Startups, London @startups-london - Tumblr Blog

Gautam Gupta Reflects on His Experience as a Teenager in VC

How To Avoid Hiring The Wrong Person For Your Startup

From Mashable: http://mashable.com/2012/01/29/avoid-hiring-the-wrong-person/

Chris Rickborn is the COO and co-founder for Unrabble, a cloud-computing hiring software company that helps busy startups make great hires.

#hiring

Weekend Video: Marten Mickos on startups, life

Marten, the self-effacing CEO of Eucalyptus talks about startups, being a tech CEO.

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2809

He almost single-handedly validated the sustainable Open Source model, so don't let his humility deceive you :)

Some holiday reading perhaps? Enjoy...

Smarter Retailing via (Un)conventional Thinking – Harvard Business Review

Tech Leadership: 7 Thoughts on Building Your Start-Up from the Ground Up – Tech.li

What to Do If Your Business Gets Hacked – Entrepreneur

How to Make a Personal Connection with Customers – Entrepreneur

City tech startups give Wall St. run for its money – NY Daily News

Easy to criticize, hard to create – A Smart Bear

How can a startup decide when to start marketing upcoming products? – Task

How To Develop An Effective Market Penetration Strategy – Task

Why crowdfunding may be the future of startups – Techi

[INFOGRAPHIC] Who’s Using Google+ – Tech.li

Tech Startups Need Non-Techies to Succeed – Harvard Business Review

Using Social Networks to Improve Operations – Harvard Business Review

7 Ways Startups Get Tagged as Too Risky by Investors – Startup Professionals Musings

How Do You Set Up Operations In The US And Why? Interview With Microtask CEO – Arctic Startup

So you want to be entrepreneur? Thanks to Entrepreneur first for this one!

Where do entrepreneurs get their money? Sketchbook by the Kaufman Foundation.

This Week's Startup Events to Watch

There are lots of exciting events occurring across London in the technology startup community - here are a few not to miss this week:

- Tomorrow: "Want to build something of value? Think of Content, Community and Analytics" by Tech Meetups

- Tuesday: "Developers, Clients, Apps, Ideas" Appsworld & AppsJunction

- Thursday: "Billion Dollar Companies - The role of Private Equity and Venture Capital in Creating Value" by Genius Incubator

I hope you all enjoy!

Startup Interviews: Nick from Poncho No.8

Yet another of our startup interview with Nick Troen, co-founder of Poncho No.8:

What made you start Poncho Number 8? We'd always wanted to work for ourselves, didn't have any debt or mortgages, wife or kids so if we thought if we did fail, it wouldn't be the end of the world. It sounds cheesy, but we also felt compelled to do something more productive considering the current economy, and start-ups and small business have always been the key to driving new growth and creating jobs in downturns. As for why Mexican, well Mexican food is so versatile and disparate, you can pretty much fashion it into anything you want, fast food, mid market or full sit down, and still have huge variations within those sectors. The popularity of Mex food was rising and we saw a lot of space to create a premium mid market offering. Our experiences from California and New York and seeing how the Americans had evolved the burrito into a more Western-centric food was a big factor in going in starting Poncho.

What were the first 6 months like as an experience? Very tough. But also exhilerating. It was non-stop work while we personally had effectively no salary (all the burritos you can eat does help though). We learnt a heck of a lot that would have been impossible to figure out without getting stuck in on the shop-level, and did all the admin while also working full shifts in the restaurant everday. What was the biggest mistake/learning that you made? Make sure you can track your figures right from the start. We took a while to get our accounting procedures in place and were just watching our top line increase without paying enough attention to our gross margin and other costs. It's crucial to make sure that you're actually making a profit and not just focus on top line sales, but we were so caught up in the excitement of opening (and the huge queues we were getting) we neglected our paperwork. What is your ambition? With Poncho, to serve the best burritos in London and the UK. Simple as that. What would you do differently Our food is all cooked fresh on site, without compromise our recipes have been developed in conjunction with our customers and our Mexican head chef to create a uniquely customised flavour range. Our food takes everything that's great about Mexican food and brings it up to date with modern contemporary cooking, while making sure it is still affordable and quick. Do you have any advice for budding entrepreneurs? Do your research, quadruple check everything and then go for it if things seem to be pointing in the right direction. Don't just gamble on something and hope for the best without doing any form of analysis. It's true that sometimes radical innovations occur (I love Steve Jobs' eschewing of market analysis, 'You can't just ask customers what they want then try to give that to them. By the time you get it built, they'll want something new', but this really doesn't apply to most of us non-genius types). Many start-ups begin in existing markets, and it is vital you get some idea of what customers would like improved to give yourself a good chance of making it amongst the competition. Fairly straight-forward enough, but done so rarely in practice.

