Archives for the month of: November, 2015

When you meet a founder, who comes to pitch his great startup, there are few basic aspects that you need to be aware of. Here are some tips for investors when interviewing a tech founder for the first time. Yes it’s called interviewing, because at this early stage you are basically “hiring” a team leader, so you need to make sure that whoever you “hire” can make the startup work.

  • Teams

Apart from relevant experience, you might also want to know your potential tech founders motivation and personal views on doing a startup. Are they committed full time to the project, or do they have a full-time job while doing the startup on the side? Also, do you believe in the potential founder’s vision and do you get along with them? You better make sure and do due diligence and verify that these are reliable and trustworthy people.

  • Business Model

Remember, the business model will most likely evolve over time. And it’s not a bad thing if the model changes along the way. The most important, is that the business model is working to bring in revenue. At this early stage, your main concern as an investor is: that the business model is tested out in the market and getting some traction.

  • Traction

Traction can really be any kind of forward momentum. But the bigger the better. They might launch a minimum version of some product and it has gone viral on Facebook. Or they might make a partnership with some big players that can open up a first route to the market.

  • Market and Industry

It is of big advantage if you come form the same industry and understand the market. Teams also prefer that their investor has some relevant background experience, because then they can get a good advice and important contacts. Another thing to remember, is to make sure that the market your team is operating in is big enough, so that the startup can scale extremely fast.

  • Technology

Is your teams tech unique enough? Who is the owner of their IP? Are they outsourcing their teams? How much is that costing them? Do they have a CTO (a tech person) who can make all of this happen? You have to make sure you get the answers to all of these questions, as it will determine the burning rates and influence the future rounds and exit strategy.

  • Exit Strategy

Another important question to ask is: where is this all going? Is your team planning to go on to IPO or to sell the company? Unfortunately, IPO doesn’t happen that often in the UK, so make sure the teams have a clear and realistic view on this. At the end of the day, you want to get a multiplied value of your shares in at least a couple of years time. That is what any startup should aim for.

  • Advisory Board

It is incredibly satisfying if a start-up has a well known industry leader as an advisor. If they have a good name on their board, it means that they will get the best contacts and the best mentoring. It also means that the leader believes in the team because he or she is backing them up with their own name.

Try to remember  these few main criteria in mind and find out if a founder has clear and realistic answers on most of the questions. It will surely save you a lot of time while making an investment decision.

Blog by Marina Atarova, 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. 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 month.

drinkersTo build and scale great product startup founders need access to substantial funding.  However, building a funding round can take 6 months and this assumes that the startup is investment ready. On the other side of the table investors are sitting on a huge pile of decks and can’t see the wood for the trees. At later stage, this is not such a problem because the founders can afford to pay trusted third parties to get involved and make introductions and even take a strategic deal-making role. Their involvement cuts the process and brings investment ready startups to the attention of the most appropriate source of investment. At early stage it is difficult for third parties to undertake this role because the founders have no money to pay for such a hands-on approach. Platforms such as www.dreamstake.net bring down the cost of each fund-raising transaction and can therefore support the founder in a more efficient way.

Corporate Finance houses normally get involved in funding rounds at around about £1m -£2m or when founders have enough money to pay a substantial retainer. Although founders may find the retainer a deterrent it focuses the advisor on putting resource into the task of getting the startup funded. It is rare that any startup is 100% ready for funding and the role of the advisor is to work with the founder to refine the deck (and the proposition) to the point where it is ready. The next step is to match the startup with the most appropriate form of funding. VCs are invariably sector and stage oriented and therefore a ‘spray and pray’ approach to distributing decks rarely works.

The beauty of platforms, is that they radically bring down the cost to serve. Look at how Airbnb and Uber are transforming their sectors. They do this by building efficient markets where consumers are matchedwith providers at a fraction of the cost. We have brought the same principles to funding startups and use algorithms to sort the deal-flow and match with the most appropriate form of investor. We can therefore, engage with earlier stage startup founders on a performance fee only basis or later stage at a greatly reduced retainer cost.

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 month.