The Tippy Top

So you've finally reached the magical £1m ARR and you're ready for your Series A raise.

The hard bit is done right?

Unlikely. The reality is that the rules of the game change at Series A.

The fundraising time commitment, rigour, due diligence, process and stakeholder management effort goes up significantly from what you may have experienced during your Seed raise.

To add to the complexity, choosing the wrong investor at this point could be a catastrophic decision.

Want to know more?

Watch or listen to The Tippy Top Podcast Episode 2.5 Edward Reid from PWC Raise | Ventures on picking investors, fundraising strategy and process management.

Edward has wide and varied experience, working across multiple industries and sectors prior to joining the PWC Raise | Ventures team in January 2020. He first joined PwC in September 2012 and completed his ACA in the Banking and Capital Markets Assurance practice in 2015. In September 2016, he joined the Business Recovery Services team where he focused on turnaround and transformation programmes for large corporates and public sector institutions.

Main topics and learnings:-

1. Picking the best type of investor for your business:

1.1. Spend time with them to build a good rapport. Find out what they're like by asking their portfolio companies.

1.2. Look for credentials and track record. Also, are they empathic to the needs of entrepreneurs?

1.3. Scrutinise the underlying deal structure, not just valuation.

1.4. Red flag: When investors drag their heels on the deal. It may be annoying now but on round 2, it may be the difference between success and failure.

2. Fundraising - how much and when?

2.1. Raise enough for an 18-24 month runway because this is a realistic time-frame to achieve your goals. Fundraising takes lots of mental capacity and time. Having cash in the bank will help you sleep better and help keep all decisions strategic.

2.2. A good ratio is raising 3 parts capital to 1 part revenue e.g. £1m annual recurring revenue (ARR)  = £3m raise.

2.3. Be wary of benchmarks on valuations. The rules of the game are changing constantly.

3. Managing the investment process:

3.1. Set a strategy at the start. Fundraising can take 6 - 12 months from start to finish.

3.2. Three core stages. 1. Getting investor ready & all materials sorted. 2. Actually engaging with investors. 3. Completion.

3.3. Stage 1 takes at least 6 weeks and is crucial to getting your fundraise right: Pitch deck, FAQs, and 3-statement financial model.

3.4. Use a corporate finance house for advice, material preparation, document management and bandwidth.

See, there's quite a bit to it. At least you're that much more prepared than before you read this though.

So, what do you want to learn more about next?

Let me know in the comments or send me a DM.

Alex @thetippytopblog

Link to PwC Raise | Ventures valuations webinar.

#seriesa #fundraising #podcast #seriesb #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #investors #investing #healthtech

Joshua Western from Space Forge recently raised the largest Seed-stage Space-sector round in the EU at $10.2m. He kindly shared his experience with us.

Joshua is the CEO & Co-Founder of Space Forge, an in-space manufacturing company, building the world's first returnable and re-launchable satellite platform. They are doing this to unlock scalable manufacturing on-orbit of materials impossible to create on Earth. These materials returned to our planet lower energy consumption by over 60%. Joshua previously worked for major European aerospace and space companies and the UK Space Agency on space exploration, national security, strategy and sustainability.

Main topics and learnings:-

1. Pick your investors carefully:

1.1. UK venture capital is led by finance. US venture capital is led by entrepreneurs.

1.2. Leverage EIS in the UK to get smart money ASAP. There's lots of dumb money in the UK.

1.3. Entrepreneurship and fundraising is a steep learning curve, but a great thing to do!

1.4. Get a strong mentor and chair.

1.5. Everyone around the table needs to be incentivised by equity. Founders, team, Board, investors.

2. How to deal with investors and service providers:

2.1. A quick "no" is sometimes better than a long "yes."  Definitely better than a long "no" and a long "maybe."

2.2. Build relationships, don't be so transactional.

2.3. Watch out for ratchets (8x anti-dilution!) and high fees. Be careful out there. Some deal introducers will ask for 8%!

2.4. Pay for good quality advice.

2.5. Be careful of investors who ask you to use their service providers. There's usually a reason.

2.6. Do due diligence on lawyers. Ask other entrepreneurs for experiences and pricing.

3. The importance of team and why dilution doesn't matter:

3.1. Being an entrepreneur involves an incredible amount of stress and it's not that glamorous (a bit fun too!). Get a trusted co-founder to share the burden. Think Frodo and Samwise. "Who cares" about the dilution.

3.2. Look for different people who are smarter than you.

3.3. Codify your values-->use them for the basis of your first interview stage gate-->then culture interview-->then skills interview last.

