Venture Capital

I recently hosted a Tablecrowd dinner with speaker, Simon Menashy from MMC Ventures… and boy did I learn a lot!

Here are my favourite remarks about the fantastic world of venture:

  • Remember that VC’s also have to fundraise for their fund
  • Venture Capital is not right for every founder and business.
  • The fund has to return profit to investors despite the majority of start-ups in the portfolio failing, so VCs are on the look for companies that are:
    • SCALABLE: Can increase it’s business without increasing the operational costs
    • ACCELERATABLE: If the VC puts $1 mil into the business, it should grow faster and deliver more return than if the $1 million investment wasn’t there.
    • 10x RETURN – VCs are looking for exits that sell the company for 10x the original evaluation (a few need to reach the potential to support all the failures)
  • This stuck with me the most: Every time you take capital, you are limiting your options. For example, Simon mentioned that if you take money from him at a $5-15 million evaluation, you are agreeing to ONLY build a $100million company (no smaller growth or earlier exits).
  • Always plan and alight your current funding round and evaluation with future rounds and evaluations. As in, what can you realistically achieve with this money? And then, what are you going to need and look like?
  • VCs want to see what guidance founders will need in the future and if the founder has mapped out the journey ahead.
  • Series A is a larger fundraising round and later in the company lifecycle. Simon mentioned a huge gap between seed and Series A in the UK marketplace at the moment.
  • Series A investors are looking for: tenacious founders, solid teams, consumer traction, revenue growth, and ROI from their companies.

I’m slowly learning more and more about the funding side of start-ups (whereas I mainly work with their advertising and product development). A great resource if you haven’t discovered it yet is the podcast 20-minute VC! Each podcast interview today’s most successful and inspiring venture capitalists, delving inside the funding game in an easily digestible audio format. I must admit, I’m a little bit in love with its founder Harry Stebbings.   

Mr. Stebbings also started a blog recently, so if you’d prefer to read over listen, check out Mojito VC.

And now, I’m off for a white Christmas in Bulgaria! X

TableCrowd Dinner – learning from DN Capital Investor

For this particular investor, the sweet spot for making investments was in series A for UK-based companies that were looking for amounts between 1 and 5 million pounds.
If you’re a start-up looking for an investment, he recommended asking yourself two fundamental questions:
  1. Do you even need to raise money? (Is there potential to scale? Can you realistically return a profit to your investors? Are you diluting your shares without a necessary purpose?)  
  2. What is the best source to raise money from?
There are many different groups to go after when raising money:
  1. Family and Friends
  2. Angel Investors
  3. Family offices that diversify from their main industry.
  4. Accelerators and incubators – who are used to helping start-ups
  5. Crowdfunding – good idea if you need user acquisition and have brand advocates
  6. Strategic Pots of Money – VCs within multinational corporations (like Unilever)
  7. Grants – R&D credits, government funds, etc.
Ways to think about each group:
  1. Amount they can give you varies (frame who you go after otherwise you’re wasting 95% of your time)
  2. Due diligence process is different for each group
  3. Terms – shareholding, join the board, have veto rights, etc.
  4. Value added. Crowdfunding adds marketing scale, VCs add more strategic vision and various business connections
  5. Time – how much can your investor commit to you? What if an angel investor has 200 companies?
  6. Speed – corporate and crowdfunding takes longer than a couple of months
  7. Return/Exit – What does success look like for your investor? Put it into context? How high is their bar?
 Our speaker also brought up two very good points:
  • Be very aware of the fact that raising and accepting external money sparks behaviour change. Companies typically shift its criteria, vision, scale, and business models when raising capital, which has an impact on the work culture.
  • 90% of the decision for Venture Capitalists is the TEAM – how passionate are the founders? Who have they decided to hire? Are they capable of executing their vision? Have they experienced and learned from past failures? Do they understand their product’s marketplace?
Another interesting dinner from Tablecrowd… if you’re in London, you should check us out! Who knows – I might be your host :)

45 Pounds of Hair Loss.

Today, I got a haircut. Seems simple enough. I Googled salons in London and found what I believed was the cheapest…. And yes, the cheapest was 45 Pounds for a cut and style. Granted I am in central London and I didn’t look for any available Groupons and deals, but I’d still like to share my overall experience.

Some background information is necessary first. Before today, I have never spent more than 20 Dollars on a haircut. That’s about 12 Pounds. And when I get my haircut at my grandmother’s hairdresser in Bulgaria, it costs 8 Levs… which is just over 3 Pounds. Thus, I’ve always avoided paying a lot of money for a haircut. I respect the profession and the hairstylists; I’ve just never been in the loop of stylist number 1, head stylist, top consultant, Brazilian blowouts, and highlight colouring. But this London Hair Salon experience was so much more than a haircut… it was luxury and marketing at it’s finest.

The Salon was very chic with white, brown, and light blue as it’s modern colour palette in Covent Garden. I walked in and quickly recited my name and appointment time, as if to prove that I belonged. A Nice Lady asked to take my coat, scarf and purse. The Londoner in me immediately thought about whether or not it was safe to hand over my bag. I hesitated for a moment and passed over my accessories… standing bare in the entryway. Then, the Nice Lady asked, “Can I make you something to drink? Tea? Coffee?” My though: “Am I allowed to do that?” My response: “Uh, no thank you.”

Next I was escorted to a chair where my stylist introduced herself and together, we discussed what ‘look’ I was going for. When we reached an agreement, I was escorted downstairs for shampoo and washing. Apparently, it was crucial that my hair be washed in the salon with their products… never mind that I had washed it one hour before to avoid extra costs. I sat down as the chair reclined and I placed my head into the sink. Next thing I know: the seat has transformed into a massage chair, my stylist is kneading my scalp and asking again if I want coffee. This time, my hesitation results in a “umm…yes, black simple coffee please.” The stylist turns to the Nice Lady and says “A black Americano for my lady please.” I was now “her lady.”

By the time we where done downstairs and I was escorted upstairs with my freshly washed hair, the Americano was waiting for me at our station. In the classiest manner I could pull off, I took out my gum and took a sip. The stylist then started cutting my hair; the moment had finally arrived! In the time it took her to add some layers and a little fringe to my brown mop, she politely asked me 9 times – and yes I counted – if she was pulling my scalp too much. Every time, I repeated, “no no” and smiled. I was probably doing something wrong because I kept adjusting my head to try and make it easier for her…

And there I sat. Getting a simple haircut. And I felt awkward, clumsy, and out of place rather than stylish and pampered. Every time my white coffee cup clanked on the plate, I got self-conscious. Everyone in the shop was trying his or her absolute hardest to make me feel comfortable, but the “girl who got a 3-pound Bulgarian haircut” was feeling something else. I felt spoiled. I felt like a haircut shouldn’t cost this much. I felt like I was out of touch with reality as a university student. True, that is a strong reaction to have against a haircut.

This might just be me, but if anyone else feels like this, know that you’re not alone. Getting my nails done, having my hair professionally cut, getting relaxing spa massages and trying on shoes for over 50 dollars makes me feel awkward and elitist. I can definitely afford it, but it doesn’t make me feel good. And isn’t that the point of these places? They want to pamper you and make you cappuccinos while you read Vogue. I’m not here to say that there’s anything wrong with it, but simply that it might not be for everyone. Just because something costs more, doesn’t necessarily mean it’s more enjoyable for everyone.