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The Story of How My Startup Dealt With Investment

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About 12 months ago I was all about seeking investment. We had decided that the only way forward for our startup, The Perch Project, was to secure cash investment. That became my top priority. That’s not the offbeat part of the story – many startups reach this point. Most of the time, an injection of cash is needed to expand, develop and/or market the product. Our primary need was development, followed closely by a marketing budget.

We had scraped by up until this point. We had leveraged the FFF network (friends, family & fools – minus the fools in our case) and managed to get a basic MVP operating. We had our B2B-facing auction system developed by a firm specialising in auction software. To save cash, we purchased an ‘off the shelf’ system and paid to have it modified and updated to suit our needs. We had the B2C-facing apps developed (both native iOS and Android, which I’m not sure I would do again) via Upwork. This was a very cheap job and our apps reflected that. Most of our resources went into the auction system, which only our venue clients can see.

I then hit the pavement and painstakingly talked around 50 venues through our vision and signed them up to the system. Excellent. Now we had basic tech, we had a solid base of venue sign-ups. We were just missing something crucial: consumers, customers, a B2C market. Without them, we had no value to offer to our venues. Sure, we had a little cash left to do some basic marketing and we had a couple of media based contacts to do a little initial coverage of our launch. This resulted in a very promising looking spate of downloads. The spate then slowed to a trickle and then something less than that. What to do?

We needed lots of users and we needed them fast. The trouble is, that costs money. Getting your app onto an individual’s phone is far more expensive than it used to be. Back in the ‘good old days’ you could bank on around 30-50c total acquisition cost for each download. This time last year, that cost was more like $1.00-1.20 per download.

A new app just isn’t greeted with the same curiosity and glee (yes, glee – app glee is a thing). To add to the squeeze, we knew that our little apps weren’t going to win any prizes for usability in the near future. We had all the UI/UX designs to fix it but we did not have the funds to develop those fixes. Furthermore, we had a cunning plan around how to growth-hack our user acquisition beyond the app stores, but we needed the development funds to implement it.

So, off I set with a pretty little investor kit tucked under my arm to find us some investment. It did not go well.

Firstly, I hit the pitch circuit. There are a few pitch events in Brisbane that will put you in front of investors. I applied to all of them. I even applied to events in Sydney and Melbourne. This can be a time consuming process. Each event has their own application method and each will have a different focus for the event that you will need to position your pitch to fit into.

Occasionally, I would get through into the live pitching, but mostly I wouldn’t get past the initial application round. Demoralizing? Of course! No one enjoys getting a ‘no,’ but hearing ‘no’ is a big part of having a startup. The result from the live pitching events was the same. No joy on the investment front. (On a side note, live pitching is scary but vital for a startup. Take every opportunity you can to pitch your business.)

Pitch events did not get us the result we needed, so we went to Plan B: VC firms. I arranged meetings with every firm I could. I think I almost saw every firm in Brisbane. I sat down and pitched over coffees and lunches and once to a room of people. I got the same feedback every time: “Well, it’s an interesting idea and you have done well to get to this point but the market is too crowded and you are too early stage.” In hindsight, they were all completely correct. It is a crowded market we are playing in, no doubt about that, and we were very early stage. At the time though, this feedback was very frustrating and, again, demoralizing.

Luckily, we had a Plan C. I went to see high net worth individuals who were not involved in the tech space at all. It was audacious, but this was the last card in our deck. So, off I went with a less tech-focussed investor deck and drank more coffee and ate more lunch. I met some truly impressive people during this time, all of them introduced to me through some well connected friends and family. It was quite a valuable experience spending time with these people and hearing their view on what I had to say and I am grateful for the time they all gave me. However, I couldn’t convince them to open their wallets or ask where to sign. Oh dear. Now we were fresh out of plans.

We still had a deep belief that we were on to something and that we could address a real problem but we had come up against a series of brick walls in the quest to move forward quickly. We resolved to keep pushing on as best we could. We went quiet and kept our heads down to put in more hard yards. And then something happened.

It was around this time that a friend introduced me to another friend of his, thinking that we could somehow work together. He introduced me to the CSO of a small tech company here in Brisbane who has a lot of experience dealing with e-commerce, m-commerce and digital solutions across a bunch of industries. Off the back of this initial introduction we went from chatting about content sharing to working together on a project and finally, he offered to take on all the development work in exchange for equity.

And there it was. We had an investment offer. It wasn’t the sort of investment we had been seeking, but it was almost exactly what we needed to move forward. It was a resource investment offer.

So, of course, I panicked. I went into hyper-worry mode. What if this was the wrong decision? What if this was all part of some dastardly plan to take over my nascent company? What if I lost all control? What if I am not competent enough in the face of this new partnership? Finally, after a good month of sleeplessness I came to the conclusion that this was a time to be brave and take the offer. We needed to move forward and this was the only bridge in sight.