Connect with Joshua on LinkedIn (with covering note please)

Find Joshua on Twitter 

Chat soon,

Alex @thetippytopblog

#spacetech #climatetech #podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #angels #angelinvesting #investors #investing

Peter Cowley, a Cambridge University technology graduate, founded and ran  over a dozen businesses in technology and property over the last 40  years.  He has built up a portfolio of 75 angel investments with  11 positive exits (including one that is 107X his investment and  returned all the cash he has invested) and 17 failures.  He is a board  member of the Global Business Angel Network (GBAN), President Emeritus  of the European Business Angel Network (EBAN), former  chair of the Cambridge Business Angels and was UK Angel of the Year  2014.  He has reviewed thousands of business plans, mentored hundreds of  entrepreneurs and is on the board of eight startups.

He is a fellow in  Entrepreneurship at the Cambridge Judge Business School and is on the  investment committee of the UK Angel Co-fund.  He has also had 16 years’  experience as chair, treasurer and trustee of  the boards of seven charities.

With his son, Alan, Peter is sharing his and others’ experience and anecdotes in order to educate angels and entrepreneurs via  The  Invested Investor which publishes two books and 75+ podcasts.  Peter is a public speaker on entrepreneurship and angel investing throughout the world. Find out more at www.petercowley.org and via https://twitter.com/plcowley

Key topics and learnings:-

1. Crafting the perfect start-up team:

1.1. Early-stage investors invest in people with a plan. Mention the team early in the deck.

1.2. You get dumb cash, smart cash, toxic cash - take references on your investors.

1.3. Good investors will find out the truth so be transparent from the outset.

1.4. Most start-ups fail because of poor founder decisions. Whether that's not having product-market fit or failing to raise cash.

1.5. Two co-founders is best. Three is second best. Four never works.

2. Your start-up is more likely to fail with investors, than without:

2.1. Ensure you keep the confidence of your investors at all costs.

2.2. Angels won't usually follow-on if things are not going well. It's not about track-record for them.

2.3. Bootstrap or raise equity? Do what's right for you. It depends on you and the business model.

3. Bad behaviour at all stages by funders (and to a lesser extent, founders):

3.1. Investors and Board members will do strange things, even sophisticated ones.

3.2. Always reference everyone you bring into your start-up.

3.3. Be truthful with yourself as that's the best moral compass.

Chat soon,

Alex @thetippytopblog

#podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #angels #angelinvesting #investors #investing #team #investordd #startupfailure #exits

We're delighted to be joined by James Newell from Clear Sales Message.

If you're still leaving your sales to chance, this episode is for you. James has a noteworthy career in sales with organisations such as Mercedes Benz, Ferrari, BMW and Alfa Romeo. James now licenses his sales methodology to UCL & London & Partners for their entrepreneur programmes.

Key topics and learnings:-

1. Sell the destination, not the journey:

1.1. To become a better seller, think how you'd like to be treated as a buyer.

1.2. You're probably not selling what you think you are. Find out what your clients/customers are really buying. It's usually something quite human.

1.3. Remember that people don't care about features.

2. The Trigger Point: It drives the client to need your offering at the moment that you are pitching it, not just some time in the future.

2.1. To find the trigger point for new customers, ask existing customers.

2.2. Potential buyers ask specific questions when they're really interested.

2.3. A good question to ask potential buyers is: "what makes you say that?" As it helps you understand their underlying motivations.

2.4. Selling via Zoom isn't much of a barrier because it all comes down to energy and trust in the person on the other side.

3. The Named Process Effect: Adding a name to your process gives it weight.

3.1. It gives buyers confidence and leaves them with something memorable.

3.2. Make it easy to read, write, speak and spell.

3.3. Focus on the end result and that will give you insight into good potential names.

3.4. Give things a name because people will probably do it themselves anyway.

You can find all of James' many YouTube videos here: www.jamesnewell.tv

Chat soon,

Alex @thetippytopblog

#podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #selling #sales #customers #buyers #saas #season2

Matthew Holding from Systema VC leads us into 2022 with the start of Season 2 of the Tippy Top Podcast.

Matthew shares some unique insights about leadership and how the investment world really works!

Matthew is the Chief Operating Officer & investor at Systema.vc and has held numerous investment roles since 2015. He's also currently a British Army Officer and training to be Troop Commander of 30+ soldiers. Matthew is ACA qualified and holds a Bachelor of Medical Science  in Biomaterials.

Key topics and learnings:-

1. How to navigate the VC world:

1.1. Get out there and don't be afraid.

1.2. Be hungry and network like crazy.

1.3. If you get a "no," it's not always about you, there's lots of other factors at stake.

1.4. Always be transparent and concise with your communication.

2. Dos and don'ts of pitching:

2.1. The pitch is all about capturing the attention of the VC.

2.2. Being able to stand up to scrutiny is more important than a polished pitch deck.

2.3. The pitch is the start of a conversation. If you expect or get offered money straight away, alarm bells should be going off.

