuff.

How to become an Angel Investor

2021 saw a record number of investors join Angel Investment Network. We expect to see the trend continue into 2022, with both established investors and new investors joining the platform. 

If you are thinking about taking the plunge for the first time and getting involved in backing some of the great businesses of tomorrow, here’s our guide for getting started:

What is an Angel Investor?

An angel investor is an individual who backs one of a startup’s first rounds of funding, investing their own money, rather than a venture capitalist (VC) that invests pooled funds at a later stage.

The term ‘angel’ apparently originally came from Broadway theatre, where wealthy individuals gave money to help bring the theatrical productions to life. 

Why should you become an Angel Investor?

Backing startups whilst high risk, opens you up to much higher potential returns than traditional forms of investments. In some countries, governments also provide tax breaks to investors that back startups. 

Who can become an Angel Investor?

In the UK, to qualify as an angel investor, you will need to meet the criteria of either a self-certified sophisticated investor or a high net worth investor:  

Self-Certified Sophisticated Investors 

Self-certified sophisticated investors need to broadly meet at least one of the following criteria:

– Have been a member of an angel network for at least 6 months;  

– Made two investments in an unlisted company in the last two years, this could for example include on crowdfunding platforms;

– Work or have worked in the last 2 years in private equity, or providing finance for small and medium enterprises; 

– Be a director of a company, or have been in the last 2 years with annual turnover of at least £1 million.

High Net Worth Individual 

Achieving high net worth individual status broadly means that you have a salary in excess of £100,000, or net assets excluding property of over £250,000.  

US – Accredited Investors 

In the US, angel investors are normally (but not always) individuals who have accredited investor status. The Securities and Exchange Commission (SEC) defines an ‘accredited investor’ as one with a new worth of $1million in assets, excluding personal residence, or having earned $200k income for the two previous years, or $300k for married couples. 

How much do you need to invest? 

Whilst startup ticket size varies hugely, a typical amount that an angel investor might invest is between £10k and £50k in the UK, and $25k to $100k in the US.

Should I diversify?  

Many investors aim to diversify their investments by building a portfolio with 10+ investments, in the hope that a few successes will counter any companies that are unsuccessful, leading to a positive Internal Rate of Return (IRR) on their portfolio. 

How do you get started? 

On the Angel Investment Network platform you can set preferences for the kind of deals that you are interested in and get relevant opportunities sent to you, or use the search facility to find deals worldwide. 

Providing you either meet the criteria of a self certified investor or a high net worth individual, you can sign up as an investor on Angel Investment Network here

Fundraising New Year’s Resolutions for Startups

Whilst we’ve seen some huge successes in terms of fundraising in the last year, it’s important to remember the companies that have been successful, not only have worked very hard and persisted to get there, they often have clever hacks and systems to help. 

As many of you are thinking about new year’s resolutions from a personal perspective, here are some recommendations for hacks, tips and processes that could improve your fundraising in 2022.  

Look after yourself to look after your startup  

Get exercising

Running a startup means there is always too much to do. Important investor meetings get diarised, exercise and eating healthily, not so much. But if you are not creating the best version of you, are you going to be presenting your start up optimally when you pitch to investors?

Make sure you are looking after your physical and mental health, it will likely pay off with you presenting yourself in the best manner possible, and in the quality of your pitch with investors.

Sleep well – keep your phone out of the bedroom 

Avoid blue light – keep your phone out of the bedroom

Now’s the time to start getting some actual quality downtime. If you check your emails in the middle of the night, it can quickly become a self enforcing habit that effects your sleep and alertness.

Lack of sleep has a number of negative effects, including impacting memory – important when recalling key metrics in investor meetings.

Keep your phone out of the bedroom and ideally have a pre-bed curfew to avoid blue light before bedtime. Leave it charging in another room over night to ensure that this doesn’t slip. 

Try the Pomodoro Technique

Raising investment whilst balancing the everyday tasks of running a business is an arduous process, it’s easy to get bogged down in the never ending cycle of replying to emails and firefighting tech bugs and customer complaints. 

Reclaim your time by planning and blocking out time using the Pomodoro Technique. 

With the Pomodoro Technique, you create a list of the key tasks that you need to do. 

Break the tasks into 25 minute segments (the optimal amount of time that people can generally concentrate effectively for).

Then fill your day with the appropriate amount of tasks. Set a timer for 25 minutes and get started on the task in hand, ignore the temptation to check your email, or anything else for that matter. When the timer ends, have a scheduled five minute break before jumping into the next segment.   

It’s a unique way to stay focused, avoid distractions and obtain a sense of flow when working. Find out more about the Pomodoro Technique here.

