North East Digital Showcase – March 2017

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Northstar Ventures – Ian Richards

Northstar Ventures was founded in 2004 and are early stage investor and invest in North East companies. They have Regional Funds, Social Funds, Accelerator and Proof of Concept funds, to find out more details about them visit northstarventures.co.uk

What do investors look for? Strong team, large market potential, scalable proposition, protectable market position, sensible route to exit. Team should have individual attributes and track records, balance of skills, team dynamic, enthusiasm, ambition and do you need additional support e.g. New recruits. Market, what is market you are trying to address, is there genuine market need, routes to market, who are the competitors, what traction to you have already. Scalable – factors include cost of customer acquisition vs. lifetime value, manufacturing process, people, technology and prefer self service e.g. Website / app. Protectable – with formal IP, first mover advantage, branding, price and positioning. Exit – what should you do with it once it’s been done, typical routes include trade sale, IPO or share buyback.

How to work with an investor? This ranges from initial contact to executive summary / pitch, presentation with key slides – who you are, problem you’re addressing, financials historic and forecasts and then have business plan. Investment process includes challenge of cross sell, pitch, team discussion, investment committee, term sheet / capitalisation, formal due diligence, legal documentation. Valuation – there’s a great deal of importance attached to this but it’s an art not science, based on team, stage of company, level of further funding required, market conditions, negotiation. Speak to potential funders early and get to know them and them to know you, be yourself when you pitch.

One Utility Bill – Chris Dawson

Their story over last two years, they simplify utilities for letting industry and consolidate bill for a few householders via direct debit or do invoice for large company. January 2014 is when they came up with idea to make bills easier for students, they went through the Rise Up programme at Newcastle University to help flesh out the idea from there. They spoke to Northstar Ventures during a founder ship program then went on to the Ignite Accelerator and after then they raised £150,000 of funding as part of a seed round.

They initially targeted students but then changes this to going through letting agents and landlords.  They reached more and more customers and use Notify to generate leads and then raised a second round of investment of £500,000 with many existing investors giving more money. They are at around £200,000 investment currently, to find out more about them visit oneutilitybill.co

Little Riot – Joanna Montgomery

We exist because we believe human connection is most powerful thing on earth, they create tech to experience a more human connection with technology. Pillow talk picks up heartbeat from wristband and plays this through a pillow, they work with children’s hospitals by connecting them with parents when can’t be held to feel connected via heartbeat. People want to use their technology to bring people together in different ways. Success has taken many different directions and they had a few bad experiences.

5 lessons learned in 5 years, 1. Respect yourself before you wreck yourself. 2. Not all investors are created equal – they found two areas of investors, people who have run businesses and people who haven’t, the former can advice you and the latter aren’t very helpful. 3. As soon as you take someone’s money, you are their bitch – the investor owns you and will always have a say, their investment agreement was dozens of pages and they have an element of control. 4. everything is up for negotiation further down the line – easy to get caught up in details, but you never know what will happen to your business in a couple of years. 5. Always trust your gut instinct – when they were doing their deal they had a bad feeling about it, but they should have listened to that and not let other people convince them.

Dropping truth bombs may be too much, so would they do it again? Their answer was no, but yes – to grow a business organically would be ideal but do need that capital investment to make an impact, they could make better decisions and there’s better support now than they had then. Good to know the people well who you’re going to be invested in, look at people and where they have worked. There has always been interest in their product and businesses coming to them to work together, to find out more about them and Pillow Talk visit littleriot.co.uk

Performance Horizon – Paul Fellows

They started in 1999 and raised their first funding but started as rename.net and were a redirection service and were Steve Wright’s website of day in 2000. They pivoted and became buy.at and were told to do odd things back then by investors and was sold to AOL for $125 million on 2008 which was later sold on for $17 million to Digital Window, they even tried to buy it back. They started as Performance Horizon in 2009 using the affiliate network technology they’d used in previous ventures to build a truly global platform with high performance and scale with API first strategy.

They were self funded initially, problem was people didn’t believe in it and was perceived as a hobby until they got their first investment and needed that to give them credibility and have raised even more money such as $1 million in 2012, $3 million later they year, $10 million in 2014 and $15 million in 2016 to help accelerate growth, they have mostly US investors who leave them alone as long as are hitting targets and also help them introduce them to new clients thanks to their connections. They have 177 staff with 100 based in Newcastle, offices all over world including San Francisco, Sydney, New York, Shanghai and Hamburg, they have subsidiary companies in Brazil, Singapore, Japan, China, Germany and Australia.

They have over 200,000 partners such as Facebook and Twitter to smaller companies. They pay out millions in over 50 currencies and tracking in 180 countries. They could make a profit but they don’t have immediate plans to do so, but within a couple of months they could, but won’t. They could have a billion dollar valuation, as they are doubling each year, to find out more about them visit performancehorizon.com

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