It took longer to get all the formal arrangements in place – enter lawyers – but it got done and we had a shiny new business partner and some kick-ass resources. I have found this new partnership is a lot more than just access to development talent though. What I am finding really valuable is our weekly meetings where I have someone else to strategise with, someone who has a different point of view and whose main concern is moving the company forward. I love having another person who is just as excited about our achievements and who will waste no time in telling me to rein it in when I get too outlandish.

This type of investment didn’t by any means tick all the boxes. We still don’t have a marketing budget and, whereas a regular investment round clarifies a company’s value, this has actually made our company really tricky to value. We also have to be quite strategic in getting our dev work done because there are obviously other projects that our partner’s team needs to work on.

Despite all this, taking on this new partner has been one of the best decisions we ever made for our startup. Since we joined forces, the company has formed new partnerships with some of the most influential digital publications in lifestyle/food in Brisbane. We closed out last month at 30,000 interactions with our feed (as opposed to 1,000 the month before) and our expansion plans are both scalable and achievable. It’s an exciting time.

It may not be the most traditional form of investment, but exchanging equity for resources has meant that the position we’re in now is stronger than it has ever been. And, of course, I’ll always buy that friend who made the crucial introduction a beer when he comes to town.

___________________________

About the Author

This article is written by Simone Perkins, contributor of The Tech Street Journal. Simone is Co-Founder and CEO of The Perch Project. She has had the pleasure of working on Perch within the startup space in Brisbane for the last 3 years. Simone likes to drink shamefully un-craft beer and really dislikes the term ‘CEO’. See more of The Tech Street Journal.

Entrepreneurship

Women on Top in Tech – Tara Velis, Growth Hacker and Digital Innovation Strategist

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(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

I am talking to Tara Velis, Growth Hacker and freelance Digital Innovation Strategist. Tara was selected and recognized by TheNextWeb.com as one of the 500 most talented young people in the Dutch digital scene during the 2017 TNW edition. Tara is known for her creative, entrepreneurial spirit, which she is using to her advantage in leading the change in SMEs and corporates around the globe.

What makes you do what you do?

I tend to see life as a big, complex puzzle. Because of my curious nature, I am in constant development, looking for new angles and new approaches to business problems. Innovation through technology is exploring ideas and pushing boundaries. The most radical technological advances have not come from linear improvements within one area of expertise. Instead, they arise from the combination of seemingly disparate inventions. This is, in fact, the core of innovation. I love going beyond conventional thinking practices. Mashing up different thoughts and components, connecting the dots, and transforming that into something useful to businesses.

How did you rise in the industry you are in?

I consistently chose to follow my curiosity, which has led me to where I am today. If you want to succeed in the digital industry, you need to have a growth mindset. Seen the fact that the industry is evolving in an astoundingly quick rate, it’s crucial to stay current with the trends and forces in order to spot business opportunities. I believe taking responsibility for your own learning and development is key to success.

Why did you take on the role of Digital Innovation Strategist?

The reason for this is twofold. On the one hand, I got frustrated with businesses operating in the exact same way they did a couple of decades ago. Right now we are in the midst of a technology revolution, and the latest possibilities and limitations of cutting-edge technologies are evolving every single day. This means that companies need to stay current and act lean if they want to survive. On a more personal level, I noticed that I felt the need to use my creativity and problem-solving skills to their maximum capacity. In transforming businesses at scale, I change the rules of the game. I love breaking out of traditional, old-fashioned patterns by nurturing innovative ideas. This involves design thinking, extensive collaboration and feedback, the implementation of various strategies and tactics, validated learning, and so on. I get a lot of energy from my work because it is aligned with my personal interests.

Do you have a mentor that you look up to in your industries?

Yes, I look up to Drew Boyd. He is a global leader in creativity and innovation. He taught me how to evaluate ideas in order to select the best ones to proceed with. This is crucial because otherwise,you run the risk of ideas creating the criteria for you because of various biases and unrelated factors. He also taught me a great deal on facilitation of creativity workshops.

How would you describe your leadership style?

I tend to have the characteristics of a transformational leader. People have told me that my enthusiasm and positive energy is motivating and even inspiring to them. Even though I take these comments as a huge compliment, I am not sure how I feel about referring to myself as a leader. To me, it still has a somewhat negative connotation. I guess I associate the concept with being a boss who’s throwing around commands. But if a leader means listening to others and igniting intrinsic motivation in people, then yes, I guess I’m a charismatic leader.

Do you consciously or unconsciously support diversity and why?

Yes, one hundred percent. I believe that creativity and innovation flourish when a highly diverse group of people bounces ideas off each other. Diversity in terms of function, gender,and culture is extremely valuable, especially in the ideation phase of a project, as it can help to see more possibilities and come up with better ideas.

