Moderation was ended in London OpenCoffee (that’s a group or web entrepreneurs, venture capitalists and other geeks of this kind) email list this week, which resulted in a lot of spam but also a lot of wise words.
The following is my selection on what people in the discussion related to funding a startup, unedited. Too good information not the be shared. (Also I wanted to store this in a place that’s easy to find).
I am starting a new kind of social shopping site and would like some help/advise on the best methods to get some VC.
In an attempt to create some serious content, I’d briefly state the following in regard to your need for funding.
1. Venture Capital firms rarely invest less than a £1m or in pre-revenue concerns, so your most likely source of funding is from Angels, who will often syndicate to spread their risk.
2. You need to work hard to prepare yourself for the pitch to any investors. I recommend thinking along the lines of seed, seedling, sapling, tree for your:
a. Elevator pitch – the single sentence that describes your project
b. Two paragraph description that will appear in the Angels notification of investment opportunities
c. One page exec summary that fills in some of the who, what, where, how questions
d. Three page Investment Memorandum that fills in more details including exit strategy(ies) that show how the investors will get a big return on their investment
e. A proper, well structured Business Plan incl. Financial Forecasts that shows you know where you’re going and how much it will cost to get paying customers handing over their money…
I would agree with Brian’s comments; there are a relatively small number of VC funds in London that look to invest below £1m, and two of these (The Capital Fund and London Seed Capital) have recently reached the end of their investment window. There are a number of EIS funds out there that do invest at this point, London Technology Fund, NESTA, The Creative Capital Fund are others. Beyond those, your best bet is likely to be angel networks. You can find a full list of angel networks at the trade body http://www.bbaa.org.uk (British Business Angels Association).
Congratulations on getting your site launch ready.
You might find this article useful: A Fundraising Survival Guide
Probably the best thing for you to do is to demo it to a few people at the next OpenCoffee and get some feedback. You might even find yourself talking to an investor.