Archives for category: entrepreneur

FailsWe all make mistakes, especially when trying to do something for the first time. In fact, I think I have probably made all of these startup fails at some time or other.

The startup world is constantly evolving. However, most of these fails are not new. I would really like other entrepreneurs to learn from my mistakes. Avoiding these simple fails will increase your chance of building a successful startup and reduce the time it takes you to get there.

Don’t build before you are certain there is a burning need

Probably the most common mistake for founders to make is to build an MVP before establishing a need. You may have read articles that suggest that it is important to get an MVP out as quickly as possible. Right, but not before you can verify that there is a burning need for what you are about to build. It is easy to test demand for your product using pen and paper and open questioning. Check that you are solving a real problem and that there are no valid alternatives that the user might use. Obsess at this stage and do not move forward until you are absolutely certain that your solution will address the issue in question. If you do build an MVP without validation of the problem you will find engagement to be slow or non-existant and total reluctance from investors to get involved.

Don’t do it alone

Building a tech startup is a team activity. A single founder will never have the full set of capabilities or bandwidth to launch a startup on their own. At early stage there is very little else, apart from the team, for investors to judge the startup on. As well as the core team, surround yourself with experts. Persuading an advisory board to support you is good way to get validation for what you are doing. If they won’t come in, they probably don’t have confidence that you will make it. Listen to what they say and tweak your proposition if it makes sense.

Don’t be closed-minded

Although founders are expected to be strong, driven individuals, close-mindedness is a red flag to investors (and probably to clients and employees). It is important to listen to advice and decide what to act upon. Select advisors with relevant knowledge; either existing successful founders or individuals with deep sector experience. Don’t look for yes-men. It is much more valuable to find people who will give blunt feedback. Learn how to take tough love.

Don’t misjudge timing

It’s easy to be either to early or too late with an idea. A lot of what you read is hot is from a Venture Capital perspective. However, by the time you have got your startup off the ground the VCs will be exploring the next big thing. If what you are working on seems too familiar then you are probably too late. Many consumer apps are in this category. If you are coming in late, make sure that you can improve on whats already out there and be totally sure that users will switch from what they have become familiar with. It is also possible to be too early. Think Google Glass or the first iterations of tablets. Remember there is a difference between pure research and being a first mover in a commercial marketplace.

Don’t under-estimate how long it takes to raise capital

Raising capital is much more difficult than first-time founders ever imagine. It is also important to remember that it is not just the first round of funding to take into consideration. There is nothing worse than raising a simple seed round only to find that you can’t get VCs (or anyone else) interested, once you have burned through the cash. Work backwards from the VC round and estimate how much you need to raise at the seed stage to get there. Venture Capital firms are moving upwards and this has created a nasty gap, sometimes calling for a bridge round. In building the first seed round, find a lead investor and build around this individual. They will bring confidence and attract other investors. Allow 6 months for each round and make sure that you are investment ready before starting the process.

Blog by Paul Dowling — Co-Founder of Dreamstake the world’s first tech accelerator platform focusing entirely on taking startups from inception to Series A. Dreamstake identifies promising startups from universities and accelerators and provides them with access to the resources they need to achieve later stage success. This is achieved through a large programme run out of Google Campus in London and our own network of experts and investors.

foodtechLondon is considered a world leader in the launch and growth of high growth Fintech and Fashtech startups. Few people realise how successful the city is becoming in Foodtech. With a latge and vibrant foodie population situated side-by-side with a rapidly expanding tech community London is set to become the Foodtech capital of Europe.

Startup communities tend to thrive where there is a logic for them to be situated. This usually means that they have a large successful sector thtiving in close proximity to the resources required to build them into technology businesses. For example, London is strong in financial services and has therefore built a leading position in Fintech. The same applies to fashion. We tend to forget the third Ftech, Foodtech. London has all the ingredients necessary to create a thriving Foodtech eco-system.

So what makes London so special in this domain? We have a very large, prosperous population with a huge appetite for some of the most diverse cuisines in the world. This has created an amazing opportunity to offer all sorts of culinary experiences, exactly where and when people demand them. In the midst of this melting pot we have a highly developed technology startup scene and the investor community needed to fuel growth. This has lead to the emergence of a whole host of providers covering everything from insect protein through to vertical farming. We already have our own food delivery unicorns such as Just Eat and Deliveroo with hundreds of new players emerging all the time.