Pimp Your Zoom Set Up

External webcam versus internal webcam

The large majority of investor meetings are still happening virtually, and it looks like that might be a lasting legacy of the pandemic, with all but a small minority of later stage meetings likely to take place over video calls. 

With so many investor meetings, how can you make sure that you present yourself in the best possible way? Firstly using meeting scheduling software such as Calendly can be useful for sharing gaps in your availability, making it easier to coordinate meeting times with investors – it can also be integrated with Zoom or Google Meet to automatically schedule a video call.

Think about your backdrop – what kind of message do you think a cluttered backdrop sends to investors? You could use a virtual background, but sometimes using a real background will give investors some insight into what you like and help build rapport, whether it’s books you enjoy reading, pictures or some unique memorabilia. 

Whilst you can make it work with pretty much any kit for video calls, having an external mic will make your voice feel warmer, like you are there in the room; an external webcam can give you a much clearer image and more of a contrast to get you stand out from the background; and a ring light can help you ensure that you maintain the focal point. 

Find more tips here.

Use a CRM 

CRM for investor management

Do you find fundraising dispiriting? You’re not alone. Investors are typically very busy and often looking to invest in something that specifically meets their criteria, meaning that it’s not uncommon for messages to not receive a response.

On the Angel Investment Network platform, you can keep track the stage of investor conversations. You can also use software such as Pipedrive, ForceManager or Trello to categorise your investor conversations by stage.

It means that you can set yourself clear targets: i.e get X number of investor meetings this week, rather than fixating on the goals of raising investment, which can take longer, and you need to focus on getting more people through your funnel to get yourself in a position where they will convert.

CRMs have the advantage of letting you set yourself reminders to follow up with contacts, giving you analytics as to how long it is taking for contacts to get between stages, as well as adding in automation, i.e an email that it sent to investor contacts when they get to a specific point in your funnel.

In Summary

We hope you have had a chance to restore over the festive period and have come back invigorated. If you are about to embark on a fundraising journey, now is the time to think of a few habits and hacks that could go on to pay dividends for you. 

Wishing you every success in 2022.

The AIN Team

Looking Back & Looking Forwards

Looking Back

When we reflected on the year at the end of 2020, a few things sprung out: the sheer chaos inflicted by the Coronavirus, or COVID, as we now call it. It caused all kinds of new problems – with new startups emerging to solve these problems.

Redundancy and furlough led to the talent pool increasing and the quality of start up teams increased, a key predictor of startup success.  Productivity jumped as people found new ways to save time, skipping their daily commute and switching meetings to shorter Zoom calls. 

Whilst 2020 was devastating on a personal front, there was no shortage of innovation. So where does that leave us towards the end of 2021?

The Antisocial Networks

Whether it’s Brexit, anti-vax debates, or anything in any way political, it’s clear that social networks are incurring serious strain in their never-ending challenge to chase engagement. Facebook’s recent rebrand ‘Meta’ makes logical sense to deflect some of the focus away from it. 

Facebook’s commitment to the metaverse has led to considerable interest in the space from Venture X, with key investors coming out as hugely bullish, even if very few people can clearly define what the metaverse is, or will become. So what is a metaverse, anyway?

According to Andy Liu from Unlock Ventures “It’s the intersection of the physical and digital worlds, where augmented reality, virtual reality, blockchain-based environments enable people with blockchain development skillsets to develop and live in new ‘worlds’ — a fully immersive experience to express themselves, connect, interact, conduct commerce, and experience a whole new reality.”

One of key questions on investors’ lips is will the metaverse be dominated by the Metas and Microsofts, or more nimble startup? Eitherway, expect an onslaught of new metaverse startups emerging in the new year.

Good COP, bad COP?

COP26 had some clear outputs from cutting methane emissions to curbing oil and gas exploration, protecting forests and shifting from coal to clean power. Whether COP26 went far enough or not to keep the goal of a 1.5 degree temperature rise by the end of 2030 is still for discussion.

 However, in the words of AIN’s Head of Impact and CEO of SeedTribe, Liv Sibony, 

If you’re looking at predictions, one thing I would say is that big companies and governments are now committing to much higher standards of environmentalism, and that demand will stimulate growth/the market for start-ups offering environmental solutions, especially in the B2B space’. 

Whilst it’s too early to see the direct impact on start up innovation, it will certainly be interesting to see the startups that step up as a result of COP induced changes in legislation. 

Are we WFHing?

As the COVID pandemic started to recede, only to spike again with Omicron, one of the things that became clear is that no one knows where they are going to be working. 

There was the colour coding your bookshelf stage, the pimping your home office with external mic, light and webcam, and then the ‘pingdemic’, with those in shared offices in particular, waiting to be pinged. 

In short, we’ve tried a lot of different ways of working over the last year, and the one thing that we can agree on is, well, it’s hard to predict where we’re going to be working next year. 