3. A new world order - Nice people finish first:

3.1. Serve to lead.

3.2. Be your authentic self. Be transparent.

3.3. Be responsive, it conveys trust.

Find Matthew on Twitter: @holdingmatthew

Email Matt with: [email protected]

Next week we're learning about the art and science of selling in episode 2.2.

Chat then,

Alex @thetippytopblog

#podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #investing #investors #equity #networking #pitching #nicepeople #season2

A warm welcome to Nic Pillow on this final episode of season 1 of the Tippy Top Podcast.

Nic is currently a VC investor at Blackfinch Ventures. Prior to that Nic completed a doctorate in AI at the University of Oxford, founded a start-up, worked in many other start-ups and also did his time in corporate, including 7 years at Nokia.

Nic brought a balanced perspective to the show, including being very candid about what taking equity funding is really like.

Key topics and learnings:-

1. Do you really want equity funding?:

1.1. Remember you are agreeing to sell your business on day 1. Make sure you detach emotionally from the outset. The umbilical cord might get cut sooner than you expect.

1.2. You may be disappointed with your investors. Find out if they really have what you need and whether they will challenge you effectively.

1.3. Valuations can go down. Not only the post-money but the pre-money = loads of additional dilution. Spend your investment money wisely.

2. How to measure the value you deliver to your customers:

2.1. Find out who is paying and what they really want. It's not always obvious.

2.2. People generally want to save time or money. Which one do you help with?

2.3. Understand what calculations your customers are doing before they choose you. This helps with your long-term source of competitive advantage.

3. How to succeed in start-ups and entrepreneurship:

3.1. All start-ups are experiments. Keep experimenting!

3.2. Truly under-promise and over-deliver, while still leaving room to experiment per the above.

3.3. ESG starts from the beginning and is a huge opportunity to create value.

See you in 2022 for the start of Season 2!

Until then, have a great New Year,

Alex @thetippytopblog

#podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #investing #investors #equity #success #value #customerfocus #customers #premoney #postmoney #valuations

A massive welcome to Jonathan Sun, founder of Horizan VC. Jonathan is a VC who is passionate about making the ecosystem work. A breath of fresh air in what can sometimes be a very opaque industry.

Jonathan has incredible enthusiasm and doesn't waste time maintaining the status quo. If you're thinking about building a start-up, you'll definitely first want to listen to the section on pretotyping!

Three main topics and key learnings:

1. Validate ideas with pretend prototyping (pretotyping):-

1.1. Before you build an MVP, first setup a landing page and get customers to enter their credit card details. Rather get this wrong 15 times than building the wrong product.

1.2. No-code is on the rise and will democratise SaaS. If tech businesses want to differentiate, their code will need to exemplary.

1.3. Chief Product Officers may therefore become more valuable than Chief Technical Officers.

Link to Jonathan's pretotyping podcast if you want to hear more: https://podcasts.apple.com/dk/podcast/the-official-pretotyping-podcast/id1550943178

2. Problems and solutions in Seed-stage VC:-

2.1. Most founders have equity forced upon them. Equity might not be the right instrument for you.

2.2. Blitzscaling might not be good for your business. Some businesses need to build solid foundations first and some businesses are better kept smaller.

2.3. There are increasingly more alternative VC funding options. Think about the student debt model combined with a safe note.

2.4. Former operators make good VCs because they can better identify quality founders, will understand them better and importantly can advise them properly.

3. Peer-selected investment:-

3.1. Village Capital are credited with this method of reviewing start-ups where your existing portfolio companies help make the investment decision. Should more VCs do this? Seems so!

3.2. Portfolio founders can predict success in new investments with accuracy of up to 80%.

3.3. Founders understand other founders better than financiers.

3.4. As a founder, try think like an investor. It will give you an edge in fundraising.

If you're interested in Horizan's innovative funding solution that combines a future earnings agreement loan and a safe note, do reach out to Jonathan via Twitter https://twitter.com/JonathanYSun1 or on LinkedIn: https://www.linkedin.com/in/jonathan-sun-652541131/

Next week we're launching the last podcast of 2021 with episode 1.10 which brings Season 1 to a neat close.

See you there,

Alex @thetippytopblog

#podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #investing #investors #pretotyping #nocode #safenote #altvc #pretendprototyping #peerselectedinvestment #creativefundinginstruments #blockchain

This week we're delighted to be joined by David Dixon, our first digital business growth coach and NED. You'll come to know David as a true tech visionary and one of the nicest people you'll meet.

This episode has some really profound predictions for the future and how you should prepare!

Three main topics and key learnings:

1.  Leadership is core to scaling:

1.1. You need to find a commercial gap. Tech is merely an enabler. Do the world need your product/service?

1.2. Leadership is about making decisions. Both decisions you make and those that others are empowered to make.

1.3. You need a north star. What are you aiming for?

1.4. Be aware of the power of culture. Culture is everything #peterdrucker

1.5. The UK needs to get better at empowering leaders. The US culture creates a better conditions for start-ups to succeed.

