GEEKnROLLA – Wisdom from Investors

 

Investor Panel – Early
Stage investing right now

·
Chris Fralic (first round capital)

·
Michael Jackson (mangrove)

·
Robert Klein (the accelerator group)

·
Mattias Ljungman (atomico)

·
Alan Patricof (greycroft / apax) – the ‘father
of venture capital’, opened in UK in 1977 with a first fund in 1981 of £10m …

The really good thing about an event like this is the
ability to hear a panel like this and then go into the room and meet people
like Sean Seaton-Rogers, Katy Turner, Alex van Someren, Sherry Coutu and other
well known investors and angels. It really brings things to life.

Another angle here are the range of people who can help.
Great lawyers like Tina Baker are easy to talk to, and you can quickly be lead
to the right people to help with press, PR, marketing, sales, and even
technology development.

The final angle is the way in which successful and growing
company CEOs are in the room to talk: Alicia Navarro, Brent Hoberman, Nigel
Eccles, and dozens more are here and available for that vital 5 minute talk.

So, armed with that, it is possible to pick out the value
from the panels, and have a chance to ask people about it.

The trend is for EU startups to grow and mature, and the
eco-system is clearly evolving and emerging. However, it is really strong and
has huge opportunities partly because the EU is so federated. It is clearly
able to launch great companies (Playfish, Last.fm, Skype, MySQL, and so on).

The current hot buzzwords for investors are:

• Great serial entrepreneurs
• CEOs who are salesmen
• Mobile
• Cloud
• Retail e-commerce
• Data
• SaaS models
• Online advertising using better data for better targeting
• Leveraging open platforms (FB, Twitter, Buzz, Android, Apple App)
• Subscription models (but very few can be scaled or work, sadly)
• Better metrics and measuring intentionality

Things to avoid are:

• Going direct to China
• E-commerce 1.0 models
• Most subscription models
• Most free to paid conversion models
• Me-too business (you need to be different, at least in one key way)

People you need to talk to in Europe, if you want to reach a
US VC are: Robin Klein, Chris Fralic, Mike Butcher (d’oh!) and … well, pretty
well any of the Tier 1 VC partners. They have to work together, and they have
to work closely with the Angel networks, who are incredibly valuable to the
early stage VCs. Critically, Chris Fralic can bridge the gap from Angels to
Tier 1, which is a vital and vibrant gap in the UK and EU funding market.

The market is not dead, and it is very possible to create a
‘super angel’ funding round for £500k to £2m in the UK. Costs of doing deals
still need to fall, and the ‘red tape’ needs to be cut back, but it is working
and is getting better. If you have a good idea, you can get funded if you work
hard at it. Startups need simple agreements, and they need to help their
investors by getting rid of parasites, and non-productive consultants,
accountants and lawyers. Put that first money into salaries, market testing and
research.

It is also possible to get real VC support at the stage
where you have proved your market and product fit. Just remember that the onus
is on the company to prove it. Then you can have the money to grow. Which is
what the money is for.

You can also do some serious homework to get to know the relevant
Corporate VCs: Samsung, Intel, IBM, Motorola, CISCO, RIM, Renault and so on.
These corporate partners can be great friends to startups and to traditional VCs.
Just bear in mind that they are specifically interested in their own markets.
There is also a good time to bring them in – on which point you need to take
advice!

(I did smile at the reaction of these – excellent – VCs to
large investor syndicates: they don’t really like them, because it often means
no one takes an interest and the politics can overwhelm the company)

As the UK startup ecosystem develops, the quality of
startups is improving, as is the pool of great founders and CEOs. They have
learned to prove it on very lean startups and learned to prove the market and
product fit. This is really helping investors get interested in the UK.

This rise in quality is leading to much better
understandings of valuations and key metrics, which is making the whole market
much easier to operate in. This is a good thing.

So, the hot news is: things are getting better if you are
looking for investment, but the responsibility is on you to prove the business
case, and to do the leg work to get introduced via a trusted source.