Wow, where has the past month gone!!!?? Last month I attended an excellent Northern Startups Event and so although this is belated I felt it was worth sharing my notes on the event, just in time for this month’s event, which will be held this evening at eOffice in Manchester (http://tinyurl.com/5ecw3h).
The Northern Startups event (http://tinyurl.com/5rlg5h) is organised and hosted by local businessman and entrepreneur Manoj Ranaweera, the format of these events differ from month to month, but regularly feature guest speakers from outside the region. The events are well attended and provide an opportunity for entrepreneurs, early-stage and startup businesses to meet each other, present, discuss and test their business propositions and theories. The events also join businesses with potential investors and service providers, including representatives from the financial, legal, sales and marketing industries.
The theme of the October event was 'De-Mystifying Investment' and delivered a unique insight into the investment process from 3 very different perspectives. The panellists were, Roy Sheldon an investor, Stuart Scott-Goldstone a lawyer and Robert Wakeling an entrepreneur, each presented and then took questions from the floor.
The Investor - Roy Shelton - DropJawVentures
20+ years experience building international technology and telecoms businesses. Roy has gained a reputation as an early evangelist of the emerging technologies that evolve to lead their field. DropJaw Ventures Ltd founded by Roy focuses on early stage investment into emerging and aspiring technology companies. DropJaw Ventures; formed in 2007 and based in Nottingham, have made 3 investments to date. Roy has seen his investment into Next2Friends rise 10 fold over the last 12 months, when the latest investor valued the company at $25 million. He is at lengths to explain that the money they invest is all there own money and he sees the role of DropJaw Ventures as an investment vehicle rather than venture capital. Their investments are typically between £50K and £100K, the focus is on startups and the early adopter market. This is an area where Roy can afford to invest, but also where he feels he can add significant value based on experience and expertise. Roy is looking to make one or two more investments in 2009 and is seeking opportunities where he can support, progress and scale an early stage business in readiness for securing future and potentially large rounds of venture capital.
To be in the running for DropJaw investment businesses must meet the following criteria:
- Is the product/service disruptive?
- Will the product appeal to the mass market?
- Do the business owners have at least as much 'skin' or money invested in the proposition as Drop Jaw Ventures?
- Does Roy like the people enough to 'go for a beer' and socialise with them? (This is a good indication of whether you will be able to work with them!)
Other questions that will need to be answered in order to secure funding include:
- What are you going to use the money for? (Roy is looking for lean businesses!)
- Can you demonstrate traction, a user curve and early stage feedback from betas?
- What is a realistic exit?
- What is in it for DropJaw Ventures?
What Roy and DropJaw Ventures can offer you, is the opportunity to scale your business more quickly and effectively than would otherwise be possible, by benefiting from not only a cash investment but also the chance to leverage Roy's contacts, skills, experience and business acumen.
Corporate Lawyer - Stuart Scott-Goldstone - Aaron & Partners
Head of the Corporate Team; specialising in corporate finance transactions at Aaron & Partners LLP, a commercial law firm with offices in Manchester and Chester. Stuart and has advised both investors and companies on a large number of early stage and start up investments in the North West, particularly those involving regional venture capital funds.
The focus of Stuarts presentation was the paperwork and process surrounding Venture Capital investment, including the legal obligations upon the company as they enter into:
- Confidentiality contracts
- Term sheets
- Lock outs
- Due diligence
Next Stuart covered some aspects of how the different types of investment might be structured, including but not limited to, equity share, dividends, loans, deeds or a combination of these.
Finally Stuart gave a high level summary of key documents that any business taking investment might come across and gave some great insights into what you should expect. The presentation covered:
- Investment agreements
- Influence, rights and veto clauses
- Board representation
- Warranties
- Disclosure agreements
- Restrictive covenants
- Key man insurance – in case of death
- Articles of association
Entrepreneur - Robert Wakeling - Wadaro
20+ years of hands-on industrial experience in senior management positions, Robert continues to be a strong analyst of future trends in wireless technologies. Robert, Managing Director of Wadaro; founded 2 years ago, raised seedcorn funding from regional venture capital market and is currently negotiating the next round investment.
Robert talked about how as a serial entrepreneur he decides which of his ideas to take forward as his next venture, he outlines his thought process as follows:
- Have an idea
- How to market
- How to deliver
- How to make money
- What are the risks
- What is the impact on friends family and colleagues
Roberts top tips for early stage businesses strapped for cash included:
- At the beginning try and secure grants rather than VC investment, the people controlling grants can be tedious but they are better than VC’s!
- Small business loans and banks are hard work, better to focus on securing grants and angel funding.
- Use some of your own money to seed the business, then take VC investment; you will receive a much larger proportion of money for the equity you surrender.
- Regional investors are a great place to start looking for funding and early stage investment
Robert then went on to talk about how to find Venture Capital investment when your business is ready for a larger cash injection. But as a word of warning to us all suggested we should be very careful to ‘Get into bed with the right person’, implying that choosing the wrong investor could mark the beginning of the end for your startup. In order to successfully secure VC funding you need to confidently sell yourself, your team and your opportunity. When you meet a VC who is interested in your company, be honest and communicative, start the relationship as you mean to go on. Remember VCs wants to make money, so give them a significant percentage of equity in the business.
Finally in summary Robert’s top tips were:
- Seed your business with grants and your own money
- Get investment
- Work hard, no holidays, no weekends, late nights!
- Monitor and manage the pressure
- Get out there and network
- Remain focused and disciplined
- At this stage the job is your lifestyle, but hopefully in the end it will pay for the lifestyle!!
Entrepreneur - Georgia Brown - PhoneFromHere.com
At this event I also did a quick 60 second appeal for PhoneFromHere.com, which covered the following:
PhoneFromHere.com
- Deliver verbal communications for Web users and online communities
- Active in tech and startup communities
- Winners of big chip international innovation award
PFH self funded
- Looking for investment to enable growth
- Looked like we had secured funding
- Disappointed to hear the fund had run dry
Typical example of why we are looking for funding
- Internet World Innovation Pavilion
- Ideal for promotion of PFH on global stage
- Now appealing for Sponsor or a partner
- Or suggestions of who and how raise money
You can also see my blog post on the Northern Startups website for more detail regarding our appeal for sponsorship: http://tinyurl.com/6csqjx, or check out the press coverage we received on The Business Desk: http://tinyurl.com/5nw2kb.
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