#startups #Interviews

Autumn Events

We are back after a long, but not so hot, summer in London and are planning some events for all of you interested in London-based technology startups.

If you are an entrepreneur and want to tell your story let us know and get in touch - we would love to have you speak at one of our events. Also, if you have any good ideas about events you would like to see let us know too...

Looking forward to an exciting few months!

Startup Lifecycle - Lean to Fat, Launch to Scale - Video

Great post (and video) from Fred Destin - Enjoy

http://www.freddestin.com/blog/2011/08/startup-lifecycle-lean-to-fat-launch-to-scale-video.html

brycedotvc

startups-london

brycedotvc:

Over the course of my career as a VC I’ve been involved with a bunch of fundraising. Raising money for our fund. Raising money for our portfolio companies. Advising friends on their fundraising. Lots. Of. Fundraising.

Some of that fundraising has been very successful. Some less successful. And...

Understanding Pre and Post Money Valuations

Startup finance is fundamentally based upon common sense - yet many entrepreneurs feel daunted by the terminology used and the numbers often involved in technology investments. One of the most common points of confusion concerns pre and post money valuations and their impact upon ownership, share price and company value. However, this is all based upon simple and straightforward principles which I will explain now.

Pre-money valuation is, in short, the value of a startup prior to it receiving investment. For the sake of argument let us assume that our startup is valued at $2m pre-money. Let's also assume that an investor wishes to invest $400k in this startup. Following this investment, the post-money value of the startup is now $2.4m. The reason for this rise in value is simply the fact that the company now has $400k more cash in its bank account.

Why should this matter to startup entrepreneurs?

The important point to note is that the valuation used is crucial for understanding how much of the company an investor will receive for the capital injection. For example, our $2m startup has received $400k worth of investment and thus the investor will be granted shares in the startup. If the investment is based upon a $2m pre-money valuation then the investor will gain roughly 16% of the company as $400k/$2.4m is equal to 16%. If however, the investor was investing based upon a $2m post-money valuation, 20% of the company would now be owned by the company.

The reason that share ownership calculations are made using post-money valuations is that unlike trading in public companies, investing in startups results in a share issuance and an increase in the number of shares. The total number of shares issued can be calculated by knowing the number of shares already in existence at the time of investment and dividing the number of shares by the pre-money valuation and then multiplying by the post-money valuation. In our example, if the company already had 1m shares at the time of investment it would need to provide an extra 200k shares to the investor such that the investor then owner 16% of the company.

For more information on startup valuation and investment stay tuned.

#finance #valuation #startups

Roll the dice or walk away from the table

Guest Post: This post originally appeared on www.groupaymatt.com and was written by @Groupaymatt one of the co-founders of GrouPAY, an exciting London-based startup. GrouPAY is a way of collecting money online from groups of friends, sports clubs and societies, and SMEs who need to organise their finances and accounts.

Roll the dice or walk away from the table. There is never going to be a better time to start your own business than today. The longer you leave it, the more responsibilities you will have and the more comfortable you will become with the life (and salary) you are used to. If you genuinely want to do it then trust me, you do not want to be doing this when you’ve got a wife, kids and a mortgage – that makes it sound like I have a wife, kids and mortgage, I don’t, and it’s hard enough. So if you’re going to do it, do it now.

Whatever you do, don’t be a non-trepreneur. If you’re not going to do anything about it, don’t tell everyone about your ground-breaking idea and billion dollar business that will never be, it gets boring real quick.

Go all in. If you’ve got to consult to pay the bills, fine, but don’t do this part-time or on an ad-hoc basis, do it before you start. It’s hard enough to build momentum as a start-up when you’re working full-time, let alone part-time. To give yourself a realistic shot of doing something, you need to build up a reserve of cash which will cover your living and business expenses for 12 months.