Whatsmore with escalating inflation and a spiral in wage demands, there’s a clear war for top talent emerging. How to attract and retain top talent is going to be clearly front of mind for startups in 2022. 

Diverse Investing

According to Nadine Campbell, Ace Entrepreneurs,in the UK while just 5% of founding teams have two female founders, research has also shown that only 1% of venture-funded startups have black founders. In the USA, black startup entrepreneurs still received only a tiny fraction, 1.2%, of the $147 billion in venture capital invested in U.S. startups.

With movements such as Black Lives Matter providing a catalyst for a growing number of new funds and outfits supporting underrepresented founders, there’s a growing acceptance about how diverse team are better rounded, have less blindspots and ultimately, are better positioned to achieve a higher valuation multiple. 

We see some positive steps in the right direction and challenge our whole investor community to think about what you can do to help accelerate this.  

In Summary

At AIN, our mission is ‘to connect the world to enable investors to back the great business of tomorrow’.

For us, it has been a strong year, we’ve launched a fund, AIV capital, enabling investors to back later stage, high potential companies, we’ve had record number of investors signing up to the platform, and a 15% increase in investor connections being made with entrepreneurs. 

Ultimately, it wouldn’t have been possible without you, our investors and entrepreneurs, and the AIN team for all their hard work. 

We know how hard it can be to switch off, but hope you get a chance to recharge in the festive period. See you in 2022.  

Tips from the Top: Transitioning from founder to leader, how to be the one in five

In the next of our Tips from the Top series, we speak to Ed Lowther who leads The Soke’s Founders Development Programme, a first-of-its-kind course designed to provide vital knowledge, understanding and skills to founders at the helms of fast growth businesses.

When Harvard Business School spoke to its 141 HBS alumni who led start-ups, they asked: “What does someone who aspires to your role need to know?” The research revealed that of all the possible areas to focus on, there are two essential areas that over 80% of the group unanimously agreed on.

At the outset, a founder needs to assemble a founding team – a series of vital decisions around choosing co-founders, appointing key talent, splitting equity, recruiting advisors, and managing a board. These are all vital, but highly demanding tasks that a founder must achieve alongside building their new business that if not done correctly can lead to early failure, no matter how brilliant the idea. Founders reach these decisions through a combination of instinct, experience and the use of trusted advisors or mentors, in combination with key skill development.

Secondly, for those looking for investment, or looking to invest, a founder needs to foster a critical set of leadership skills needed early on, that in turn helps to attract further investment and support the business on its path to success. What’s clear is that early development of specific leadership skills in communication and conflict management is where a founder can really differentiate themselves.

Whilst many founders may believe that they naturally possess the skills to successfully build their business to success, the reality is that few come to the fundraising table with the array of skills needed to successfully lead an organisation from an idea through the teething stages to growth and finally exit. This is particularly the case when founders are required to run a company not purely to satisfy their own ambition (management, creative, financial, or otherwise), but to meet the expectations of investors and other stakeholders, including staff.

So what steps can founders can take to improve their skills in communication and manage conflict with their co-founders or staff?

  1.  Your business is founded on a great idea – it does not mean all your ideas are great.

In business journals, strategy reports and insight magazines, much is made of creativity being at the heart of business success and growth. Tesla CEO Elon Musk is vocal in encouraging his employees to think creatively, eager for them to predict future trends and allowing them to share their ideas freely, to improve the prospects of the company. The stratospheric growth of Tesla suggests that his approach is bearing fruit.

For those at the beginning of this journey, the thought of fostering creativity can feel like a luxury, alongside all the other business demands. Innovation is however proven to create growth. Businesses at all stages need to remain nimble as their customers’ needs and demands change. How successfully a founder facilitates the communication of ideas around their business and across functions is a marker for future innovation and adaptability for the business idea to survive in the market. 

Create dedicated time for creativity and innovation as part of routine business operations, giving space for open communication between the founder and team members of all functional areas. Foster an environment for the team to be creative and openly communicative, without it all being founder-led, so that ideas are assessed on their own merit, whatever the role of the team member in the company.

  1. Learn to share through building communicative resilience

Once a founder has the fundamentals of their new business in place, the idea is taking hold in the market and revenue is growing, it’s an exhilarating time. Few businesses can grow rapidly through organic growth alone and therefore a founder must also accept the challenge of securing capital through external sources. It can be an exciting but risky time, with a number of factors that can damage a business just as it begins to succeed. Much of the damage comes from the amount of time that is needed, coupled with the energy required to be successful, which takes away a founder’s dedication to their clients. Customers can sense neglect, just at the moment a business wants to secure their lifelong loyalty.

