To find out how start-ups are taking the opportunity to make 15-minute introductions with investors, GrowthBusiness visited the offices of Passion Capital for an open office afternoon.
In the hot seat: Entrepreneurs meet with investors at the offices of Passion Capital
For many early start-ups the opportunity to mix and mingle with investors is few and far between, so when the situation does arise to meet ten in an afternoon, it’s a chance too good to turn down.
Three months ago I attended an open office afternoon at London-based early-stage investor Passion Capital. After the roaring success of the event, Passion decided to waste little time in organising another.
Last time I attended the event I took some time to speak with a selection of early-stage entrepreneurs in attendance (including Apprentice alumnus Nick Holzherr) to find out how their businesses worked and just what they hoped to achieve by coming to the session.
This time round I decided to get ahead of the curve and meet up with entrepreneurs ahead of the open office event to discover how they were going about planning their meeting slots and, for those new to the game, what they were expecting.
Computer says no
First on the list of attendees was Howard Kingston, co-founder of Future Ad Labs and fresh off the production line of an accelerator programme in the North of England.
Kingston has cut his teeth in the social gaming world and it was during the summer’s Olympics that he had his eureka moment. Whilst attempting to purchase tickets for the Games, Kingston was repeatedly frustrated by the confusing and annoying prompts at the end of the application to prove the applicant is human.
‘We’d been doing a lot of game mechanics,’ he said, ‘and thought, ‘wouldn’t it be great if you could prove you are human by playing a game’, so that is what we’ve done.’
Kingston’s vision is to replace the word-solving prompts, which currently exist on sites such as Ticketmaster, with branded games through his PlayCaptcha.
Ahead of the investors’ open office afternoon, Kingston said that he already knew quite a few of the venture capital firms set to attend but was just as keen to meet some of the others. His eyes, he told me, were particularly drawn to the likes of PROfounders Capital and Balderton Capital.
‘I’m always a big believer in ask for money and you get advice and ask for advice and you’ll get money,’ he explained.
‘We will go in and ask for feedback on the product, and if they are interested they normally suggest the next step.’
His business has already been successful in securing some pre-seed investment from Ballpark Ventures, but Kingston is frank in his revelation that Future Ad Labs wants to raise a big sum of money fairly soon.
Air of mystery
The next entrepreneur I made contact with was a little cryptic. Clearly eager to extol the virtues of the company, this business builder asked me to ensure that he remained anonymous.
This entrepreneur (who for arguments sake I shall refer to by the company name Bespont) told me that he wanted the business concept to do the talking itself – far be it for me to argue with how he wants to do things.
The Bespont concept is attempting to create a social marketplace for emerging designers, linking them with customers who are relevant to the product they are trying to sell.
‘Designers will be reaching the correct audience. They will not be on page 55 of Amazon; they will be exactly where they need to be, on their prospective buyer’s page,’ Bespont told me.
With the business idea only coming to the company’s founders a mere six months ago, it is at a fairly early and undeveloped stage. The team has spent their time interviewing designers and consumers to find out just what it is they want from this kind of shopping experience.
‘This is set to be our first investment dialogue, we have a couple planned for after but for now this will be an introduction for us,’ Bespont added.
The company’s agenda going into the meeting slots, Bespont says, is to get some feedback on the company idea, to discover what investors think of the concept.
With it being their first exposure to investors, the team had made sure to make contact with fellow entrepreneurs in the same space, who have previously raised equity capital, to garner some tips and recommendations.
Ahead of the 15 minute meeting slots, Bespont explains, ‘We have a pitch presentation prepared. We have all the technical documents that are going to map out how we would proceed.
‘We have an information architecture manual and a software manual – we know what to do, we just need a little push.’
As this fledgling entrepreneur told me, ‘We know how to light the fire, we just need the match.’
Going into the meetings, and tailoring their investor selection, Bespont highlighted the likes of Passion Capital as investors that would very much be suited to the kind of business being built and the stage it is at.
The final entrepreneur I made contact with is attempting to rewrite the way smaller retailers interact with the likes of Amazon and eBay. Matthew Gribben’s Infinity Software Management is the by-product of a career in the e-commerce world.
‘At the moment you have a lot of independent retailers that have their own e-commerce site, which will be fine by itself,’ Gribben explained.
‘And then you have these monster brands like eBay and Amazon, and what e-commerce companies need to do is utilise these larger brands to sell their products rather than just relying on their own sites.’
