Dreamstake Founder Paul Dowling has written about the need for the UK and London to address a growing start-up funding gap between £150k and £1 million; government Seed Enterprise Investment Schemes (SEIS) and Enterprise Investment Schemes (EIS), as well as the growth of accelerators and crowdfunding sites have made it easier for start-ups to attract early stage funding, whilst VCs can provide investment for more developed companies requiring larger sums, if they can demonstrate sufficient traction and growth potential.
Paul believes the gap between these two approaches can be filled by the pooling of funds through syndicates of traditional investors, tech specialists, overseas investors and first time angels, and it is in this spirit that he and Dreamstake co-founder Marina Atarova have launched the HoxTech Angels, an opportunity for serious investors to meet once a month at the Hoxton Hotel, and listen to pitches from start-ups carefully selected from the Dreamstake platform, in a comfortable and exclusive environment.
Last night Paul and Marina, who are well known on the tech scene both for founding the Dreamstake platform, Europe’s largest network of investors and start-ups, scored via an algorithmic ranking system, and for the networking events and workshops they run at Google Campus, played host to 6 start-ups and 20 or so investors in the Hoxton Hotel’s private suite at the HoxTech Angel’s first event.
London Tech scene buzzing
With the London Tech scene buzzing, investment into a Tech start-up can represent an exciting play as part of a larger diversified portfolio, and helps the entire start-up eco-system to develop and grow. Paul stressed the hands on and “emotional” nature of start-up investing, which may involve mentoring, sharing contacts, and no small amount of work on the investor’s part! Although risky (tech start-ups have high rates of failure), working alongside a start-up is often a hugely satisfying experience, and picking a winner can lead to substantial financial gains, plus there is downside protection if you are investing via a tax efficient vehicle.
So, after a quick meet and greet in the Hoxton’s flash “kitchen” space, it was into the boardroom and time for the pitches:
1. Time for Medicine
Founded in Cardiff, Time For Medicine is a cloud based specialist medical advice service to help patients and consultants connect. Every year hospitals are dealing with over 100 million visits from outpatients, at a cost of £20bn, and very often attendance is an issue for patients who must travel far from their homes. Consultants are the most expensive human resource that the NHS must pay for. Communicating online can result in faster diagnostics, helping to save lives. To date, 60 consultants have agreed to help Time For Medicine develop their platform, which is already compliant with many NHS services, and approved and regulated by a major Healthcare regulatory body in Wales.
The platform currently offers 20 clinical specialities, which cover one third of all outpatient visits. Patients are able to upload photos of rashes or injuries, for example, and be automatically assigned to the most appropriate consultant, saving valuable time, and for less serious cases, instructions and medicines can be issued online without the patient needing to visit a hospital. To date Time For Medicine has raised £1.6m of equity, with around 65% coming from clinical sources. Joint MD and Finance Director Clive Minihan, educated at Harvard Business School, is looking to raise further investment.
Vinoa is described by founder Cyrus Tchaherdehi as “wine tasting through your letterbox”. Wine can be an intimidating product due to its expense and variety, but it is also a product of interest for many and as such the market interests around 29m in the UK. Vinoa provides a wine shop experience for the home, by offering a subscription service that delivers monthly samples, 4 different wines per box for just £10 per month. Larger bottles are repackaged into smaller ones using the latest scientific techniques, giving subscribers the opportunity to sample a greater variety and purchase full bottles of the ones they like.
Vinoa is targeted at a non-affluent market of around 6m people in the UK, who are likely to spend up to £10 on a bottle of wine, and drink less frequently. This is similar to a number of proven business models such as Birchbox, the cosmetic sample suppliers, and companies such as Majestic and Naked Wines. Vinoa also provides an online store.
Vinoa has begun strongly, attracting 500 members in its first five weeks of trading and being favourably reviewed in the press. They are looking to raise funding at the same time as running a Crowdcube campaign, which they believe to be a strong marketing channel for the product as well as a fundraising tool. The team have put together what they believe to be a conservative set of growth projections which will see them at around 50% of the size of Naked wines within 4 years. They have completed a pre-seed round and already have some notable angel backers.