At this moment, a founder will be at their communication limits, often exhausted by the sound of their own voice, as they describe the brilliance of their business, the financial plan and the superb team assembled to make it succeed, to yet another room of potential investors. The key skill to develop here is ‘communicative resilience’, a combination of sustaining a consistent and engaging narrative of the idea, clear understanding of the business strengths and challenges, and a willingness to answer penetrative questions designed to interrogate a founder’s financial shortcomings. This combination tells investors that you can share this with them and make it successful at the same time. 

Be mindful that you communicate the strengths of the business in a way that puts the business idea at its heart and that through additional financial support, this idea will flourish. The moment that investors sense that a founder does not want to share and is more interested in their own success irrespective of the idea, the fight for their funding is lost.

  1. Conflict is inevitable – fail to prepare for it, prepare to fail.

It’s likely that as a founder builds their team, they have been successful in recruiting a diverse team, all with unique skills and often varied or differing opinions. In fact, this diversity is often a key ingredient for driving a business forward as these individuals bring perspectives to the founder that they would not otherwise have seen, helping them grow the business successfully.

The differences in this team that exist through individual variances of cultural background, learning styles, personality and many more factors besides, overlaid with managerial expectations, accountability issues and communication styles, will inevitably lead to conflict. And at this point, the founder needs to establish a pathway that is neither a hierarchy of opinions, where ‘I win because I’m more senior,’ or that a conflict is simply ignored.  Without establishing this early on, conflicts cannot be resolved satisfactorily and can lead to increased stress and decreased performance in the team, which will impact business growth. 

Plan to navigate conflict by setting out a framework for all employees to identify and resolve issues between each other, building a culture that celebrates diverse perspectives with a way to manage the conflict that this diversity can bring. It will help shape the best outcomes for the business and build genuine trust and respect between team members, managers, and the founder.

StartUpBuzz

In the run up to the festive period, the AIN team highlights some of the companies that they are most excited about. With two companies shaking up the property market, a chocolate brand targeting the very top of the market, and a company that is revolutionising 3D printing.

Virtual View App 

During the pandemic, viewing properties has been difficult, at times impossible, but one of the lasting effects of it is more and people screening potential properties with virtual tours. 

Virtual View’s ‘Vieweet’ app helps amateur photographers create a 360 view, or virtual tour on an app. It’s useful for viewing potential property to buy or let, but other use cases span insurance, interior design and surveying. 

Key Facts

– Vieweet currently collects data on the 7% of the UK properties sold every month 

– Partnerships with some of the largest property sites including Zoopla

– Customers include some of the largest estate agents, such as Purple Bricks and Countrywide

‘The thought of them already collecting data on 7% of UK properties sold every month before turning on the revenue taps showed me just how confident the founder is. The levels of data they can gather on each home will help further stimulate several other industries’ Xavier Ballester

Find out more about Virtual View App

PropertyLoop 

Continuing the property theme, PropertyLoop is an end to end lettings platform. Making life much easier for property landlords. It’s also the world’s first commission free letting platform. 

Landlords typically spend thousands on unhelpful agents just to find a tenant. On PropertyLoop, landlords list their property only once, the listings then are posted on to hundreds of portals including Rightmove, Zoopla and OnTheMarket. PropertyLoop verifies renters identities, as well as sorting tenancy agreement, deposits and renewals.

There’s also a ‘Smart’ tools service where tenant report any issues with the property online, where it is automatically sent to relevant, qualified contractors who bid for the work. Property Loop takes care of all the access, proof of work and invoicing so that landlords don’t have to. 

Key Facts

– Multi excited founders 

– sold one of London’s biggest retail estate agency chains, taken care of $1 billion of property every year. 

– 95% of the market still being dominated by High Street Agents, the ‘Blockbusters’ of the Property Market

Total Addressable Market – £1.7 trillion rental market

‘Having spoken to a number of landlords about PropertyLoop each of them said they would be crazy not to use it. Everything to do with the running of your property under one roof and free is definitely a problem being solved!’ Xavier Ballester

Firetree

Firetree

There’s expensive chocolate, and then there’s Firetree – chocolate is priced at a price point that you wouldn’t really expect to see chocolat at, more the territory you would expect to see a fine wine.

Firetree is a new chocolate brand positioning itself at the top of the end of the market, and therefore avoiding the competitive mid-market with the likes of Cadbury and Mars. Chocolate is roasted in its shells using a slow chocolate craft production process to ‘optimise their complet taste characteristic’.

Firetree believe they are the only serious player who can capture the top of the market with an experienced team that combines both mass market and high end chocolate experience. 

Key Facts 

– Set for £1m in revenues in 2021

– Retailers include Harrods, M&S and Ocado

– Vegan, Dairy-Free, Nut Free, Halal and Kosher Certified. 