2. Why some ideas fail and some succeed:

2.1. There is definitely an element of luck.

2.2. Hire people better than you and then let go. Easier said than done of course.

2.3. Focus on current customer need but give space for the future.

3. Futurism. Winding back to 1995 and fast forward to 2050:

3.1. The future will still be people-led. Creativity is a very unique skill that isn't easy for machines to replicate.

3.2. To stay relevant, entrepreneurs need to treat everyday life like it's a start-up. 12-month forecasts are thing of the past.

3.3. We'll see 25 years progress in the next 10 years.

Keep tuning in for more exclusive content all carefully curated to help entrepreneurs succeed.

See you next week,

Alex @thetippytopblog

#podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #investing #investors #future #futurism #metaverse #leadership #success

Our first ever dual podcast and what perfect guests to lead the charge! Both Sam and Xavier from Angel Investment Network are about as passionate as they come. Their 'work' is entirely focused on helping entrepreneurs succeed. They've helped build a truly impressive global network of Angel investors and facilitated thousands of investments. They also have a more hands on fundraising service for later rounds which means they're a one-stop shop for pre-Seed to pre-IPO funding rounds. With over 22 years combined experience in start-ups, they've learning a thing or two and kindly shared their wisdom.

Topics and top learnings:

1. Founder conduct:-

1.1. Nice people generally have better fundraising outcomes.

1.2. You need a connection with your investors because it's a long-term relationship.

1.3. Competence and execution are key. Passion is also hugely important. Also, keep your investors regularly updated.

1.4. Be your authentic self. Investors will see through anything else.

2. Start-up valuations:-

2.1. Misalignment often occurs because entrepreneurs are looking far into the future and [some] investors are looking at the past.

2.2. If you can't agree a valuation with your potential investors, either you're not communicating the opportunity properly or your expectations are unrealistic.

2.3. For early stage start-ups, a great way to value your business is asking yourself "what you would take now" for the whole business.

2.4. With high valuations, think about the later rounds and the scrutiny that institutional investors might apply.

2.5. Both investors and entrepreneurs need to feel like they are getting a good deal.

3. Investor readiness:-

3.1. Salaries are not about an absolute number but all about alignment.

3.2. Read Venture Deals and Zero to One to help you prepare for fundraising.

3.3. Remember that fundraising never stops. Think about the whole journey from the beginning.

Resources mentioned during the show:

https://www.amazon.co.uk/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1118443616

https://www.amazon.co.uk/Zero-One-Notes-Startups-Future/dp/0804139296

https://seedlegals.com/resources/how-to-value-your-company/

https://www.thetippytop.com/resources.html

I've personally recently used the 'how much would you take now' valuation tip so hopefully you're also learning just as much as me.

See you next week with more,

Alex @thetippytopblog

#podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #investing #investors #angelinvestors #pod #fundraising #founders #conduct

Podcasters, you're in for a treat today with Jim Nicholas, CEO of Uniphy and Chair at Codeplay. An entrepreneur that walks the talk. Most people only talk about passion. Jim is so inspiring that he has this visceral gravitational pull in every room he enters, so I had to invite him on the show.

If you're thinking about becoming an entrepreneur, now or in the future, this episode is for you!

Topics and learnings:

1. Passion makes the world go around:

1.1. Passion is the fuel for innovation. It is a fundamental ingredient.

1.2. Passion cannot be faked, it's too obvious to everyone.

1.3. Anchor your passion in numbers, otherwise it's just hot air.

1.4. "Start where you are." Don't look for silver bullets to improve your circumstances.

1.5. Consider optimising your career for how much fun you're having.

1.6. Focus on something you're interested in. Invest and apply yourself. That's most of the work.

2. How creating an ecosystem reduces your CAC:

2.1. Take a macro view of how your business' role in the value chain.

2.2. Entrepreneurship is as much about an innovative go-to-market strategy as it is about product.

2.3. Create demand-pull from within your ecosystem.

3. Success all comes down to focusing on your customers:

3.1. Customers need to feel appreciated. They know if you're faking it.

3.2. If you disrespect your customers, you're disrespecting the people who are putting food on your table.

3.3. Customers are fundamental to your existence and a key component of raising finance.

3.4. Don't be disrespectful of other peoples' time and money. This holds true for employees,  customers and investors.

Next week we're featuring our first ever dual interview podcast with one of the most active angel networks in the world!

Stay tuned and chat then,

Alex @thetippytopblog

#podcast #learnwithalex #askalex #investoready #vc #venturecapital #vcs #entrepreneurship #startups #thetippytop #businessadvice #seed #entrepreneurs #tech #investing #investors #angelinvestors #pod #fundraising #customers #passion #inspiration #cac #customeracquisition