For investors there are a whole host of opportunites to look at, including; food ordering, restaurant management, supply chain and waste management, new food production techniques, new sources of protein, diet management and many others. Food is the world’s largest industry sector and is only set to grow. London is extremely well placed to be at the centre of the foodtech revolution.

We strongly urge founders to look at solving real problems across all points in the supply chain; from farm to fork to bin and not to limit themselves to simple delivery apps which is rapidly becoming a crowded market.

Blog by Paul Dowling — Co-Founder of Dreamstake the world’s first tech accelerator platform focusing entirely on taking startups from inception to Series A. Dreamstake identifies promising startups from universities and accelerators and provides them with access to the resources they need to achieve later stage success. This is achieved through a large programme run out of Google Campus in London and mentoring with our own network of expert investors. We are currently running a Foodtech accelerator with Just Eat. Investors please register for demo day here.

Me

You have identified a large and growing market, built an MVP and acquired a few customers. You believe that you will have a business that will be attractive to VCs in 12–18 months but you need £250K to hit the metrics that they demand. Everyone is telling you that you need to find an angel investor or more likely a group of angels. However, finding them is easier said than done.

I was chatting to a Russian investor yesterday. He has made investments in London, Silicon Valley and Tel Aviv and put forward the view that early stage investment was often controlled by a small group of insiders. In the Valley, for example, the best startup investment opportunities are never put out to the broader investor community. He is sometimes asked whether he would like to ‘join’ an investment opportunity as if it is a special privilege.

It got me thinking about the London investor scene and whether something similar exists here. I believe it does, but it is much smaller and therefore even more difficult to penetrate.

Some of you will be familiar with those lists of investors that have circulated on groups like London Startups on Facebook. Well, surprise, surprise, these are not reliable. The VCs are usually accurate because they are easy to identify simply through their websites. However, the angels are either already invested out, were never investors at all, are in the wrong territory etc.

I started to think how best to build the ‘real’ list and realised how important it is to identify the movers and shakers. These are the guys who have been there and done it before. The founders of startups such as Just Eat, Transferwise, Shutl, Songkick, Love Film and the likes. In addition to these there are small numbers of potential tech investors embedded in the main angel networks plus a group of newbies who have the money but not experience. These are good to build a round behind the lead investors.

I have ended up with a list of 100 influencers. These are people that I believe can make a round happen by bringing a combination of expertise and capital. I am meeting as many as possible and inviting them to review the startups on our platform. I have learned that building a round is very strategic. Founders need to be well prepared and pitching at the right level. They don’t get many bites of the cherry, exactly because it is a small community of investors.

Blog by Paul Dowling — Co-Founder of Dreamstake the world’s first tech startup platform to match over 16,000 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 create profiles on the platform and get curated introductions to investors. We are constantly looking for great early stage tech startups. Investors please contact [email protected]

At first glance, investing in technology startups looks highly attractive. The best ones grow into billion dollar companies in amazingly short timeframes and fortunes are made by those that spot the winners. Even without betting on individual unicorns David Rose of New York Angels estimates an annualised IRR of 25% for angel investors. Not bad by any standards.

So where is the dilemma? The problem is that when you look to make your first investment all technology startups look high risk and of course they are. There is at least a 50% chance that the startup you are reviewing will fail and only 10% that it will be that billion dollar unicorn. It is only when you diversify the risk over at least half a dozen startups that things start to look more rosy.

I recommend that the first decision to make is whether to be an active or passive investor. You can choose either approach but your tactics will vary depending on which strategy you follow. To passively invest, you will need to follow others. Pick investors who you trust, investing in sectors that they understand. These are often HNW’s who have made their money from successfully selling or IPOing a company. Let them do the due diligence and set the term-sheet and invest alongside them.