Gribben’s software offering will connect a customer’s e-commerce site with said marketplaces, with ‘just a few clicks’ listing an entire inventory on the big sites. The product will then keep descriptions and pictures up-to-date, with orders ultimately processed via the retailer’s own branded site.
No outside funding has been secured so far as the business is still developing its core system and code. It has plans to enter a private beta with a few of Gribben’s old customers from when he built e-commerce sites.
His agenda for signing up to slots at Passion Capital’s open office session is to forge some all important contacts for the future, which he views as an incredibly valuable exercise.
‘This is going to be the first time I’ve had to sit down and plan out a pitch for this product,’ he said.
‘It will be an interesting experience trying to put myself into the shoes of an investor and give what they would like to hear.’
Leaving them all to prepare for their meetings, we agreed to rendezvous part-way through their time slots to find out how they were getting on.
Pitch to perfection
Giving entrepreneurs 15 minutes to communicate their business idea is always going to be a bit of a stretch, so there was a predictable air of alacrity when I arrived at Passion Capital’s office in Farringdon.
With the likes of Index Ventures, Balderton Capital, DFJ Esprit and EC1 Capital in attendance, the lucky few who had secured meeting slots had an abundance of expertise to draw on.
Linking up with the entrepreneurs I had met up with before was hard work. With a few slots opening up due to non-attendance, many enthusiastic entrepreneurs were buzzing around attempting to snap up some last-minute slots.
Having introduced myself to Kingston and the Bespont team, I was beginning to give up hope of meeting Gribben when he jogged into the room just in time to make his appointments.
Looking particularly hot and flustered he told me that his day hadn’t exactly got off to the best start when, as he was filling up his car in Manchester for the drive down, he was car-jacked at knife point.
Now for anyone else this might have been the sign that today just wasn’t your day. But for an aspiring entrepreneur like Gribben, he didn’t want to miss the chance to meet some important contacts and so quickly rented a replacement car and made the mad dash down to London.
Catching up with him after a few appointments he told me that, while feedback had been positive across the board, most wanted to see a working demo of the product before they formed a solid opinion.
‘Balderton Capital just said to me that if we stick to the timeframe we have now in terms of having a beta testable version in April they would definitely be interested in talking to us,’ Gribben said.
He also added, ‘This is one of the first times I’ve had to walk up to someone who doesn’t know about the business and pitch it to them, explaining concisely what we do, so experience of that is very valuable.
For Kingston and his business partner, the investor slots afforded a rare opportunity for the duo to pitch in tandem, something which is good practice he said.
One particular venture capital firm had suggested that the two consider actually not taking investment, rather sourcing capital by taking payment from clients up front. The move is not something Kingston had previously considered and was a useful suggestion, he believed.
Asked what was the overriding piece of advice the two had received, Kingston added, ‘Well we haven’t launched yet, so everyone would like to see us do that.
‘They have bought into the concept but they want us to go to the next stage so we can blow them away.’
For the Bespont team it was a similar case of investors wanting to see a working prototype before going any further. Bespont said that they found the dialogue easy and enjoyed the process of meeting investors.
Having managed to secure a number of slots, Bespont said that it was going to make sure to follow up with investors to cement the relationships they had begun to forge.
After the excited hubbub of the open office afternoon, I waited a week before speaking with the entrepreneurs to see how they had taken on board what had been said an implemented it into their future plans.
In the time in takes me to get back in contact with Gribben his investment efforts have moved on considerably. With progress made on a working system to demo, it has now put the business in a position where it is seeking some seed funding from regional backer The North West Fund.
Gribben says that he and the company will be going to the Fund with a live system and customers hoping to secure much needed development capital.
Kingston and his business partner went away and classified the investors they met with into low, medium and high interest. With contact made on that basis, the company has now set up a number of follow-up meetings to further discuss the product.
As well as that, the investors they met with have now put them in contact with some of the biggest ad networks in the country, something they hadn’t been able to do before.
Bespont had been spending its time flushing out the details of the social media marketplace so that it has a more coherent and presentable feel to it.
For all three entrepreneurs the chance to meet a host of investors gave them useful feedback on the business plan, a few more business cards in the wallet and the opening of a couple of useful doors.
In an era when email, Twitter and LinkedIn often keeps people at arms length from each other, the chance to get some real face time with investors was worth its weight in gold.
Full list of investors which took part: