My 3 ‘Can’t-Live-Without’ iPhone apps

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I thought I’d take a break from the topic of investment and fundraising for a while and instead  start the New Year on a lighter note by spending a little time reflecting on three of my ‘must have‘ apps. I’ve picked on these three because they really are cornerstone apps for me and vitally important to the way I work; on-the-go and across several devices. Below is an outline of my top three but I would really like to hear some of yours too.

1PW_Graphic1 Password (£5.49):  This one is totally indispensable for me. These days we all have so many passwords to remember and we need access to them across several devices. I hold and use somewhere between 50-75 passwords for website access and all manor of logins. The high level of encryption and the excellent data management make 1PW an app that is definitely a must have for me. When I upload or change a password on one device then it is synced automatically across the others. The key feature of this app is that all you ever need remember is ‘one password.’ Even though you might make a different log-in for each website, this application recognises the URL and feeds in the log-in details automatically, as long as you give it your 1PW master password. There are other neat futures too, like the ability to store wallet information such as bank or bank card information (really handy when you are out and asked for some verification information), or the ability in a PC browser to recognise the website and let you type your 1PW password to open up the access without launching the application. However, the cost to have the application across all devices (laptop, mobile and tablet) is over £40. For me, still worth it for such a vital application.

DropBox_GraphicDropbox (Free):  For around 6 years now I’ve been storing ‘everything’ in the cloud. My hard drive has only been used for nothing but storage of the files and apps that it was born with on its OS installation birthday. I used to use iDisc before Apple knocked it on the head mid-2012. For a while I found myself scrambling around as iCloud was not going to support file storage and synchronisation. I was nervous about transferring everything over to Dropbox but I’m pleased to say it’s been up to the job. Making things even better, these these days many application makers build in the option to synchronise or back-up to Dropbox. Everything I do is in the cloud; no more saving things on hard drives.

ScannerPocket Scanner (£1.49):  This one is sooooo useful. I mainly use if for scanning important documents when I am on-the-go then emailing the resulting PDF back to my email for safe keeping, storage or to view at a more convenient time.

Apps

I’d also like to take some time here to acknowledge some really rather naff apps that should be a lot better. I love Linked In and use it daily but the iOS app for me is truly naff, with no consistency with website product. A mention here also to every WiFi printer app I’ve ever used.

I’d be interested to know what is the most expensive app on your phone. Mine is not a business app but an ornithology app I brought a few years ago to encourage me to get out a little more and go for more walks. For a few years I got into bird spotting with an app weighing in at around £13.

Got time to tell me the most expensive app on your phone, or what apps have become totally indispensable for you? Any that are truly useless and frustrating?

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6 Key Thoughts Along The Fundraising Journey (No6)

Lining Up Your Fundraising Approach (Access & Assumptions)

Don’t Treat Fundraising As Just An Access Issue.  Too many assumptions – Don’t assume, prepare! 

Image courtesy of freedigitalphotos.net

One of the hardest things about my work is pushing away companies that are looking for investment. Industry figures say that around 95% of businesses looking for investment fail in their fundraising attempts. In this series I’ve been looking at some of the reasons that I frequently see which ultimately lead to that fail. This 6-part series is not meant to be definitive but just a collection of some key thoughts and issues that get in the way for founders as they look to fundraise. This article is more pertinent to the way founders approach intermediaries or brokers (either solo fundraisers, angel networks or corporate finance firms) and picks up on the lack of understanding over the nuances of the angel investment landscape and how to get connected to investors. In essence, the big mistake is to just see introducers as just connectors (i.e “if you can  just make an introduction and give me the investor’s contact details, then I will do the rest”).

I see too many founders launching themselves into a dearth of fundraising activity in the hope that somewhere along the line they might connect with a likeminded investor or hit a lucky break. Being an occasional fundraiser/broker, I get many requests from company founders asking if I can introduce them to angel investors. Frequently, it goes something like this … “here’s my executive summary, let me know if you know anyone who might be interested in investing in this.” The problem is that there are several assumptions usually being made when someone says this to me and they broadly fall into two categories.

1)  Being ready for the deal:

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Usually the biggest assumption is that they believe they are ready to speak to investors, overwhelmingly, they rarely are. They presume their deal proposition and the way they are communicating it is ready to put in front of investors; we call this being ‘investment ready.’ Perhaps they have managed to get a decent business plan/executive summary/pitch deck together and would no doubt feel at ease answering questions, such as, “what size or where is your addressable market?” or “when do you expect to reach break-even?” or “who do you expect to exit to and for how much?” However, there is a stage beyond this and very few get to it. It’s called ‘deal ready.’ Being deal ready means configuring the deal opportunity with the aim of de-risking it as much as possible to make it easier for an investor to say ‘yes.’