If you choose to be an active investor, you should do a lot more research up-front. This kind of investment has to be fun and is often best driven by a passion. The tech startup sector is very diverse and it is rarely possible to pick a sector that has more potential that the next because everything moves so fast. If you are based in a city such as London, you can predict the sectors which will get the most support from Government and corporates. In the case of London it might be FinTech and FashTech. You might alternatively choose to bet on the future and take a look at sectors such as EdTech or HealthTech. You can also take a technology focused approach, looking to back emerging technologies such as Virtual Reality, Artificial Intelligence, Robotics or Big Data. Whatever choice you make, base it on research.

Active investors sometimes choose to invest in smaller portfolios. The reason for this is that it’s difficult to manage more than a few startups at once.

Finally, there is nothing wrong with taking a hybrid approach. This would involve investing in a small number of startups as the active lead and then build the rest of your portfolio by following other more active investors.

So the main tips to angel investors are;

  • Always diversify your investment across multiple investments
  • Only actively invest in what you understand
  • Follow other angels when you don’t fully understand a sector or technology

Blog by Paul Dowling — Co-Founder of Dreamstake the world’s first tech startup platform to match over 16,000 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 create profiles on the platform and get curated 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

 

 

great-gatsby-party

 

I read the recent blog by Bryce Roberts of O’Reilly AlphaTech Ventures, ‘Are we reaching the Limits of Silicon Valley’s Venture Model?’, in which he questioned the validity of the model.  As a Londoner with little connection to The Valley,  I realised that it was only one of many hundred recent blogs I have read from Silicon Valley VCs that recognised that the model might be broken.  It was refreshing to hear a VC actually take some responsibility for the current situation.

As an outsider, I would be a bit more blunt in my observation.  I guess Mattermark could confirm that over the past 20 years, Silicon Valley has consumed by far the highest ever level of resource in human history.  This has involved deploying trillions of dollars of capital in addition to concentrating some of the best minds from across the globe.  And the result?  A taxi app and a bed and breakfast app!  Before you shout that I don’t understand.  I do realize that Uber could be the basis for driverless cars and that VCs have been clever enough to spot this and pump in capital.  However, it is still only a taxi app. and it is quite possible that Tesla or someone new will get there first.  In the context of the trillions of capital and concentration of resource, is this really a great result and shouldn’t VCs take full responsibility for failing to invest in more significant opportunities?  It’s your bubble guys. No-one else is to blame.

Silicon Valley VCs are hypocritical in their approach to investment.  They dictate rules that they don’t observe themselves.  They insist that businesses are scaleable but have done nothing to ensure their own businesses are. They still invest in companies an hours drive from the office and employ little in the way of automation. It’s an old story. Turkeys don’t vote for Christmas and VCs don’t wish to put themselves out of a job.  They therefore insist that somehow VC is different from other professional services and can’t be automated by platforms or machine learning.  They have been guilty of extreme groupthink which has lead to a bubble.  Yes, sorry guys, it is a bubble. Just in case you haven’t noticed.

The bubble has been caused because of this groupthink.  It’s always the same. It goes back to the tulip bubble and has caused every bubble since. This time around it has been caused by an inability to take true risk on innovation, instead chucking capital into ‘me-too’ marketplaces and ‘safer’ business models. This groupthink happens because of a lack of diversity and the exclusion of wide ranging opinions. There is life outside The Valley in case no-one has noticed.

The rest of the world has some justification in being unsympathetic to The Valley and in particular Sand Hill Road.  You have sucked our resources for a few decades and risk spoiling our party too. You have given us the basis of our own startup revolution but any bubble threatens to take us down as well.

The solution?  Silicon Valley VCs need to admit that they are myopic in their approach. They can no longer kid themselves that somehow a bunch of bright people can change the world through concentrating capital based on their decisions.  The close-knit cluster has had its day. The internet will open it up, as it has the industries VCs invest in.  We should strive to reach the point where a founder building a startup in Nairobi will have equal access to resource as the college kid from Stanford. As VCs themselves say, ‘platforms change the world’.  This much is true.

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.

 

About 6 months ago I heard a presentation given at Campus London by Daniel Kraft from Singularity University.  A similar presentation from him can be found as a Ted Talk.  The talk blew my mind away and opened it up to the amazing possibilities facing the medical world from the exponential growth of several technologies in parallel.  The combination of low-cost gene analysis, improved computerised bio-informatics, robotics and increased connectivity will revolutionise the way we interact with medicine.