StylePilot is a sophisticated search engine for the menswear clothing market, with the ambition to become the foremost search engine for the global male fashion sector. The Company have developed an enormous automated database from which users can explore different designers and styles, get fashion tips, and read about the latest trends. CEO Stephane Mauret explained the “unfair advantage” that StylePilot has over its competitors, being the Style DNA tool they have built which enables users to build a profile of themselves and their fashion tastes for more targeted recommendations. The team believe this a unique feature that differentiates and popularises their offering.
Success to date includes 19k Facebook likes, 26k Twitter followers, and an email subscription base of 23k, plus an average time of 4 minutes spent on the site by visitors. The team have also developed strategic partnerships with Shortlist.com and Attitude magazine. The team are looking to raise funds on an £800k pre money valuation based on 20% of the business. Significant existing shareholder include an ex Versace CEO, a VC at Walmart, and a marketing Director at Moss Bros. The original founder has left Style Pilot ceding strategic control to 3 partners who own around 45% of the Company.
LinkHubb is an ingenious solution to the problem of sharing links via email and the “dark social” environment that this creates. Founder Daniel explained that 74% of all links are shared via email, rather than social networking sites like Facebook or Twitter. This is a big issue for advertisers, who would like to know what is being shared, and often for individuals as sharing via email can be cumbersome and result in miscommunication.
LinkHubb is a site where people can share links to anything, whether it be planning holidays, sharing a cool article or having a group discussion. The site keeps everything organised and visible, is customisable and can be shared across social media sites.
The team have identified different ways to monetise, including access for advertisers and a LinkHubb for business that allows hubs to be branded and public facing. The website was officially launched last week and the team believe that EBITDA of 2.2m is achievable by 2017 based on the market research they have completed and their growth projections. They are seeking SEIS investment and have a 4-5 year exit strategy.
Tutortab is an online tutoring platform launched in September 2013. The brainchild of founder James Grant, who after skyping a tutor at University subsequently received his highest ever mark for an essay, the product has won 5 academic themed competitions and a number of grants resulting in the team deciding to go full time with the project. 2,000 tutors have already been signed up and bespoke software built, allowing students to pay just £13ph for expert advice and tuition via a video link-up. “The price of a Dominos pizza”, as one reviewer has succinctly put it.
There are 300 active students signed up to the site who on average will purchase 10 lessons each revenue is achieved by taking a 20% cut of all services provided. The team have some outstanding backing from an ex marketing director at Burberry, Head of HR at KPMG and are conducting late stage talks with Barclays Wealth who have expressed an interest in leveraging the service. Development of the site has been outsourced to a dependable contact based in Eastern Europe.
The founders believe there is significant opportunity in China where there is a desire to learn English and to apply for British universities, as well as for those seeking to learn Mandarin. The team are looking to complete fundraising via SEIS.
Lobster is a social content marketplace that could help to revolutionise the way we procure images and other media online. There is a lack of quality, affordable visual content available for purchase on the web, so to solve this problem Lobster is connecting media buyers to anybody who wishes their sell their personally curated content online.
By registering their Instagram or Flickr accounts at Lobster Media, and adding the hashtag #LM to your images you effectively make them available for sale. The images will be searchable by geo-location and date, a unique feature. Images will be sold for $1, 2 or 3 US dollars. Revenue is achieved by charging a 25% commission on images sold. The team hopes to become the iTunes of social media content!
Sites such as Getty and Shutterstock can be expensive and choice is limited, so Lobster opens up the market to amateur photographers and artists from anywhere in the world. Lobster founder Olga Egorsheva believes the market is currently worth $1 billion and growing. Strategic partnerships have been discussed with Wix, Instagram and Flickr. The team, who recently pitched to thousands at the Tech Crunch Disrupt Event in London, and were part of the Wayra Accelerator programme, are seeking to close an investment round by April 2015.
Overall, the evening was fun to attend with a really good blend of serious questioning on the part of the invited angels, and some humour as well. The pitches were of high quality and plenty of networking took place before and after, with potentially interesting results. The next event is scheduled for 23rd Feb, for more details please contact Marina, Marina@dreamstake.net, or Paul, Paul.email@example.com