2)  Don’t treat fundraising as just an access issue: 

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The second assumption and this is more usually the territory of first timers, is a lack of understanding of how to go about raising finance or how connections and introductions in the investment landscape are made. Founders often perceive getting investment is just a question of getting access … “if you can just give me the contact details (i.e. the access), I’ll give you a small slice of the deal for your trouble.” Just by the virtue of having a business plan or an investment opportunity, they feel they deserve the access that they are seeking. But a broker is also a gatekeeper and deal sifter. Before they will give that access, a review of the proposition is needed. If it’s not ripe for an introduction then it will be rejected.  Some entrepreneurs feel that the best strategy is to sign up as many brokers as possible but this is an approach that fraught with difficulty. ‘Spray and pray’ is not a realistic strategy and means that you end up with several brokers giving your deal a light touch. If they can place it easily they will but they won’t spend much time on it. I see many founders wandering around from angel to angel or angel network to angel network, hoping that eventually someone will believe in them and their propositions and say yes. If I just connected up all the businesses I could with investors without paying heed to whether the proposition was good enough, I would get a reputation for throwing any old deal out into the community; I would become a deal spammer.

Experienced people know that the investment community doesn’t work that way. Those that don’t, float around reaching out randomly asking “if you think you know anyone that might be a good match, could you introduce me to them?” It is very rare that I will engage in such a random approach and make that sort of casual connection. Ultimately, I and others like me (angel networks included) act as a sieve. If I don’t think their plan is good enough, why would I risk my reputation and send out sub-standard deal flow. There’s no way I would send out such business plans or summaries, let alone give out investor contact details. If the company and the deal is good enough, I have to get under the hood i) so that I can get to the stage where I think I can get behind the deal and ii) spend time helping the company to write a better executive summary. The summary is so important, it’s the foot in the door and it has to be close to perfect.

Accept, nay embrace, the sifting process so that you can come out the other end knowing where your weaknesses are. Then have a period to make changes according to the feedback you’ve been given, then you can start to fundraise. Here’s a good way to map out your fundraising campaign.

IDEAL APPROACH:  

1. Documents > Put together both an executive summary and business plan. Obvious I know but you’d be surprised…..

2. Testers > Devise a list of three investors, or individuals in the landscape who you would not necessarily be looking to invest but who might be happy to give you feedback on your ‘investment deal.’  Ask them, “if you had the money, is there anything that would stop you investing in this proposition?”

3. Revise > Makes changes, possibly revise your strategy according to the feedback you’ve been given (these maybe quick changes that could just take weeks, or painfully slow ones that may take months). In essence you are have made changes to de-risk the opportunity for investors.

4. Embark > Now take your deal out; directly to investors if you can, or if you can’t get or don’t have direct access, then either i) put together a PPT and stand up and pitch at angel networks, or ii) find a broker or intermediary to represent you (the above mentioned solo fundraisers, angel networks or corporate finance firms). Beware though, to get ‘success fee only’ representation (i.e, no win, no fee) you and your deal have got to be not just good but really really good, especially in the current climate when even more companies are competing for the same investment that you are.

Please do leave a comment or question. Was this helpful, interesting or totally off the mark?

6 Key Thoughts Along The Fundraising Journey (No5)

Investor Contact – A One-Hit Pitch or Contact, Not an Unfolding Mystery

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“You get one shot so make sure it’s your best. Be prepared, be focused and be thorough. “

A frequent frustration when receiving incoming investment enquiries (either for the angel network I run, or for me as an independent fundraiser) is when the enquiry is drip-fed or trickles across the internet to me via a string of emails. The most common contact or access into angel finance tends to be via ‘pitching events.’ However, company founders also seek out investors directly where the first point of contact would be by email or a message via LinkedIn. The problem is that these digital introductions can be a very time consuming experience for those on the receiving end. You may not like it but you will be sifted and most likely moved on quite quickly (hopefully politely) so that the next business propositions can be reviewed. Remember, investors are looking for the best of the bunch, as soon as they see the investment opportunity, if it’s not in the top bracket, then they need to drop it quickly and move on.

Bad scenario #1:  An incoming email with either, i) a 30+ page business plan, or ii) a 15+ page powerpoint pitch deck. My reply, “Dear founder, would you mind sending me an executive summary or a short 1 or 2 page overview of your proposition. If you don’t have one, please see the attached example (N.B. I often send out an executive summary template). I’m afraid I wouldn’t get my work done if I had to read business plans all day long.” The normal review and sift process takes about 20-30 seconds (similar to a HR recruiter), therefore don’t make the reader work hard or reject you just for providing too much information. Yes it’s true, at this stage it is possible to provide too much information.

Bad Scenario #2:  Incoming email with an attachment but with an explanation that “the financials are not quite ready but I’ll email them over later in the week,” or, “I’m waiting for the result of a really big deal. I’ll keep you posted as things become clearer.” Don’t assume that the reader will remember you or your business proposition when you next email or call them. Many investors and investing groups can get anywhere between 10-30 investment propositions a week.