Don’t worry about what your family, friends or the man in the pub think of your idea. Worry about what your actual target users think and only really the early adopters at that. To get a new product off the ground you need a few people that love or need your product or service, not lots that think it makes sense. There’s only really one way to find this out, build something and get it in front of your target users.

If you plan to start a genuine tech start-up where the tech is part of your key value-add (i.e. not an offline business with an online distribution model but an inherently technical solution to a problem) then you cannot outsource development to a bunch of guys in India. This will be nothing more than a great way to waste time and money. Either find people who can help you build it (technical co-founders), learn yourself or find a new business. It’s your call.

Good luck!

Startups London Guest Post: Founding Smarkets

Note: This is a guest post by Jason Trost co-founder of Smarkets.

Thank you for contacting me with regards to getting people more involved with startups in London. This is something we at Smarkets really aim to promote. Hunter Morris and I set up Smarkets to create a new betting exchange platform to better all those available online at the time. We felt that those available were marred by inefficiency, accessibility issues and poor overall user experience and our aim was to solve these inefficiencies. I have a background in trading securities, so I had a sense what people look for from exchanges. Our aim was to produce a new type of betting exchange, one that was simple enough for the non-specialist to use, but with all the features that you would expect from a high end exchange-platform - a platform that would be attractive to both the seasoned trader and the casual gambler alike. There have been many memorable moments at Smarkets, one thing that really stands out is how the company has progressed over the years. I have dedicated a lot of sweat and tears to this startup. Considering looking back to when we use to operate out of my flat to what we are achieving now is incredible. We are now trading over £1 million a week and being a part of something that has evolved and grown at this rate so quickly is fantastic. Working at Smarkets is like working at any other ambitious startup. We all commit to the task at hand and roles are commonly interchanged between staff. Despite the culture at Smarkets being informal, the level of effort and commitment is extremely high. We are a small team and spend time together outside of work. In a way, given the nature of work at Smarkets, the ‘work’ has become integrated into my social life. I, and the team, are very passionate about Smarkets and its progression. This is apparent from the way we all work within the company. Our biggest challenge so far has been translating ideas first proposed by Hunter and me 3 years ago from concept to a product people love. Creating a functioning website that mirrors the image we had of Smarkets has been very difficult. We have had to find very innovative ways of solving complicated technical and logistical problems. On the basis of our progress so far, I think that the future is bright for Smarkets. We have developed an easy-to-use yet powerful exchange platform that out-performs our competitors. Our site is growing and our markets are becoming increasingly liquid. On these foundations I believe that Smarkets can look forward to much future growth.

My ambition is for Smarkets to become synonymous with placing a bet online.

Tech Boom or Bubble?

Valuing startups is an art not a science

With the multitude of IPOs, funding rounds and expected valuations linked to startups across the globe we felt it important to shed some light upon the mysterious world of startup valuations. There are a number of important factors that must never be forgotten when addressing this topic and I will attempt to address each one in the following hypothetical thought process. Imagine an individual with a good grasp of academic finance and an understanding of business dynamics who tries to understand how startups can be valued. Surely valuation is linked to discount free cash flow? Company value is most commonly associated to their discounted free cash flow today and in the future. This, coupled with the return on invested capital, is highlighted as the key multiple in valuing enterprises in any sector and of many sizes. But many startups have no free cash flow? This is when the concept of expectation comes into play. Most startups are valued at a stage when the majority of their value is based upon individuals’ predictions of future growth and levels of profitability. Facebook and Twitter have been great examples of this but even Amazon went through a period of huge uncertainty whilst maintaining a high valuation. But sometimes even these predictions seem unrealistic? It could be expected that these predictions lay within the realm of possibility but in fact they often do not. Value in startup land can often be a result of short term demand and limited supply with VCs and other investors racing for a piece of the next “big thing”. This scramble can produce a market dynamic that pushes the value of a company well beyond sustainable levels for all those involved. However, the future cash flows of a firm are not the only motivation for investment and this is often forgotten by the majority of commentators. One thing I hear far too often is that a firm is surely not worth what the last funding round suggests. This is a paradox in itself. A firm is worth as much as people are willing to pay for a share of its ownership and this is exactly what is happening at each funding round. Perhaps a more appropriate statement is that a firm is unlikely to generate the levels of profitability that justify an investment at the current company valuation. This I can totally agree with.

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