Do you have any advice for others?

Yes, I have some pieces of advice I’d like to share.
First of all: Develop self-awareness. You can do so by actively seeking feedback from the people around you. This will help you understand how others see you, align your intentions with your actions, and eventually enhance your communication- and leadership skills.

Surround yourself with knowledgeable and inspiring people. They might be able to support you in reaching your goals, and help you grow both personally and professionally.

Ask “why?” a couple of times. This simple and powerful method is useful for getting to the core of a problem or challenge. Make sure to often remind yourself and your team of the outcome of this exercise to have a clear sense of direction and focus.

Data is your friend. Whether it’s extensive quantitative market research or a sufficient amount of in-depth consumer interviews (or both!), your data levels all arguments. However, always be aware of biases and limitations of research.

Say “Yes, and…” instead of “No”. Don’t be an idea killer. Forget about the feasibility and budget, at least in the ideation phase. Instead, encourage your team to generate ideas without restrictions. You can compromise certain aspects later.

Prioritization is key. There is just no way you can execute all your ideas, and, quite frankly, there is no point in trying to do so. Identify the high potential ideas and start executing those first.

Encourage rapid prototyping. Don’t wait too long to experiment, launch, and iterate your product or service. Fail fast and fail often. Adopt an Agile mindset.

If you’d like to get in touch with Tara Velis, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/taravelis/

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Callum Connects

Marek Danyluk, CEO of Space Ventures

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Marek Danyluk has a talent for assessing the competencies of management teams for other businesses and pulling together exceptional teams for his own businesses!

What’s your story?
I am the CEO of a venture capital business, Space Ventures, which invests in seed and pre-series A businesses. I also own and run Space Executive, a recruitment business focused on senior to executive hires across sales, marketing, finance, legal and change.

My career started as a trainee underwriter in the Lloyds market but quickly moved into recruitment where I set-up my first business in 2002. The business grew to around 100 people. I moved to Asia in 2009 as a board member of a multinational recruitment business with the mandate to help them scale their Asian entities, which helped contribute to their sale this year, in 2017.

My main talent is assessing the competencies of management teams as well as building high performing recruitment boutiques and putting together exceptional management teams for my own businesses.

What excites you most about your industry?
Building the business is very much about attracting the best talent and being able to build a culture which people find invigorating and unique. It’s an exciting proposition to be able to define a culture in that regard and salespeople are a fun bunch, so when you get it right it’s tremendous.

From a VC point of view there is just so much happening. South East Asia is a melting pot of innovation so the ideas and quality of people you have exposure to, is truly phenomenal. The exposure in the VC has taken me away from a career in recruitment. Doing something completely different has given me a new level of focus.

What’s your connection to Asia?
Whilst I came here with work, both my boys were born in Singapore and to them this very much is home. That said, my father in law spent many years in the East so coming and settling here was met with a good degree of support and familiarity.


Favourite city in Asia for business and why?
Possibly Hong Kong. It’s the closest I’ve been to working in London. Whilst there are massive Asian influences people will work with you on the basis you are good at what you do and work hard. I find that approach very honest and straightforward.

What’s the best piece of advice you ever received?
“Always treat people well on the way up!”

Who inspires you?
I like reading about people who have excelled in business such as Jack Ma, James Kahn, Phil Knight, Sir Richard Branson, Elon Musk, all have great stories to tell and they are all inspirational. No-one has inspired me more than my parents and they are well aware as to why…

What have you just learnt recently that blew you away?
Pretty much any technology innovation blows me away.

If you had your time again, what would you do differently?
Whilst it is important not to have regrets I do continually wake up thinking I’m still doing my A’ Levels. So, I’d have probably tried a little harder in 6th form.

How do you unwind?
I like the odd glass of red wine and watching sport

Favourite Asian destination for relaxation? Why?
Japan skiing. I love skiing and Japanese food and it’s a time when I can really enjoy time with the wife and kids. I recently tried the Margaret River which was divine, although not technically Asia.

Everyone in business should read this book:
Barbarians at the Gate

Shameless plug for your business:
Space Executive is the fastest growing recruitment business in Singapore focused on the mid to senior market across legal, compliance, finance, sales and marketing and change and transformation. Multi-award winning with exceptional growth plans into Hong Kong and London this year, and the US, Japan and Europe by the end of 2022. We are building a truly global brand.

Space Ventures is interested in any businesses that require capital or management and financial guidance or any or all of the above. We have, to date, invested in on-line training, food and beverages, peer to peer lending platforms, credit scoring as well as other tech and fintech start-ups. We are always interested in hearing about potential deals.

How can people connect with you?
[email protected]

Twitter handle?
@Spaceexecutive

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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