22 Mar 2013

What happened on 18 March at Finance, Incubators and Accelerators...

Despite the rain outside, the sun shone at the CBI as our chair, John Spindler, CEO of Capital Enterprise, @capenterprise, took us through a whistle-stop tour of the scene.

Here is his much requested presentation:

The night was full of top tips from our panel and audience. Thanks to The Fonecast, you can listen to Mark Bridge's wonderful podcast of the evening.

Now to thank the panel:

Alistair Hill, CEO of On Device Research (speaking as an Investee) @ondevice
Sitar Teli, Managing Partner at Connect Ventures @sitar
Michel Sabatier, Managing Partner at Crelligo
Inmaculada Martinez, Partner at Opus Corporate Finance @inma_martinez

Here are some great quotes and tips that our friend Rob Finean picked up for us:

Q: How was 2012? What do you expect from 2013?

Sitar: I get excited by apps you give space on your homescreen - last year it was Citymapper www.citymapper.com/router/ that made the grade as an app you use every day. This year expect more games (they are easy to start) and I'd like to see more mobile B2B apps.
Inma: I love Platter, a platform for cooks at home to make "food as good as sex"!
Alastair: I liked OpenSignal www.opensignal.com, crowd sourcing network coverage maps
Mark Bridge gets opening comments from John Spindler
Michel: I like where mobile is changing other industries like mHealth, mobile money and machine-to-machine. This year we're seeing the Augmented Reality trend take root in retail.
Nic: We're seeing the smartphone as a hub for other stuff like sports and health sensors.

Q: Isn't the app market dead? Do we ever see follow-on funding for apps?

Nic: Not dead, just crowded. Need to get the fundamentals right - a solid business model.

Q: What do you wish you'd invested in?

Inma: one Wayra company's automated B2B publisher for tablets
Michel: Codapayments, a Singapore mobile money platform for paying with airtime
Inma meets a business delegation over from Spain!
Sitar: Connecting brands with consumers. And the mid-core games for the 35-45y/o folk who can't play WoW all the time anymore! The UK is a hive of game development.
Nic: Strikead, mobile real-time ads. People have finally started to buy on phones - over Christmas eCommerce was huge.

Q: Should I fund by revenue? Are potential customers afraid of VC/Angel funds running out?

Chorus: If you can fund with revenue you should do! You don't read in Techcrunch about all the successful $10-20M startups that do pay their way with customer revenue.
Nic: Not many businesses need VC/Angel funds. Explore all other types of funding first.
Sitar: VC/Angel is quite an expensive way to fund, only for a special type of business that doesn't have instant revenue but does have a solid business plan that will scale to provide a huge return for their investors to match the risk involved. (Potential customers might be reassured to know about the business plan rather than be afraid of the investors.)
Inma: In Spain I've seen some companies spend all their time fundraising instead of working on their business. Be sure you know your cashflow, what you need and exactly when. Milestones that show exactly what £X will achieve. If you do go to an institutional investor it must be with a proven plan.

Q: John's presentation has a vast range of financiers out there and many of them charge. Where does a beginner start? Is there a way to focus (say on mobile)?

Nic: VC is a referral business. You must network: Come to Mobile Monday; follow investors' blogs.
Michel: Look in your own industry, these people are most likely to understand you.
John: Look at investors' portfolios of past investments. Accelerators will help you to refine your pitch.
Alistair from On Device Research
Inma: Be humble, listen to all their feedback and tweak the product. This can take 3-6months. Founders network and run their ideas past everyone all the time. Referrals happen fast when the idea is good.
Bryan Taylor (of PixelPin): I spend 5 nights a week networking and getting noticed. We've money from Wyra, Technology Strategy Board, Seedrs.comand we're still not ready for VC. You have to get out there.

Q: How hard is Series-A funding to get today?

Nic: It shouldn't be easy. The risks for the investor are huge! So do listen carefully for feedback and follow advice. I try to give everyone feedback but it's true many VCs don't have time to do that.
Alastair: We went out with a team, a product, some revenue but a business plan with not enough growth for the VCs. Those first VC meetings were a battle until we learnt it was a discussion and they were advising us how to make the business scale. We got there in the end with their help.

Q: What about 1 person bands?

Inma: Get your team together first. One-man-bands won't get anywhere.
John: Preferably a Hipster + a Hacker + a Hustler.
Sitar: I can think of only one single-founder business we've invested in, purely because we had experience with him before. Even then the first step was recruiting his co-founders.

Q: Warren Buffet famously says the best holding period is forever. What about you?

Sitar: It depends on the company - Warren Buffet is a very different kind of investor.
John: You don't want to be the zombie that raised capital but never scales.
Nic: The funds are someone else's money and they'll want it back, usually within 10 years. So with contingency 8 years maximum. Sometimes companies are ready to give it back in just 2 years but most are 3-5 year holdings.
Inma: Most of Opus is about selling companies, not fundraising! You can never tell when acquisitions are going to go ballistic in your sector. Learn to use Gartner Magic Quadrant http://www.gartner.com/technology/research/methodologies/research_mq.jsp
Alistair: We had just £1m of investment. Our competitor got £10m of VC but the pressure to try to scale too quickly killed them. The timescale is as important as the amounts.

Q: Can I outsource this?

Sitar: No. I want to speak to you, not your banker.

Q: Is it important to have co-located teams?

Michel, Sitar and Inma
Nic: It's a huge benefit
Sitar: Yes, I haven't invested in any distributed teams.

Q: Pros/cons of incubators?

Inma, loves Wayra
John: Accelerators want to prove a business plan in 3 months. Metrics are vital, the hot-house is great for all this stuff.
Alistair: White Bear Yard is great. All the co-location spaces are good places to get started immediately.
John: Techstars http://www.techstars.com/program/locations/london/ has just opened applications for their summer 2013 programme.

Q: Is there any advantage to being a Community Investment Company (CIC)? How will an exit happen?

Sitar: Be totally honest and open about all your goals.
John: Some investors are exclusively for social enterprises.
Michel: And anyone can be interested if you'll make a profit.

Q: I had a multimedia company that worked well. Now I've a hybrid idea, is this going to be more difficult?

Nic: If you have a prototype to show go for it.
Sitar: Lots of people come for advice, many people have an "office hours" for an hour's meeting.
John: If you want an introduction, send me a slide deck.

Q: Last words?

Inma: Investors are looking for their next investment. They want to. Listen to their advice, your next pitch will be better.
Sitar: Network. Quality, not quantity, this isn't Farmville or Klout.
Michel: Research who invested in what.
Alastair: Be honest. You have to believe it.
Nic: It's an exciting time to be in mobile tech, 50% more money was invested in 2012 than 2011.

Finally, a huge thank you to all those from the Momolo community who contributed to The Mobile Academy Knowledge Exchange drive. From Mobile App Analysts, Interaction Designers and Games Developers, to Guerilla Recruitment practitioners, Sustainability experts and Street Art Event organisers- we received a very big, very mixed bag of offers of industry expertise that Monday's MoMo goers are keen to share with participants at The Mobile Academy.

While for all those lovers of learning from experts, there's still time to register for the next programme which starts on April 23rd. For details: http://moblacad-apr-2013.eventbrite.com