In the startup world of Tech City, Shoreditch everything seems to centre around finance. Budding entrepreneurs seem to spend as much time writing slide decks and pitching their offering as they do developing it.
The Start-up Industry
A whole industry has build up around offering advice
and seed funding to startups. Movie recommendation startup Tank Top TV
recently placed onto the Wayra incubator program, landing themselves
€40k in investment, office space in central London and mentoring and
advice. "Wayra's funding comes in the form of a convertible loan, which
is extremely founder-friendly," says founder Liz Rice. "And of course
it's a great signal that we're a business worth watching!"
European seed fund Seedcamp offers similar amounts
of money and even more support. As well as linking you with their 2,000+
mentors from around the world, they provide a "Founder's pack" that
contains more than €150,000 of free or reduced rate services for
successful companies.
Little wonder then that these places are hotly
contested - Tank Top TV beat hundreds of other applicants to secure
their place and each Seedcamp week attracts a similar number of
entrants.
High Competition
The tough competition means that Seedcamp have their pick
of who they can invest in, and this tends to mean that they can pick
the companies who have already reached the point where they would be a
viable business even without the investment. At Seedcamp London earlier
this year I heard one startup remark that they had failed to place on
Seedcamp when they were struggling, but that now that their business was
on a firmer footing they had been accepted. They received the funding
just when they no longer needed it.
As with most things in life, there is no free lunch.
To get a sizeable amount of investment, you'll need to be able to
demonstrate a pretty good business model and give away a substantial
portion of the business. Jennifer Sheridan, founder of live sharing site
Togeva recommends that you interview your investors and don't just jump
to take any money that is offered to you. Her top startup tip? "Be
prepared to scale back and eat beans on toast."
Sustained Success
Many of the most successful businesses in Tech City
has grown to international prominence without a penny of outside
investment. Local business Mixcloud state proudly on their website that
"Mixcloud is in the rare position of not having taken equity investment
as a startup." And this doesn't seem to have stunted their growth - they
are "one of Facebook's choice music partners" and were "named by The
Independent as one of the Top 25 Music Websites in the world".
Zoe Cunningham is the founder of Tech Talkfest. The
next Tech Talkfest event "Raising Finance: from Idea to Exit" takes
place on Monday 4th November 6:30pm at the Adam St Entrepreneur's club
near Charing Cross. Tickets are available from http://www.techtalkfest.com/
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