Archives for the month of: February, 2015

Data protection and information security have always been top priority for startups, but recent media coverage has brought home the importance of compliance. Incidents involving data breaches from high profile companies around the world combined with new, proposed EU Data Protection Regulation, have sparked greater awareness and encouraged startups to take data protection more seriously.

Data protection is governed in the UK by a law called the Data Protection Act 1998. As a business it is vitally important to obey data protection regulations, as the Information Commissioner’s Office (ICO), the body, which is responsible for enforcing the Act, has significant powers to crack down on non-compliance.

Most relevant to startups, as governed by the Act, is the use of personal information held about individuals and retrieval systems. This Act gives people the right to know what information is held about them, as well as access to that information. So, if you hold personal data about individuals, the Data Protection Act will apply to you.

Here are three important things for startups to keep in mind when it comes to data and information security compliance.

#1. Stay away from security hardware as much as possible.

Today, you don’t need large IT expenses and hardware to protect your data and digital assets. Powerful, cloud-enabled “managed security as a service” solutions are available to startups for generally very low monthly expense. These services are effective enough to achieve compliance with rigorous digital security requirements.

Your startup can effectively outsource all data security compliance by utilising cloud-based technology.

For example, SalesFore is a CRM tool that is Data Protection Act compliant. By using a service like SalesForce, you can ensure technical security without maintaining expensive internal systems for data management. Additionally, applications like SalesForce are easily able to scale with your business as you grow.

#2. Maintain IT Visibility and file sharing guidelines.

Regardless of your company’s size or life stage, it is imperative that your IT department maintains visibility over what your employees are doing with your company data, and which tools they are using to store, sync and share it.

At a minimum, your company should establish data security policies that include guidelines for file sharing. Issues tend to arise when consumer cloud file sync and share tools introduce risk for data breaches, with employees often unknowingly introducing risk to your organisation by simply syncing data across devices.

#3. Be sure to train your employees on data protection regulations and compliance.

Many startups today operate in a virtual environment, where employees are scattered across different regions and time zones. Training all employees on cyber security doesn’t have to take a lot of time or money, yet it is essential.

Talk to employees about using trusted WiFi networks, maintaining control of all mobile devices, and utilising good password protection. Vulnerabilities are often a result of human error, including unintended issues as a result of an employee’s tech security habits.

Teaching good habits can go a long way to protecting your company’s data long term.

About the Author
Keir McDonald MBE is Chief Executive Officer and Founder of EduCare, an online training solutions company that specialise in short, jargon-free sessions on essential business topics. The company’s training programmes for businesses are all written or endorsed by subject matter experts including Skills Platform and EdNext.

logo squareStartup funding is all about timing. Founders do not always make the connection between the Lean Startup methodology and the funding cycle. However, it is important to recognize that there is a clear link between reaching certain lean startup milestones and the type of investment available. Failure to recognize this will lead either to burning cash too early in the cycle or being starved of adequate finance later on.

Problem/Solution fit – It is vitally important to establish that there is a market for your idea. Does it solve a real problem and do other people agree that it is a problem worth paying to solve?  There is little point in expending too much money to establish this. Founders should achieve as much as possible using questionnaires and a range of other tools that don’t involve building expensive  tech. This is the phase that would traditionally be self-funded or at most involve a few friends or family members. The accessibility of new sources of capital such as crowd-funding does not reduce the need to prove product/solution fit before using other peoples’ cash.

Product/Market fit- This is the phase where the initial technology is normally built. Lean states the importance of building a stripped down prototype to test the main business model. I believe that there is some justification in raising small amounts of capital to fund this stage. Capital is needed both for the technology and to provide enough marketing resource to engage a reasonable sample of target customers to test assumptions. The usual way to fund this stage is through single or groups of angel investors. In the US, startup founders are able to raise sufficient funding to robustly test the business model and prove they have product/market fit. In the UK there is a challenge that founders will fail to raise enough to fund this stage through to a conclusion. Unfortunately, this leaves them limbo, having burned  through a seed round and still not ready for VC funding.

Scaling – Founders should not seek funding to scale a business until they have proved that the business model works in practice. Once it has been established that the business model stacks up and that there is a large global market for a product, VC funding can be sought. Deploying capital before proving product/solution fit is known as premature scaling. In simple terms it means that the investors are pumping money into a proposition that remains unproven. The key is to establish a position to demonstrate that your startup has achieved traction in a profitable and repeatable manner. VCs are good at assessing whether startups have achieved traction and will not provide funding if they don’t believe a business is ready to scale.

Founders should be aware of the type of funding available at each stage of the development of their startup. They should avoid taking excessive funding too early in the cycle but should also avoid falling into a gap where no-one will fund later on. Crowd-funding and Government tax breaks may have exasperated this issue by providing access to easy capital and over-valuing unproven propositions. The key is to schedule your funding requirements to achieving specific milestones.

Blog by Paul Dowling – Co-Founder of Dreamstake  the world’s first tech startup platform to match founders with the most appropriate investors using a unique startup rating system. This allows entrepreneurs and investors to monitor startup progress and inject capital and support when most needed. Startup founders can create profiles on the platform and get direct introductions to investors. We are constantly looking for great early stage tech startups. Investors please contact [email protected]

We have also recently launched an exclusive tech angel investment club in partnership with The Hoxton. HoxTech Angels will run invitation only angel investment evenings every last Monday of the month.

