Insight Notes

Can Europe Grow Unicorns?

In a recent cover story on the Age of Unicorns, Fortune Magazine, recently commented, “the billion dollar start-up was once a thing of myth, now they seem to be everywhere”   The question is where are Europe’s unicorns?

On one hand, European tech firms haven’t done so badly –an influential study last year from GP Bloudhouse reported that between 2003-2013, Europe founded 30 unicorns (firms that raised at a $1 billion valuation in either public or private markets) compared to 39 in the US. Yes, European firms were slightly smaller and slightly older, but not so bad.

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The Start-Up Fundraising Advisor: The how-to guide

You have raised angel funding – made good progress and now you need a larger cheque to supercharge your growth. You also need the expertise and professional experienced Board a VC investor will bring. Brokers and their terms of engagement are many and varied – so what to do? And are their cheaper alternatives? We recently ran a beauty parade for an early stage company to run a fundraising with VCs so have considered this area carefully.

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KPI setting for an early stage business – the path to sales – but how do we measure progress?

“Not measuring is not an option”

Recently I was working at an early stage business which was not turning over regular revenue each month. The management team were at a loss as to what KPIs they could measure, which would be useful for reviewing in Board Meetings, for prospective investors and team management. Typical example KPIs for most established companies are metrics around revenue, margin – gross & net, client satisfaction, market growth, faulty goods returned, complaints etc. Using a Balanced Scorecard approach this would be extended to employee and other stakeholder satisfaction metrics (The Balanced Scorecard approach works on measuring progress on metrics in Finance, Internal Business Processes, Learning and Growth and the Customer). However what if you are not (or barely) revenue generating? What do you measure?

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The Exit: Waterfalls explained & some innovative incentive structuring for growth Companies

This article looks at how a typical waterfall for a sale of a VC backed company works.

So you are finally executing an exit or more importantly you are about to enter an exit process for your company and as CEO/CFO know that your common equity options are at the bottom of a long stack of debt, convertibles, preferred equity and additional warrant coverage. They are worth something for sure – but how much? Are the VCs motivated by a different target exit price than required by the management team to make a decent return? As CFO you need to understand these issues intimately to be able to work with all the shareholders and buyer in order to get a successful transaction approved.

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Factoring – What is it and the Implications for your business ?

Factoring: Selling your invoices to a third party financial party at a discount as a form in finance has in one form or another, has been around for about a 1000 years and can be an invaluable source of financing for start-up companies.

We will take a brief look at the two main types of invoice factoring in the UK and then highlight some advantages, disadvantages and potential pitfalls.

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Convertible Loan Notes for early stage companies – to do or not to do……

This article looks at the increased use of Convertible Loan Notes lately, from the point of view of the investor and the borrower – from a team that gets involved on both sides of the fence:

Convertible Loan Note: Debt piece with typical expected protections, however fully convertible into equity (common or other) under certain specified circumstances.

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Crowdfunding…a threat to Venture Capital?

Crowdfunding is a very recent phenomenon and is growing strongly now, albeit from a small initial base. In this post we look at what crowdfunding is and whether it’s a serious competitor, a valid alternative or complement to traditional sources of capital. In future posts we will look more specifically at equity and debt crowdfunding markets.

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Angel to VC – Bridging the Series B Gap

This is our first very detailed blog focusing on the Series B gap in the market with regards to why it exists and what can be done about it. We have also included some of the other challenges start-up firms will face in their early days. In our next blog, we will be focusing on some of these challenges and potential solutions to them, so stay tuned!

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Angel Backed Companies: Getting Through A VC Transaction

Welcome to our fourth blog focusing on one of the most important and crucial stages for a growing business – getting through a successful VC transaction. In this post, we explore how to be ready for due diligence, the type of process you should run, navigating negotiation and structuring issues as well as board composition and how to actually close the deal. This is a common area where most businesses fall down and it can be relentlessly costly so is an absolute must read.

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Start-Up Challenges: Initial Customers & Suppliers – Getting It Right First Time

This is our third blog focusing on the common problem that businesses face in terms of their relationship with customers and suppliers and then managing their working capital around that relationship. We will explain how offering a test product for free may not always be the best route to market. In terms of initial relationships with customers, we highlight how companies can make crucial but small errors which can inflict damage to company finances lasting 12 months and highlight the importance of financial strength when approaching suppliers – and what to do if you do not have this strength.

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Start-Up Challenges: Governance – How Board Reports Can Help Drive A Young Company

This is our second blog focusing on the principle of “what gets measured – gets done” tackling governance issues common with young companies and how Board Reports can be used in combination with KPIs to help drive a company forward. We will explain why Board Reports do not need to be a “necessary evil” and the simple processes that need to be implemented in order to ensure a clear understanding of the business is maintained at all times. To emphasis the point, we have also included a sample “CEO Dashboard” following our recommended traffic light format along with a real life case study showing how the solutions can improve performance.

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Insight Notes