The best advice I often give out is in focusing companies on how to make a decent executive summary. This summary is so important because it’s your foot in the door. Be unfocused in this and it will lead the reader to suspect that if you can’t write a half decent 1 or 2 page executive summary, then it’s quite likely that the same focus and attention to detail is likely to be seen in every aspect of the business and its associated business plan. The problem with many summaries is that they max out on market aspects and also on product/service information but with very little on the investment proposition being offered to investors. They frequently fail to address the main required question: “how are you going to make money for an investor and what can you show to support this?”

Take a look at some of the summaries in the ‘Deal Activity’ section of this blog. I find this format seems to cover most of the urgent things you should communicate to an investor.

Your feedback and comments to this article, as ever, are always appreciated.

6 Key Thoughts Along The Fundraising Journey (No4)

Validation & Traction – Two Crucial Words When Looking For Investment

“Too Many Businesses Want To Jump From Being A Minnow To A Whale”

(Image courtesy of 123rf.com)

I’m currently seeing a lot of businesses with really great business proposals looking for investment but lacking vital demonstrations of key proof points; in essence they are concept stage or pre-development propositions that ask the investors to take a huge leap of faith. In times of boom, these proof point generally matter less as investors scramble and clamour to sign up all ‘n’ sundry in the hope of not missing out. However, in these times of austerity, reaching these proof points is vital in gaining investor interest. I like to equate these proof points in terms of two proof points; the first being validation and the second traction. It’s not enough to have the best theoretical money making idea, a fabulously detailed business plan, a full set of detailed financial statements and a team of all-star internationals ready and waiting in the wings. It will always be the business that has achieved these proof points who will gain investor attention, over those that have a great business plan and fantastic team but are still on the starting blocks. Achieving proof points can significantly de-risk the opportunity for the investor and significantly increase the possibility of a deal being struck. The first proof point, ‘validation’ is about proving that there is a market, to show that there is potentially a paying sizeable audience, client base or consumer volume that seems to be interested in buying your product or service. Engaging a little bit with that audience and getting early feedback helps your investor see that real people or real customers believe in your offering also. This can be done by getting trial registrations, downloads, client letters/emails expressing tangible interest. You can’t do this by quoting top-level ‘size-of-the-international-market’ statistics. Identifying the addressable market is the starting point of validating your offering. The next proof point is the big one – traction. In essence, this is about giving your investor an early and mini demonstration that real people will pay for what ever it is that you are offering. This Techcrunch article entitled “Why traction is so important” really digs down a little more into the subject and is really worth a read. http://eu.techcrunch.com/2011/01/06/guest-post-the-importance-of-traction

This one is also excellent: http://www.forbes.com/sites/caroltice/2012/11/02/what-really-makes-venture-capitalists-invest-in-your-startup/

And a late addition: http://techcrunch.com/2013/01/06/iterations-traction-capital/

And another:  How Much Traction is Enough for Investors? Really really important article:  http://bit.ly/1pL3eVh #Startup #Traction #RubberHitsTheRoad

I’d be really interested to hear other views on what validation and traction look like from your perspective.

6 Key Thoughts Along The Fundraising Journey (No3)

It’s Not All About Your Business Idea

(Image Courtesy of 123rf.com)“Good Ideas & Good Investment Propositions Are Two-a-Penny”

Yes, it really is true and yet many founders give the impression that they alone are holding the big ticket to success. The statistics show that the odds are heavily stacked against every milestone of business success that you are likely to encounter. From staying in business more than 3 years to procuring angel investment, the odds are not in your favour. Even if you do get investment, there are a million and one reasons why a business won’t achieve success and the statistics prove it. Angel investors are speculating their personal money, so don’t be naive and assume that just by the virtue of having a business idea or a business plan that you should automatically have the right to talk to investors. Business ideas that have not developed into an investment proposition are rarely worth the time and effort. My belief is that founders often feel that if they can just hook the investor with the opportunity then all other considerations will take care of themselves. Most investors that I know are too cautious with their money to hand it over on an untried opportunity alone. Most investors are not looking for good ideas (per se) but for ideas that have begun to prove themselves by gaining some form of business traction. The potential of the opportunity does not override all other considerations.

Investors are looking for people that have gone beyond just identifying a business opportunity, to actually demonstrating and validating it in the marketplace. Such ‘wise heads’ will often benchmark against real-world data that shows how much money they could return for an investor. If “ideas are worthless” (as Colin Willis of the business accelerator Ignite100 explains in the article link below) then what is worthy to an investor? My answer would be founders and entrepreneurs who know how to ‘configure an investment proposition’ and who have validated it as far as is humanly possible. There is always an abundance of investment opportunity out there for investors but an investment proposition is different, it’s an idea or an opportunity wrapped up in as much tangible market place proofs as possible. This proof is often referred to as traction or validation but more about this in article No4 – coming soon.