‘ I tasted them and know just how delicious they are. My wife is a big chocolate snob and says she has never tried a better chocolate. Firetree could be the brand to take over the super premium category.’ Xavier Ballester

Find out more about Firetree.

Wayland Additive

Wayland Additive

Wayland Additive have overhauled additive manufacture (3D Printing) of metals, making it faster, more reliable and allowing for the printing of larger structures than has commonly been possible. 

Wayland aims to create metal Additive Manufacturing (“AM” – 3D printing) machines to sell to  industrial organisations, including in the aerospace and medical industries. With highly advanced tech created from the worlds of scanning electron microscopy and electron beam lithography. 

As a result of these innovations the machine will offer higher productivity, unparalleled process monitoring and control, and versatility in materials.

Facts

– First client signed in N. America (£850k) and working with the MOD

– £29m pipeline of opportunities

– Raised £2.1m of a £3m round backed by Longwall Ventures

To hear more about Wayland Additive, reach out to Ed Stephens directly ed(at)angelinvestmentnetwork.co.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.

SixtySecondStartUp with CheckMates

In this week’s edition of #SixtySecondStartUp we catch up with Leah Zabari, founder of CheckMates, an app to connect you with anonymous support during difficult times.

  1. What does your company do?

Checkmates is a mobile app designed to help individuals connect with anonymous support during difficult times.

Checkmates uses algorithms and a dating app “swipe right” style in order to help the individual find profiles they can relate to.

Our focus on imagery and metaphors to describe each user’s story erases the need for potentially triggering language. Therefore putting the user in control of their information and how they would like to receive support.

  1. Why did you set up this company?

In 2017 my mother was diagnosed with breast cancer. Although she received fantastic treatment and support from the NHS and Macmillan cancer support, I really struggled as a carer and a family member to find the support I needed. I was receiving therapy at the time but what I really wanted was to meet someone who was going through the same thing, someone I could relate to and who knew how I was feeling.

This sparked my idea of Checkmates; and the more I went through my vision and values for Checkmates, the more it became evident that this was a platform for everyone; loneliness and the need for support and help is not just an issue for children. Statistics show this to be an increasing worry for older adults. Everyone needs to be heard and listened to, and to feel supported.                                                                                                                                                     

The MyCheckmates App
  1. How did you get your first customer? 

We are currently undergoing a testing period of our first version of MyCheckmates app with our community. Until we have refined the last final details we want to make we haven’t launched our paid feature Checkmates+. We are aiming to launch MyCheckmates to the world mid 2022 after our upcoming seed round.

  1. We knew we were onto something when? 

We did a lot of market research before we began developing MyCheckmates; we shared a survey asking everyone if there was a time in their life they would have used MyCheckmates had it been available; this had a 100% positive response. The following question was asking them to share what the challenges were they were facing, the answers left me speechless. 

Everyone was going through such different experiences and yet everyone felt alone. Addiction, bereavement, mothers with daughters battling eating disorders, unemployment struggles, breakups/divorce, nurses suffering mental health issues due to their work through the COVID 19 pandemic.

No matter who you are, everyone needs support, everyone needs to be reminded they are not alone.

  1. Our business model: 

MyCheckmates is working on a freemium model meaning a basic version of the app is free for all, however a paid version with many more features is available and strongly encouraged in order for users to get the most tailored support to their needs.

We currently have a monetised weekly mental health check-in newsletter and a biweekly podcast breaking down the stigma around emotions.

MyCheckmates has huge room to expand into many different areas of mental health; including mindfulness and meditation features within the app, and in person events to find support within small communities, both of which we are working on currently.

  1. Our most effective marketing channel has been: 

Social media! When Checkmates started out as scribbles in my notebook one of the first things I vowed was that the service Checkmates was offering was to be accessible for all. This has mainly shown itself in the form of a free version of our app but has also come through in other aspects of the company’s profile; such as its community services. All our social media is free, interactive and allows everyone to feel like part of a team. We share resources, testimonies and tips and tricks to check-in on your friends mental health as well as your own.

  1. What we look for when recruiting:

Enthusiasm, honesty and flexibility. As a startup things change all the time, we are a small team currently doing a little bit of everything; filling in gaps when needed and constantly learning new skills in areas some of us haven’t studied since highschool! 

With our app having such a huge focus on mental health we want everyone in our team to be passionate about improving the services that are offered to those struggling. We are a business, but a business created to help our users. Passion and a desire for positive change has to lie at the forefront of all decisions.

  1. The biggest mistake that I’ve made is:

Assuming I needed a technical co-founder before I could get started. 

