Angel Investing in London – CityMeetsTech

citymeetstech-thumbnailI attended the CityMeetsTech event yesterday evening at the new Google Campus on Bonhill Street, EC2. The event was advertised as an opportunity for selected tech start-ups to pitch to angel investors.  Each start-up to be given 3 minutes to pitch their slide deck and then 2 minutes for questions and onto the next.

See for details on the organization, whose goals are laudable. Clearly there are lots of wealthy professionals in the City and in close proximity around Old Street a cluster of fledging tech companies; more than 3000 according to a recent BBC news item. Bringing these two groups together must surely help in providing seed capital for these firms to grow.

As someone who has made some money in software technology  in the City, I wanted to find out how such events work and whether I myself would consider investing. After all, what with Savings rates paying 2.5%, less than the rate of inflation, public equity markets having gone no-where since 2008, and commodities also down, there have to be decent alternatives to investing than just the London property market.

The list of eight shortlisted firms presenting can be seen here

So having spent two and half hours, listening to the pitches and chatting to some of the founders afterwards, here are my thoughts.

Firstly as a general point, I would say the format works very well.

While on the face of it 3 minutes seems way too short to impart much information, in reality it forces the presenter to absolutely focus on keeping it simple and focusing just on the key points important for a pitch for investment. These include: what is the problem, how product solves, the team, milestones to date, market size, and competition, amount of investment required and use of investment.

Most of the founders pitching had 6 slides that covered these and I am sure putting these together helped them really focus on the essence of their offering.

Secondly, the strength of the idea, clarity of the presentation and credibility/enthusiasm of the founder are absolutely crucial in getting any interest.

To kick-off the evening, Scott Sage, one of the founders of CityMeetsTech, did a good introduction to the event, the organization and acted as event chair.

Before this I spent 5 minutes looking over the marketing gumph left on each chair from the evening sponsors. Disappointed to see no nice freebies like pens and the like (would have expected something from google) but two of the items stood-out.

Firstly a little booklet from SEEDSR, which is a crowdfunding for startups site. Very well written, quick read and elegantly makes the point. Make a note to checkout the site.

Secondly, a booklet from TaylorWessing, a law firm. Not expecting to get much information in this but am pleasantly surprised by the level of detail provided in the Seed Investment chapter.

Decide to keep both these and ditch the rest on the chair next to me.

We are about to start.

First up, the founder of CrowdIPR with his slides and a Finnish sounding accent (which I later discover to be Estonian, so pretty close). Applying the crowd sourcing model, to the question of Intellectual Property Rights; so creating a crowd of specialist researchers that respond to projects asking about whether a specific idea is the subject of any existing patents. Credible pitch, particularly when said had commitment of £400k of the £600k investment required, so looking just for the remainder. In the questioning made clear that 70% of the fee for each project is disbursed to the crowd of researchers that work on a project based on an algorithm that judges the value of their contribution.

Second up, the founder of InputDynamics, with an offering that creates something called a BigSoftKey for a mobile and a live demo – so founder taps on the back of his cell phone to active camera shutter and says his SDK can be used to create software buttons anywhere on the device. With some help from the event chair, it became clear that this works with acoustics and the microphone. Questions from the audience sceptical about the use of such a key and founder came up with a button to move to the next slide on the back of an iPad, perhaps common gaming actions, and some others that did not catch.

Next, Lectrio, course management for small educational institutions. Web software that allows educators to timetable classes and share course materials with their students. A free service and premium service, emphasis on ease of use and integration with Google Calendar and Docs (first of a number of pitches mentioning this). Credible pitch, good focus on a specific sector; language schools in London and size of UK market, not to mention expanding to other countries.

Next Planvine, which is a what’s going on in London site. I was sceptical on this, but as the founder took us through his slides, could see the value in the idea. So rather than my usual last-minute haphazard attempt to plan for the weekend and driven often by an advert on the tube or something in the London Standard that happened to catch my eye; I could go to this website and it would bring together everything that was going on in London as the sites integrates with the main London venues and ticket events sites.

Next Seesr, interactive videos made easy. An application that allows the creation of hot-spots in a video stream, that a user can click on and for these to be links to further information. This leads to greater engagement with the adverts and so conversion rates. Credible pitch, been going 9 months and founder completed the 13-week Oxygen Accelerator boot-camp, details of which can be seen here. At £75k, one of the smaller amounts of investment amounts being asked for this evening.