A few good articles loosely on the same theme…

http://www.growthbusiness.co.uk/comment-and-analysis/2129233/its-not-the-product-its-the-execution-stupid.thtml

http://www.forbes.com/sites/alextaub/2012/03/01/what-it-takes-to-raise-seed-stage-funding-in-2012/

www.timjoslyn.com/post/2400692301/funding-is-not-a-right

www.nebusiness.co.uk/business-news/science-and-technology/2011/07/01/why-your-idea-is-worthless-51140-28976859

http://blog.elegantbanners.com/2010/12/entrepreneurs-ideas-are-worthless-execution-is-gold

6 Key Thoughts Along The Fundraising Journey (No2)

Investor Criticism Now Can Lead To Investor Funding Later

“Feedback & Knock-Backs From Investors Are a Valuable ‘Proposition Testing’ Opportunity To Be Seized Upon.”

(Image Courtesy of 123rf.com)

Some take feedback and criticism from investors well, others do not. I have seen many founders take offence at certain feedback suggestions or criticisms given to them from investors. They would do well though to remember that it is a kind and helpful investor who despite their busy workload, still chooses to give feedback and their thoughts as to why they do not want to look further or invest. This information or advice can almost be worth paying for because in the long run it could save time, effort and financial resources. More importantly, it comes from a source that is not motivated out of self-interest or a fee but only from a desire to try and teach or help. If you have such feedback then you should count yourself lucky and fortunate to have an investor who has taken the trouble to give you their thoughts and the benefit of their experience, even if their conclusion is not easy for you to take. Don’t snap back at them just because they take a different viewpoint on your business or industry than you do. Think about working with the feedback to see if some strategic changes may be necessary, or take their comments and try to find a way to de-risk your opportunity for the sake of any future investor conversation. For example, if the investor feedback says “the opportunity looks good but I am nervous because you have not grown a startup before, or have no track record in this sector.” Depending on the stage of your company, you may want to consider taking on a co-Founder, bringing in a mentor or a Non-Executive Director. Another comment might be “I would be happier if I could see some form of consumer, client or audience take-up as all you have at the moment is an idea in a business plan. It would be good to see that people actually want what you are proposing.” A follow-up conversation with the investor might say something like, “what monthly number of audience website downloads/sign-ups would provide the basis for our investment conversation to continue?” Or, “If I could get a letter of intent specifying the number or volume of their potential interest from the Head of Purchasing at ‘X’ (national retailer), would this form the basis of our ability to move forward with an investment dialogue?

If you are fortunate to have put yourself in front of several angels but received a rejection at each turn, see if there are any common criticisms. If they are all saying similar things then you have good food for thought as to why you might not be getting funded. Remember, they have once been where you are now before they achieved their success.  They deserve to be taken seriously.

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The next 4 articles will follow soon.

6 Key Thoughts Along The Fundraising Journey (No1)

You Think You’re Ready To Talk To Investors But You’re Not

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Sifting through a volume of investment enquiries, trying to get to ‘the good ones’ can be quite a burden for angel investors, fundraising individuals and VCs alike. I say burden because to engage with company founders and entrepreneurs whose businesses are not ‘investment ready,’ let alone ‘deal ready,’ is not the most rewarding way of spending your time. The problem is that most who come with business proposition clutched firmly in hand believe that they are ready to talk a deal and deserve the time and attention of the investors they pursue.

If I was to put a percentage number from the businesses that I see that I would take to investors, it would be between 5-10%. Which leaves a lot of businesses fumbling around with the misguided belief that investors should be drooling over their business idea.

A lack of understanding, training and experience as to how to configure your business to attract investment is a very real issue and the main stumbling block for entrepreneurs and founders as they seek finance from business angels. Colin Willis of the investment acceleration program Ignite100 says, “In the UK there is not an equity gap but an execution gap.” I wholeheartedly agree. The only experience many have of raising finance for their business is perhaps the sourcing of a bank loan, or maybe funding from friends or family. The professional equity investment community is a whole new level of experience with its own unique set of unwritten rules. A simple business plan may have been enough to convince the bank manager for a loan in the past but to get money from angel investors, your business investment proposition needs to explain and show a whole lot more. Knowing how to execute an investment proposition is the key component missing from most founder approaches to investors.

It wouldn’t be right to leave the article here without suggesting some form of cure for the problem. One of the easiest ways to get investment ready is to make contact with your local angel network. The following page on the British Business Angel Association outlines the angel funding process (here) and elsewhere in the site UK angel networks are listed. Be prepared, there will usually be some sort of fee involved in helping you develop your investment offering.

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The next 5 articles will follow soon.