The amazing growth and connectivity of technologies such as connected digital medical records, robotic surgery, nano-medicine and genomics will provide us with a health eco-system that will allow greater emphasis on preventative health and re-direct medical budgets on improving quality of life rather than focusing it on the last few years of a patients existence.

Health services the world over struggle to deal with a variety of problems; increasing cost, unfavourable demographics, access variability, fragmentation, waste and the slow adoption of technology.  Technology can have a positive impact in addressing all these issues.

The increasing power of the smartphone alone is providing a new and increasing range of innovations. It is already possible to test for STDs, blood sugar levels and many other symptoms using sensors or patches linked to smartphone apps. Graphene patches will be even smaller and cheaper.  We are seeing a massive increase in the adoption of quantifiable self solutions. The popularity of wearable wristbands and smart-watches allow us to monitor our health in realtime and take preventative actions. It will not be long before clothing will incorporate sensors that will monitor all aspects of our health and warn us of any problems.

Another area of huge change is in imaging, which is getting increasingly faster and provides far higher resolution. This enables improved diagnosis and supports the surgeon in decision making.  Advanced robotics also provide surgeons with the tools to conduct operations that would not previously be possible.  This can be combined with internet connectivity to allow sharing of information by surgeons during surgical procedures.  Technologies such as augmented reality and even motion detection have potential in medicine, for example in detecting or monitoring stroke victims.

Medical scientists are also carrying out extremely advanced research on devices that allow brain-computer interface as a means for helping quadriplegic patients to restore certain functions.  Artificial retinas will help restore sight and robotics are either replacing or augmenting limbs.

The reduced cost of the genome sampling to less than $100 will allow us to predict the likelihood of developing certain hereditary disorders , this combined with environmental data, and will allow us to take preventative actions.

In general, technology offers the possibility to bring a new approach to medicine that focus resources on prediction and prevention, bringing a higher level of personalisation and participation.  In so doing, technology will increasingly help to empower patients, enable physicians and enhance wellbeing.

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.

 

 

Lean has served the startup world well and is still applicable to 90% of technology startups. It was designed for high growth, low capital intensive startups as defined by the likes of Steve Blank. It has never been for everyone but I find that it is often ignored through laziness or in some cases pure arrogance.

I would now argue that lean will also be adapted over time. In the case of really simple startups, I would suggest we will see a kind of leaner than lean approach, where the tech has zero cost (wix etc.) and it is quicker to simply build a product to test both problem/solution and product/market simultaneously.

The second area is highly complex products. As we move towards more impactful use of tech building an MVP will not always be possible. This could include hardware, chips, drones, blockchain etc. For the time being I will still relate all startups to the lean stages but with an open-mind in the above situations.

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.

 

Dreamrate

We would all like to be able to spot the next big startup success before anyone else.  We could be that smart investor who gets in first and makes millions or we could sign-up as a team member or co-founder. It’s also exciting to be able to compare notes with friends about the latest cool apps. But why does it matter to founders and why should they provide valuable data to people like us?

Validation is essential at all stages – We have moved away from the days when startups emerged from stealth mode to a surprised customer base. Unless you are involved in pure research or developing deep IP you need to be sure that other people buy into what you are doing. Ratings can determine where you are in the process. Have you established problem/solution fit or are you well on the way to scaling?  It is important to know. It will determine which investors you talk to and the valuation of the business.

It’s helpful to know where you are – You often don’t know what you don’t know. A rating system can help establish the gaps you need to plug.  You may be a single founder with a cool idea. However, if you don’t have the necessary technical experience you won’t build a successful business. A rating system can provide an objective view of where you stand in the startup lifecycle and help you to address issues.

It’s tough getting discovered – You will need your startup to be discovered by investors, potential team members, the media and customers. The startup world is becoming increasingly crowded. There are millions of apps submitted to the App Store and without a objective ways of listing and rating it is impossible to be discovered.