As a solo founder the first thing you read online is *ALERT ALERT* you need to find a technical co founder to be taken seriously. This is not true, being a non-technical solo founder isn’t easy, don’t get me wrong, but I was the one with the ideas and vision so why not get started straight away? If partnership is the right thing to do then I strongly believe it will happen. Working with business partners; whether that is investors, co-founders or employees you work closely with does not work unless your personal relationship is solid too. You have to have the same vision and trust each other; you can’t fake or force either of these things.

  1. We think that there’s growth in this sector because:

In total, 45% of adults feel occasionally, sometimes, or often lonely in England. This equates to twenty five million people.

5.0% (1 in 20,) of people in the UK (2.6 million adults) reported that they felt lonely “often” or “always” between 3 April and 3 May 2020, about the same proportion as before the national lockdown due to Covid-19. Of those asked, 30.9% (7.4 million adults) reported their well-being had been affected because of their loneliness in the past seven days. 

This figure is ever growing, especially with the effects of the COVID-19 pandemic and its aftermath. As well as the heartbreak and isolation that the pandemic has brought many individuals more broadly, the social distancing measures and the limitations of household bubbles has denied many people the opportunity to meet new people and find the support they need.

  1. We worked with AIN because:

We are about to embark on a first fundraising journey that will allow MyCheckmates to be taken to the next step and start providing support to the people that need it. We have all the ideas, the passion and the projection. All we need now is just a little extra help from investors to make this happen. When Drummond got in touch it came at the perfect time with our BETA launch, it is a fantastic way for us to be able to share MyCheckmates with the people who can help make this happen.

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.

#SixtySecondStartUp with Society

Up next for #SixtySecondStartUp we have Matthew Billington, Co-founder of Society. Matthew noticed that student usage of Facebook was falling off a cliff and set up a startup to help student societies manage their members with their own branded apps.

What does Society do?

Society is your own branded community app in an instant. With over 1,700 clubs with group chats in over 217 Universities in the UK and worldwide, Society is now the fastest growing app at University for clubs and societies.

App features include push notifications direct to all your members for instant alerts and updates for events and announcements. It has your club’s calendar of events, an instant searchable network, personal profiles, direct messaging, group chats, free e-tickets and much, much more. And, it’s completely free for students. 

The Society App

Why did you set up Society?

When I entered my 4th year as a dental student at King’s College London, I soon discovered that being elected President of the KCL Dental Society of 800 members came with its fair share of problems. Engagement was falling and falling, Facebook was becoming increasingly outdated especially with freshers. Year on year, we were seeing a progressive decline in engagement with university students.

With popular event booking platforms such as Eventbrite and Fatsoma, having high transaction fees, I wanted to create a platform with the lowest possible ticket transaction fees for students, whilst remaining free for free events. WhatsApp groups were also a terrible way to manage a society and events. 

How did you get your first customer?

After engaging with Presidents from other dental schools I soon discovered that nearly every new President of a university society is in the same boat, re-creating the wheel, each and every year.

I originally came up with the idea of the Dental Society app to have a profound and positive impact on committees and society members at all 16 dental schools. Helping committees to save time through automating event management, certificates, ticketing/e-tickets for events, whilst having the committee displayed and available for all members to directly contact through the chat. 

We knew we were onto something when?

Suddenly, the Presidents of King’s College London Medical Student Association wanted to use the Dental Society app. Then 18 months ago when the app was re-engineered and relaunched as “Society” for all student clubs, Aston’s African Caribbean Society wanted to use the app. That’s when we experienced exceptional growth from 12 clubs to 800 clubs to now over 1700 clubs in the last 18 months.

Our business model:

Society co-founders chose pre-monetisation to maximise and prioritise viral growth without friction. Over the next 12 months, we are proving multiple revenue streams to find optimal ways of aligning monetisation with viral growth.

Our most effective marketing channel has been:

Word-of-mouth with students. The new academic year saw more than two hundred Society Ambassadors attend Freshers Fairs at Universities across the UK to promote the Society app to clubs, societies and students. All ambassadors wore the Society hoodie while spreading the word about the features and benefits of the app. The awareness campaign was a huge success.

Society Brand Ambassadors

What we look for when recruiting:

Insanely great people with ideas and raw talent, passion and energy that don’t need to be managed. They have to believe in the Society app, our vision and be fun. 

The biggest mistake that I’ve made is:

Not immediately realising the full potential of the Society app as an instant community app for absolutely everyone in the world. ESN UK is set to digitise the student exchange experience with their new Society App partnership. Formally the Erasmus Student Network, ESN is the largest student-led organisation in the world in over 1,000 Higher Education Institutions in 42 countries.

Together with Society App, ESN UK are launching a new app specifically for their members to help them to develop skills to a higher proficiency. As seen in The Daily Telegraph, the ESN partnership presents a global opportunity for the Society app and is one of the pathways to having a world-wide presence in 2022 with student brand ambassadors in every country.

