The startup milk round is nearly upon us, what with Seedcamp and the TechCrunch 50 starting soon. However, it would seem that many in the Tech community don’t realise that there are other UK funding programs available as well. We certainly didn’t, in fact it was a tip off by TCUK’s Mike Butcher [Ah, shucks - Ed] that made us enter the Creative Business Accelerator (CBA) program last year.
The CBA program was run by a GLE Capital, and is funded by a combination of bodies such as the London Development Agency, Dept of Trade & Industry, The Institute of Chartered Accountants, as well as supported by the likes of Google, Oracle, NESTA and Kingston Smith.
In the CBA program, 700 entrants were whittled down to a last 70, who all had to make a 5 minute pitch to the CBA panel, of which 15 finalists were chosen. The range of chosen companies was wider than you see in the typical “Tech” bake-offs, we had everything from fashion to film production, but about 1/3rd of the companies were technology or online new media.
To back up a bit – why were we there? We set up Broadsight as a digital media consultancy and technology development house, (becoming “New Media” ourselves via our blog was an accident ;-) ). Earlier last year we had submitted a solution to the BBC for a “Zeitgeist Measurement” requirement from their Innovation Labs, which was accepted. We realised later that what we had designed, in the general case, is a real time context search system, so we decided to develop that further. The consultancy side of the business brings in respectable money, but not enough to fund out a product build like this as fast as we would like, so if possible we were keen to obtaining some outside funding. We found that some startup schools like Seedcamp only want the young ‘uns, but we at Broadsight are a bit more seasoned, shall we say ;)
The way the program works is that over a period of about 4 months you attend a number of half day workshop sessions, where experienced people come and talk about various aspects of being a startup. There is also a mentor assigned, a seasoned person to talk to. Sessions range the gamut from legal and fiducial requirements for set up through product marketing and design, effective selling methods, writing business plans, and various other aspects of running a successful business. Calibre of presenters was pretty high overall, but the real value was in the workshop format itself, with questions and comments coming from our wide variety of companies often leading to insights you may not get in a homogenous “all tech” environment. The endgame is a session similar to TechCrunch50, where the companies get to pitch for 5 minutes to a whole range of angels, VC’s etc.
A lot of the course was focussed on learning to pitch, and of course where and how to obtain funding, and when to obtain funding. This was the most fascinating piece – we had a variety of people – angels, VC,s, bankers, lawyers etc come and talk about this, and I think there are some take-aways here that other eager tech startups need to know:
(i) They almost unilaterally told us that money from VC’s etc is the most expensive money available, and if you do take it, take it as late as possible, after exhausting all other sources. The more developed your business is, the better your negotiating position will be.
(ii) There are also a wide range of grants available in the UK – some are 100%, some are 50/50 funded by the government to reduce the VC’s risk (why this is necessary is the source of a totally different post!) – and the T&C and “hassle factor” of getting these grants, while non trivial, are probably no more than the amount of work you will put in to get Angel / VC funding – and you don’t have to hand over equity.
(iii) Never accept the first terms sheet / contract that is put in front of you – this is a negotiation.
The issue the average startup company has is that it has less information of the “art of the possible”, which is why companies like The Funded are useful as they allow startups a better view of what is happening in the market.
Our own conclusion from the session – for the time being anyway – was that we preferred to keep our current business model for a while longer, and first seek grant funding for product buildout. But it was a very useful, and illuminating, exercise to go through.