It helps investors build portfolios – Investors need to diversify their risk. They do this by spreading their investment across a broad portfolio of companies. However, it is extremely hard for them to know which startups to invest in. Most investors will not attend generic networking events in the hope of discovering a winner. It just is not good use of their time. They will also not read unsolicited business plans from startup founders. They simply can’t see the wood for the trees and have no objective way to evaluate what’s been sent to them.

A rating system enables all interested parties to ‘discover’ the next big thing.  It allows us to categorise our database and curate deal-opportunities to investors that are interested in specific sectors or funding stages. If you would like to be discovered we would encourage you to create a startup profile on our platform. Each month we select the most promising startups to pitch at Hoxton Hotel London. We also match startups to angels or VCs depending on the funding stage.

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.

 

 

baby unicornAngel investors are often cautious about diving in too early when it comes to investing in early stage tech startups.  They argue that it is highly risky and that there is little quantitative data on which to judge performance. Of course this is correct but does the situation get any more favourable if you leave participation until later? We all know that even VCs have a poor record of picking winners. Surely it is better to make a larger number of smaller bets at early stage than risky larger amounts on later rounds when the valuations are poorer and you have less influence? Here are a few reasons for getting in early;

You can cherry-pick the best opportunities

In the current frothy market there is strong competition for VC ready startups.  However, at seed stage, there is the possibility of spotting a gem. Admittedly it takes more work and you may want build a relationship before committing but you can construct a portfolio of startups that play to your personal strengths and experience. I would advise networking like crazy in your designated sector, learn whats attracting VC investment and get in before the rest.

You can influence the outcomes

If you are first in, you can have a strong influence on the strategic outcomes of the startup that you invest in. You will want to pick strong founders in industry sectors where you have previous knowledge and contacts. You can build a powerful relationship in an advisory role and take away some of the burden from the founder in building the first full funding round. You can also bring the benefit of your experience and help the founder attract other investors.

You get a better valuation 

Clearly the earlier you invest the more favourable the valuation you will secure. This has the advantage that you will be able to construct a portfolio in which you hold equity in a great number of startups with higher equity share. The diversification of your portfolio is an essential part of achieving a higher return on your investment. If you spot opportunities early enough you will find that quite small individual investments can have a major impact.

I would advise founders to start building their funding rounds, bottom up, from very early in their startup lifecycle. They should identify smart investors who are able to add value during the early days and later bring in other investors to construct the full seed round. Most founders fail to realise that they will need a lead investor anyway. It is better for both parties to build the relationship early to obtain maximum benefit.

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.

 

The startup eco-system has always been about concentrating resources around great founders. First it was Silicon Valley followed by around-about 20 other cities across the globe. It was then realised that this was not enough and we saw a proliferation of accelerators, some stretching out to the developing economies. These individual ‘dots’ are vitally important to the health of the global startup scene. The next phase is to join the dots and it will be the internet that enables this.

Silicon Valley gave us all an insight to the model needed to create successful startups. The Valley concentrated resources within a few hours drive of Sand Hill Road where the VCs were based.  Investors could keep an eye on their portfolio companies, which were formed by founders from Stanford and Berkeley universities. The Valley acted as a magnet for talent from across the globe and sucked in resources from other economies.

Other cities such as New York, London and Tel Aviv sought to copy the formula and tech tech clusters were formed. Silicon Valley was still dominant and often pulled in mature startups for funding.  This situation has been a great benefit to The Valley but has drawn resources away from other centres.

Accelerators, are effectively micro-clusters.  They concentrate resources around specific startups, wherever they are formed.  An accelerator run in, say Nairobi, can attract the best local talent and give them the support they need. They can attract investors and mentors from across the globe.

Now platforms such as Dreamstake are joining the dots. Accelerators, angel networks, co-working spaces and a whole bunch of other initiatives are looking to deliver support and funding to startups wherever they are. They provide a useful concentration of resources but often lack the capital they need to fund the startups on their programmes.

The internet allows us to identify the best founder talent wherever it is and deliver resources on a global basis. This creates a meritocracy where location is no longer the only determinant of success. For the first time in history, a brilliant founder in Africa, can access the support needed to build a global business. This will go a long way to reducing poverty in many parts of the world.

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.