1. What it is like for a tech company in the London market to source investment?
It’s hard compared to the US, but easier than, say, in Germany. So it’s all relative. The main difficulty here is the length of time it can take. What would take six weeks in New York, could take six months here.
It’s mainly down to philosophy, habit and even deal flow.
2. Which funding rounds/amounts are particularly hard to raise?
In many ways the seed round is the easiest. After that the bar is higher; you can’t raise funds on an idea any more so it’s important to show investors that you have achieved what matters to your particular industry or markets.
The hardest time to raise funds, is when a company does not meet any of the typical round definitions or investor expectations. For example, a xompany that invests heavily in IP early and which is consequently slow in generating revenue requires i) additional burdens of proof ii) the need to validate both the IP and the potential to scale without the evidence of revenue and iii) investors who understand the market space well enough to know the company is directly correct.
3. How have you and others overcome the funding issues?
Thankfully we have been very successful as a company in achieving funding. At the core level it comes down to trust; investors are buying the fact that you understand your market space, your cognitive abilities and are able to demonstrate the attributes of your proposition.
The world is increasingly data-driven, so investors are looking beyond whether they like you or not. You need both vision and evidence.
4. What needs to happen in London to make it easier for tech companies to scale up?
In the US, the level of in-depth tech knowledge is significantly greater. This translates into a willingness to commit both earlier and more deeply to the companies that are funded. But it’s also about the intrinsic eco-system. The raw talent here is broadly similar but the levels of support, experience, and real know-how on building a business are still lacking in many entrepreneurs.
5. What's your perception of investors and venture capitalists?
The nature of investing is that you can only invest in say five in a thousand companies you analyse for funding, which means investors have to say ‘no’ most of the time.
So it’s not really about whether they are nice or not – they want the company they’ve invested in to deliver the best. Their returns are intrinsically linked with those of the business. It’s only when there’s a divergence of attitude to strategy or approach – and this goes back to establishing an understanding of approach and what matters to the company’s industry and market.
6. Are there any secret tricks to getting funding and how much of an old boys club is it?
Precision. Of a universe of say 500 investors, only three may both want to and be able to invest in a new opportunity. The key is to identify these three, and practice on others until you’ve honed your pitch.
Note, that the real issue is getting funded by the right investors for your particular business – even more than getting the funding in the first place. And it goes back to trust again.
You can’t get away from the fact that people trust other people that they have connections with – so connections do matter. So if a VC or other investor is told by a contact: ‘you should look at this company,’ you’ll listen because you’ll trust them.
On the other hand, if an investor sees any business they see with potential – it won’t go against them that they haven’t been introduced by someone they know. It may be harder to get in front of the investor in the first place, but they are not going to turn down any promising opportunity.