We think that there’s growth in this sector because:

Significant traction has been made in the new academic year post covid lock downs. In the last 90 days, clubs have doubled and grown by 100% across 1,700+ Clubs, now also with 1,700+ Group Chats. Memberships have grown by 130% and engagement has grown by 700%. Over £50,000 has been collected via Society Pay, the in-app payment gateway. This exceptional growth since launch only 18 months ago, means the Society app has already cornered 13% UK market share and is expected to double in 2022.

The app’s success reflects UK University only, excluding parallel, international and enterprise markets. There’s still time to invest in the Society app (EIS approved) this year to support the team growth of student brand ambassadors and react native developers, which will allow greater scale and global ambitions to be achieved. 

We worked with AIN because:

AIN was highly recommended and we found AIN to be one of the best ways to reach and communicate with potential investors.

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.

StartUpBuzz



At AIN, we celebrate connecting investors to back the great businesses of tomorrow, whatever they do. With this in mind, our latest round up includes a new form of property marketplace, a platform using AI to reinterpret education and a company making new types of soup!

Soupologie

Soupologie

Whilst you may think there isn’t much to differentiate soup, Soupologie would beg to differ. Soupologie makes award winning soups and ready meals that are driving a number of innovations including: the world’s first ‘5 a day soup’ and ‘first free from the 14 main allergens soup’. 

Capitalising on the plant based movement, the company has achieved strong growth and has even released two cookbooks. With an exit focused management team and strong revenue growth, the company is on a fantastic path.

Key Facts

– On track for £3.2m revenue in Y/E May 22

– Products sold at Waitrose, Tesco, Ocado and leading supermarkets 

– Over 21k+ followers on social media  

“Soupologie have steadily built a strong business core around an innovative product range. Alongside executing the fundamentals of the business brilliantly, they amplify the brand exceptionally well through wide reaching media campaigns and an enviable following. The combination is powerful and we knew it was something that our network would be keen to see” Sam Louis. 

Find out more about Soupologie here.

Vesta

Vesta

Vesta is a marketplace for buying and selling rental property, and has sold over £50 million of property since it’s launch in 2018. 

It’s the leading marketplace of it’s kind covering buy-to-let, student accommodation, and portfolio properties for example. The properties often come with a tenant in place – if you buy a property with a tenant in place, the tenant is happy as they don’t need to find somewhere else to live, and the buyer is happy as they have an immediate rental income. 

Key Facts

– The rental market is expected to be £1.7 billion by 2025 

– Vesta has a growing pipeline currently worth £100 million.

– Revenue currently > £20k a month

“This is a space that has been of interest to me for some time and Vesta clearly sets out what the investment options and how much I can hope to generate from the moment I buy the property” Xavier Ballester.

Find out more about Vesta here.

Habitat Learn 

Habitat Learn

Habitat Learn is an ecosystem of products designed to remove the barriers of learning. With the ethos that ‘when online learning works better for all students; all students work better.’

Habitat Learns comprises a suite of products easily integrating into existing education technology. This includes: 

– Video conferencing software, designed specifically for education, as well as providing high quality live stream content, there is AI captioning and translation, and digital watermarks to safeguard IP. 

– Advanced analytics including everything from live recording, invoicing and student attendance records

– An option to get notetakers to take notes remotely. 

Key Facts: 

– Projecting £3m revenue in 2021, (£600k: 2020)

-185 customers (universities and colleges) including Harvard, Yale and Cornell

– Experienced team founding multiple successful startups 

“With lockdown Edtech has seen a real surge but I also looked back to my uni days where I spent most lectures frantically scribbling and missing half of what was said… Oh to have had Habitat Learn!” Xavier Ballester. 

Find out more about Habitat Learn here.

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.

#SixtySecondStartUp with Alpaca Coffee

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.

  1. 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.

  1. 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. 

  1. 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. 

Alpaca Coffee

  1. 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. 

  1. 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 ?

  1. 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 ?.

  1. 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.

Coffee?

  1. 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.

  1. 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. 

  1. 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.

Emerging from the pandemic – Startup sentiment in the UK and USA

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.

Here is the full report

#SixtySecondStartUp with IBS Coach

Liamhl Asmall shares the story of IBS Coach, a digital dietary treatment for the 800 million people affected by IBS.

  1. What does your company do?

We help the 1 in 7 people who suffer from Irritable Bowel Syndrome to get instant and effective digital treatment from the phone in their pocket. It may come as a surprise, but IBS is one of the most common digestive conditions on the planet. It’s not life threatening and is still taboo (which is most likely why it’s been so overlooked for so many years), but it severely impacts relationships, work, travel, and ultimately, quality of life.

In one study patients with IBS were willing to give up 15.1 years of their remaining lives to achieve perfect health. People are desperately seeking a cure.

  1. Why did you set up this company?

Healthcare for IBS is inefficient and unaffordable. It is incredible that patients have to wait a reported 1 year to see a specialist on the NHS, or pay up to £320 for private treatment. We set out to solve this problem that our friends and family had faced. Our mission is simple: to make effective digital treatment accessible, affordable, and scalable for this 800 million person IBS healthcare market.

The IBS Coach App
  1. How did you get your first customer? 

When developing a medical product you’ve got a long road to walk before you can sell to customers. Our journey went from achieving medical compliance to setting up a closed beta testing group for people with IBS, to launching in the app stores. The overwhelming positive feedback gave us confidence that patients would buy our product. We launched commercially in October this year and had our first sale almost immediately. It’s a good feeling to know we’re helping people manage their IBS.

  1. We knew we were onto something when? 

We interviewed 30 people with IBS at the start of our journey and just listening to their stories and frustrations showed us there was a clear need for an affordable, simplified treatment for IBS. Very early on we shared a post on Facebook and had almost 200 sign ups in the first 24 hours. These were early points of validation and were supported by lots of desk research.

  1. Our business model: 

IBS is a lifelong condition that needs ongoing symptom management. Because of the ongoing nature of IBS, we aim to support patients throughout their life. The business model is a recurring revenue subscription and we are currently testing our acquisition channels and pricing. One of our goals is to establish a marketing flywheel with our next SEIS fundraise. 

  1. Our most effective marketing channel has been: 

Organic sales in the iOS app store. We’re now putting marketing spend behind Apple Search Ads and Google Ads which are ‘high intent’ channels. We’ve run multiple Facebook campaigns to test landing pages and messaging, and we’ll be exploring ways we can partner with brands.

  1. The biggest mistake that I’ve made is:

One of the early mistakes was focusing too heavily on the product (we have a great product, and as a medical product we perhaps needed to spend a lot of time here!). However, if I were to start over I’d spend slightly less time on product and more time testing sales channels. It’s a fine balance as founders have to wear many hats. The risk is that founders focus on the jobs they like, or feel most ‘comfortable doing’. It’s good to be aware of our bias towards tasks.

  1. We think that there’s growth in this sector because:

IBS is a lifelong condition and the latest reports suggest the rates of IBS have actually increased during Covid. Couple the above with the mass adoption of digital healthcare, the large unserved market, and the scalability of our effective digital program and we have the right trends for our company to grow. 

  1. We worked with AIN because:

AIN has a reputation as one of the best platforms to share our ambitious plans with engaged angel investors; We hope to make many new connections and raise our current SEIS round.

If you are interested in learning more about IBS Coach, please get in touch via the Angel Investment Network platform.

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.

AIV Capital completes investment into meat alternatives business Eat Just Inc.

AIV Capital has announced investment into alternative food business, Eat Just Inc. Eat Just Inc develops and markets plant-based alternatives to conventionally-produced egg products. Founded in 2011 by Josh Tetrick, the San Francisco based business is reducing dependence on chickens and battery farms for egg production by creating a realistic and viable alternative from mung beans.

Eat Just Inc. has raised over $500Mn to date and will use its latest round of funding to continue to improve the unit economics of the business and to focus on international expansion outside of the US. It was announced recently that the key ingredient in its plant-based JUST Egg products received approval from the European Food Safety Authority’s (EFSA) expert panel on nutrition, apart from taking a business law firm‘s advice. This opens a pathway for the initial launch of JUST Egg to occur in Europe in mid-2022. Its high profile produce was also on the menu at Barack Obama’s recent 60th birthday.

The company has also raised over $400Mn for its subsidiary, Good Meat which focuses on cultivated meat as an alternative to traditional chicken based products. Good Meat is the first company in the world to receive regulatory approval to sell the cultivated meat products which are now available in Singapore. Earlier this year, the company secured rights for a manufacturing facility in Qatar as a partnership between Doha Venture Capital (DVC) and Qatar Free Zone Authority (QFZA).

AIV Capital is the recently launched institutional investment arm of Angel Investment Network, the world’s largest online angel investment platform. Led by experienced investment manager Ethan Khatri, AIV Capital’s focus is on investing between $10 -$75Mn+ into established businesses ranging from Growth/Series B to pre-IPO and has a flexible approach utilising both primary and secondary capital. 

According to Khatri: “We are delighted to have partnered with CEO, Josh Tetrick and the team at Eat Just Inc. With the demand for plant based products soaring they offer a viable alternative to conventionally-produced egg products and are offering impressive returns for all stakeholders. This is a prime example of the sort of business we will be working with at AIV Capital. One with a strong management team with a demonstrated edge in the space they operate in.”