 

It’s ironic that an industry that espouses the need to automate services and predicts the demise of middle management professionals has been one of the slowest to adopt these principles themselves.

The theory goes, that huge swathes of middle management will be cut out by automation.  Industries such as banking and insurance will be transformed by process improvements, big data and artificial intelligence. However, will Venture Capital firms adopt any of these technologies to add value to their clients?

The answer, is likely to be, ‘not at any time soon’.  VCs will argue that it requires their special skills to ‘pick’ the best startups.  There is little evidence of this. After all, the success rate of picking winners at seed stage is poor and it would be hard to argue that ‘spray and pray’ techniques across a broad portfolio yields inferior results.

Many VCs still adopt the principle that they will not invest in firms that are more than an hours drive from their offices. This is so that they can remain ‘hands-on’ with their portfolio.  This need to closely manage portfolio companies has also led to the polarization of fund size.

However, there are fundamental scaling issues with the VC model.  This works against achieving economies of scale and reducing transaction costs. Ultimately, it leads to a lack of liquidity outside Silicon Valley.

Platforms have the capability to deploy algorithms to pick early stage startups with a similar degree of accuracy to that achieved by the managing partners of VC firms. At the very least they can out-perform the picking techniques used in crowd-funding . There is a growing body of research from initiatives such as Startup Genome that can be codified as software to support the selection process. Platforms such as Dreamstake are able to rate startups automatically. This will cut transaction costs significantly.

Over the next few years we will see a revolution in financial services in general. FinTech startups will work alongside legacy IT to automate the industry and create efficient markets, even at early stage. This will reduce the role of specialists and bring startup investment to far broader audience.

Blog by Paul Dowling – Co-Founder of Dreamstake  the world’s first tech startup platform to match founders with the most appropriate investors using a unique startup rating system. This allows entrepreneurs and investors to monitor startup progress and inject capital and support when most needed. Startup founders can create profiles on the platform and get direct introductions to investors. We are constantly looking for great early stage tech startups. Investors please contact [email protected]

We have also recently launched an exclusive tech angel investment club in partnership with The Hoxton. HoxTech Angels will run invitation only angel investment evenings every last Monday of the month.

 

iwatchLondon and New York are two cities that are well placed to take a lead in the fashion technology space. Both have a vibrant fashion scene, sitting alongside some rapidly developing tech startups. They can draw upon amazing talent from both sectors.

Fashion technology is a very broad sphere ranging from e-commerce and blogging through to wearable tech, sizing and image recognition. The fashion industry is well established and extremely creative. However, there is still a great deal of scope for technology to play a part.  We have identified a few challenges that still need addressing;

User experience issues – Fashion users are particularly sensitive to both style and function. Products have to look good and work well, or they will not gain customer acceptance.  We saw this with Google Glass, where the appearance of the product has been a factor in it’s slow acceptance. No one wants to be seen as a Glasshole. There are also a whole range of privacy issues relating to such a product. The iWatch is also going to face User Experience issues. The limited display face will dictate that it has to be used in conjunction with your smartphone and the limited battery power will be a real deterrent to mass adoption. Will there be a battle between smart watches and other less complex wrist-based devices?

The mobile experience - E-commerce is still difficult using a smartphone. Many online fashion retailers use the affiliate model to avoid keeping stock and dealing with returns. This involves a complex purchasing process, where the consumer is taken through to e-boutiques to make the ultimate purchase. Without aggregated baskets this can be an extremely frustrating experience. Solution providers such as TwoTap and UB are on the case, and trying to address this issue, but there is still some way to go before mobile fashion becomes a simple experience.

The tech is still lacking - There is still work to be done to make certain technologies fit for fashion consumers. A lot has been made of image recognition, with apps such as ASAP54 and others. Wouldn’t it be nice to snap that dress with your smartphone camera and buy the exact item with a few clicks. However, current image recognition is not up to the job and therefore can only suggest ‘find similar’. Many such apps  do not know whether you have snapped a pullover or a pair of shoes. Similar issues relate to sizing and styling apps. The technology is getting better but it is debatable whether it adds enough value for universal acceptance.

Many fashion apps are developed by tech oriented teams that do not understand the fashion industry. These startup teams should make sure that they include at least one fashion insider. Fashion is an enticing business. The sector is the fourth largest global market. However, it is extremely demanding. Many web-sites fall down, purely on graphic design and usability. Purchasing fashion is an emotive decision. Brand is important.  Net-a-porter, Farfetch and Asos are showing that keeping it simple is the key to success. It will be fascinating to see how the new crop of wearables manage to balance human needs with the increasing power of technology.

Blog by Paul Dowling – Co-Founder of Dreamstake  the world’s first tech startup platform to match founders with the most appropriate investors using a unique startup rating system. This allows entrepreneurs and investors to monitor startup progress and inject capital and support when most needed. Startup founders can create profiles on the platform and get direct introductions to investors. We are constantly looking for great early stage tech startups. Investors please contact [email protected]

We have also recently launched an exclusive tech angel investment club in partnership with The Hoxton. HoxTech Angels will run invitation only angel investment evenings every last Monday of the month.