Great discussion and insights from investors, engaged audience and inspired networkers: Frog Valley starts 2017 on a very positive note!
On 26th Jan 2017, the Frog Valley team was delighted to host a very high profile panel event comprising of Jeff Tijssen, Head of Fintech and Digital Partnerships at Capco, Gary Stewart, Director of Wayra UK, Cornel Chiriac, Managing Partner of London Venture Factory and Fernando Valda, Investment Director at Nord Engine Capital. We would like to thank them all for a very insightful event. In addition, we would like to thank our moderator Hernando Bunuan who cadenced the conversation as well as our host CAPCO.
During this event 6 majors themes have emerged that are summarised below:
2016 and Brexit:
As we all know, year 2016 has been the year of global political, economic and social changes and challenges. In the U.K. Brexit has come as a surprise and certainly the government was not prepared for it. London is going to face a lot of competition from other cities in Europe as we are already seeing government in Germany, France and Portugal, amongst many others attracting and facilitating the implementation for tech start-ups in their countries. In addition, some financial institutions have already started to move some of their staff to Frankfurt and Paris, this is becoming reality. From a Chinese angle, Fernando explained that actually the U.K. positioning themselves as a global free trade leader could actually facilitate doing business with China and other countries globally, even more so that Trump is toughening global trade deal for the US. The other optimistic view is that the sterling falling has encouraged some foreign investment into the U.K. Overall; we haven’t seen any decline in investment yet. Furthermore, London is still the main hub for tech talent in Europe, with over 300.000 developers, it is 4 times more than Berlin or Paris.
Whilst Brexit is certainly not the challenge number one for the start-up community it certainly represents an additional difficulty to the numerous challenges that they already have. The biggest challenge being continuing retaining and attracting tech talent. One out of 3 tech talents in London are European. To this date, we still don’t know what the status is going to be for European already working and living in the UK and neither what the new immigration regulations would look like?
All of this uncertainty is surely damaging for the businesses that do need to set-up plan for growth and build their vision.
Another challenge that start-up in the UK encounter is the lack of local funds. They are still relying too much on U.S. investment. This is a phenomenon that happens at all stages, from Series A to E, where more local investments are needed.
Finally Jeff commented that more exit are needed in the UK as it would strengthen and encourage further investment.
Some advices to start-ups
- Focus on solving a problem, make some experiment, get some insight and traction. You are not expected to know everything from day one, you are on a journey of trying, testing experiment. Once you start to get some traction, it is a good time to engage with investors, and then to surround with a team of executives who would help scaling up the business.
- Choose well your investors and maintain a good relationship with them. You must make sure that there is good connection and level of communication with your investors, otherwise it could be damaging for the performance of your business.
- It is essential to demonstrate some existing evidence that your product or service is attractive to customer. Gary made a point that a VC would prefer investing £1m in 30 start-ups who have proving evidence that their idea works, as opposed to investing £30m in one startup who has the idea of the century but no evidence yet. That would be far too risky for investors.
- Get a very good lawyer that can advise you on the terms that you are signing with your investors.
- Make sure that you have an honest appreciation of your company and avoid wrong due diligence as VCs truly dislike bad surprises along the way.
When start-ups are pitching, What VCs are looking?
- Ensure that you describe the problem that you are trying to solve. The question is not about disruption, it is about solving a problem. If your product or service solves a problem then you have a great chance to attract investors.
- Make sure that you know very well your product or service, that you master your business plan, that you have a clear vision and that you have the confidence that it would be successful. Gary commented regarding how American are more confident and proud in what they do, to the point that it influences their success.
- Present the cost of customer acquisition, lifetime value, ROI. If you win that game then you have a great product.
- Have a strong vision and a compelling story.
- Traction, traction, traction, is a must to attract investors. Present evidence that you have a product or service that can generate traction and revenue.
Trend for 2017, where to invest?
Blockchain, Proof of concept, AI, Machine Learning, Medtech and Google deepmind are the big trend for 2017.
However, Gary made a point here that if you are looking at developing a revolutionary idea, then do not look at the trend. If it is the trend then it may be already too late. Instead he recommended thinking of problems and how to solve a problem and then you may come up with a revolutionary idea.
Vision for 2017
Nobody knows what the future is made of, however the panel gave some tips and strong suggestions for 2017 to ensure London remain a grounded place for start-up to grow:
– Reassurance from the government that we will be able to keep our tech talent and attract new ones
– Encouraging more local funding as opposed to keep relying on US investments
– Having more exit to encourage more investors to invest.
– Showing more confidence.
Again Gary made a point here that ideally we would need more investors who are also entrepreneurs. Unfortunately there are too many investors who have no empathy for the entrepreneurs and make their life very difficult as opposed to facilitate them.
In conclusion, VCs would be ready to invest in your idea if you are solving a problem, getting traction and having a strong vision. The London start-up community would remain strong and competitive internationally as long as they would be able to attract key tech talent.
In case you were not able to attend the event, you can watch here too.
Frog Valley is proud to partner with Capco for the organisation of our events.
Capco is a great support for our events by providing a fantastic venue with
the iconic Bold Rocket and « almost » unlimited drinks.
Capco is a leading global business and technology consultancy.
They specialise in the financial services industry, with 21 offices worldwide.
They are advising some of the largest financial companies on strategy, digital