Resources Guides 08.12.16

TMT investor advice – case study

DupsyAbiola is an ambitious entrepreneur keen to grow her business, InternAvenue, with outside investment.  The business launched last year and has already won some prominent awards leading to strong interest from investors, but Dupsy is being careful to get the right ones on board.

Dupsy offers some TMT investor advice:

InternAvenue helps businesses find entry-level talent by matching them with people seeking positions, placements and internships. Students and graduates can advertise for free, while employers pay a fee. The site launched in October 2012, and we are fundraising at present from a small syndicate of Angels for the next stage of growth over the coming 12 – 18 months.

The business received initial development capital from my brother and I.  We then attracted funding from an experienced technology investor.  I was fortunate to have the input of an experienced and supportive angel investor from relatively early on.

At seed stage, an investment of capital is really an investment in the founder and her ability to perform.  This capital allowed the business to move forward with technology and business development, branding, IP, and trademark.  The business is now trading and generating early revenue, with customers including AOL, Carphone Warehouse, Gymbox and Stanhope Capital.

Previously, I had a successful City career but wanted to do something in this space.  I have enjoyed getting involved in every aspect of the business and working closely with a small but dedicated development team.  The platform quickly started getting interest from candidates and employers.  It became clear I needed to find more capital.

We have been fortunate to have received a lot of publicity for the business.  We have had high profile features, including an appearance on Dragon’s Den last year.  We have also won a few prominent technology awards and began to be approached by venture capital firms.  We are still early stage and felt that it would be best to work with experienced angels who can not only provide growth capital but assist us with the development of our team and seek institutional capital next year.

I have always been very keen to conserve as much capital as possible and invest heavily in product development.  We have been focused on getting the InternAvenue platform ready to prove that the concept works, together with investing in technology to make the business scalable.  I have leveraged all my contacts and worked hard to produce great results at the lowest possible cost.  This is not a culture we will ever lose: ambitious growth and an excellent product are the backbone of great companies and require significant investment.

My advice for people at the early stages of setting up a fledgling business, as I was last year, is “just keep going”.  Do whatever you can with the tools you have available.  Ultimately there is no substitute for rolling up your sleeves and getting on with it.  Fund-raising is time-consuming, so planning for investment well in advance is a smart move.  There are few first-time entrepreneurs who find it easy to raise their first investment and being proactive makes this more likely.

A key issue for entrepreneurs in Europe is lack of visibility of the credible TMT investors. Institutional investors tend to be fairly open about their portfolios and areas of interest; however, it is very hard to find information about private investors.

I found it much more productive to deal with investors referred to me by people I know. Because of the personal connection, people tend to say yes or no quickly.  It makes the process less time-consuming and the outcomes are of much better.  It removes a large amount of the initial barriers of trust if they know people who know you.  You are asking for thousands of pounds of their capital after all.

It is important to do due diligence on TMT investors before you meet them.  It is easy to think that finding investment is a one-way process, but looking into the background of potential investors is a great way of accessing whether you are likely to be a good fit for them and vice versa.  Entrepreneurs are very supportive of one another.  It is fairly easy to reach out to the founders of portfolio companies and get unbiased feedback on their shareholders.

There is no substitute for a supportive investor network. You have to be able to communicate with your investors for the lifetime of your company and they can be an extraordinary source of support and assistance.  One of my investors flew across the world to accompany me to some important meetings, while another has been instrumental in making some important introductions.

I would urge would-be entrepreneurs to work on building up their investor contacts as soon as possible.  They will be very useful in the future.  Even investors who are not a good fit for your company can be very useful sounding boards and connectors.  Neutral investors will help tell you about the reasonableness of deal terms and may be able to tell you who might be a good fit for your deal stage.