Next Skylightit, all in one business management and project collaboration. Founder started well, but ran into 30 second warning, without having got close to the investment required slide, so skipped a few; which made the understanding of the offering weak with the audience. While he mentioned good exposure on BBC Clickonline and both a Free and Paid Service, left with the impression that this was a very competitive space (mentioned Huddle, who are one of the most successful tech startups from the Old Street area); but more on this later.

Next StoryBricks, story telling for online games. Founders starts by saying he does not like public speaking (oh no bad sign) but then in his 3 minutes comes across as very likeable, enthusiastic and credible; so perhaps strategy is to lower expectations at the start and then surprise and delight by the end; risky over 3 minutes, but pulls it off sufficiently for me to ask a question; do his brick components create code and how do they help with existing games.  Answer is that these brick s communicate with an AI Server and allow characters and emotions to be selected and inserted into a storyline to create MMO games.  Leads me to think I have never tried any of these massively multiple player games, as always felt the time and commitment warranted would be too great; while the odd short stint of Temple Run on my Samsung Nexus is easy to switch on and off.

Last Up, yReceipts, email receipts for POS terminals, which offers retailers the ability to send receipts to the customers as emails, Credible pitch, clear pricing model and large number of stores and tills in the UK and Australia using. Ability to embed advertising and social media in the email receipts and integrate with loyalty reward cards to get emails, show good engagement with customers. Good presentation to end the sessions and close.

That’s the detail and as everyone gets up to head over to the food and drinks, I feel the need to stay in my seat and look over my rapidly scribbled notes. At the end of the 40 minutes, it takes a good few minutes of concentrated reading and re-collection to figure out who had said what and more crucially what amount of investment they required and what milestone this would allow them to achieve.

So I try and list the ones of interest to me and see whether I can find and chat to some of the founders in the hubbub of drinks and scrum of people.  I estimate around 70 in the room as a fair number of empty seats but when stood around food tables there seem to be more.

Come up with four and plan to find these and if not these then one or of the others.

Is it just coincidence that both the first and last are on my list?

Perhaps, perhaps not, after all going first and going last has to be an advantage.

Catch up with Alex from yReceipts and start to ask him questions on how the product works and who they sell to, how much money is required and what it will be used for. He answers well, one other guy joins and also asks questions; together both of us continue for some minutes. To founders these cannot be the first time have fielded such questions. Questions answered, exchange cards and move on.

Can see one of my other selections but he is talking to someone behind me. Spot one of the founders that did not make my list and decide to talk to him. Give him the feedback that I think his sector is too competitive and he has a nice comeback; it is true but growing at 60% – so opportunities for many firms. Spend a few more minutes chatting.

Move over to talk to Faizan from Seesr and ask more details. He offers a demo on his iPad which I take up and the concept is very clear. Explains some advertising jargon to me – pre-rolls – which apparently are the short advertising videos that one sees on video sites; like the annoying ones I am always skipping on Bloomberg’s site I guess; but apparently these are the most successful forms of advertising. Numbers sound impressive, but I quickly realise that I don’t know much about how the advertising market works and that he needs funds to build the product to get it into the hands of first customers.

Find Taavi of CrowdIPR by himself and start to ask him more detail. His start-up is based in the Google Campus building, which he says is great as lots of ideas and innovative folks around. Tells me about the algorithm for assessing each researcher’s contribution to a project in order to allocate payments and how they are thinking of a patent for this. Mentions that the investor in this round is IP Group, a well known UK public company that works with universities to commercialise intellectual property. Chat over the value proposition; how they find researchers (networks, personal, linkedin), what is in it for the researchers (money for some, expert recognition for others), crowd sourcing is being tried in many sectors and they have picked this specialist one but platform could be used for others.

So that is the last one I have time for and it being 9pm head for the exit. About 20 people still thronging around the food, so majority seem to have left.

Today, the day after I would draw the following conclusions of the event and potential investment opportunities.

Angel investor should focus on sectors they understand and where they can draw on networks of contacts to verify assumptions.

An investment is more compelling when others are willing to invest in the current round.

Competitive sectors are a turn-off.

The milestones and user numbers quoted by start-up are self-promoted; even with due diligence one wonders how these can be verified.

Most of these start-ups are pre-revenue or have freemium models; so any investment is a decision not on whether they will have profitable customers but whether they can continue to the next round of funding in 12 to 18 months time; typically a larger amount  from a VC firm.

And lastly what a truly international and inspiring place London has become, with smart young professionals from the world making London their base and founding tech companies when their contemporaries from ten or twenty years ago would have been focused on careers in blue-chip banking or accountancy firms.  That has got to be a good thing.

Now all that remains is to give some serious thought as to whether I want to meet up with some of the founders and consider their proposals in details.

One thing for sure, will definitely attend the next event.

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