This is going to be rough sherm8n. Hold on to your hat. I'm sorry if this upsets you.<p>To be honest, I'm suprised you've received any funding. You're a company that increases Twitter and Instagram followers. This is a deeply dodgy, largely unproven and mostly saturated market and you're charging prices that'll leave you out of pocket. No way are you worth $600,000. There's no way you can get enough customers.<p>You can spin this as a story about how you should never leave the comfortable bubble of San Francisco, but to my mind it's yet another story of how insane things are over there.
The main problem here seems to have been a lack of understanding that it's essentially a requirement now in the UK to be set up for EIS/SEIS if you want to raise money. Investors expect it.<p>We've been through several rounds of fundraising, and as an American from the bay area over here, it's definitely not the same environment as you hear about from YC companies, etc. raising in the Valley. But the UK/European market is absolutely smaller and more fragmented (language barriers alone are massive) so opportunities are not nearly as large. You also don't have the same degree of FoMO[1] going on, as there just haven't been enough big exits. I wouldn't expect that climate to change any time soon, or with any expedience.<p>But definitely be registered as a company in the UK, and set up for SEIS[2]/EIS[3], if you want to raise money here.<p>[1] <a href="http://en.wikipedia.org/wiki/Fear_of_missing_out" rel="nofollow">http://en.wikipedia.org/wiki/Fear_of_missing_out</a><p>Edit: Links to relevant docs on gov.uk<p>[2] <a href="https://www.gov.uk/seed-enterprise-investment-scheme-background" rel="nofollow">https://www.gov.uk/seed-enterprise-investment-scheme-backgro...</a><p>[3] <a href="https://www.gov.uk/government/publications/the-enterprise-investment-scheme-introduction" rel="nofollow">https://www.gov.uk/government/publications/the-enterprise-in...</a>
I'm an American, running a startup in Scotland, funded by a Scottish angel syndicate, which functions in many ways like a "mini VC". There is intense, constant griping both in Scotland and in the broader UK about the funding climate vs. Silicon Valley. Having been involved in a South Florida startup previously, I can assure everyone here that there are much worse places to raise money and run a tech company than Europe.<p>Most of the horror stories around fund raising in Europe that I've heard involve B2C companies, or very low revenue-per-customer B2B companies that are constrained by many of the same challenges around customer acquisition (low average rev per customer, not very sticky, can't afford an inside sales team). This makes these B2B companies effectively the same as B2C in many ways.<p>The key thing to recognise, in my opinion, is that it's extremely difficult to raise money for a software company that's pre revenue or likely in search of product/market fit <i>in almost any market</i> other than a few cities in the US (NYC, Valley, Boston, Others?). Sure, there are counterexamples, but this seems to be true in general. This isn't just a European "problem" and my not even be a problem at all.<p>When I was playing in rock bands, we quickly learned we needed to play venues that fit our style. Playing in front of an old folks home crowd wasn't going to work. This sounds amazingly stupidly simple, but there's plenty of people ignoring this lesson in startupland with regards to fund raising. If you're sitting anywhere but a few select markets, reading Valley blogs, you're going to be in for disappointment when it comes time to apply all of your Valley knowledge in a non-Valley environment.<p>B2B land is so much easier than B2C land, and there's plenty of investment out there. Most software and most money made from software is in B2B land. Why not try it out? You could be surprised.
Another London startup story: <a href="https://medium.com/@buro9/the-journey-of-a-london-startup-what-i-learned-when-my-company-failed-c67acd74b862" rel="nofollow">https://medium.com/@buro9/the-journey-of-a-london-startup-wh...</a><p>We had 50k users, some revenue (meeting our targets for that point) and the growth we had projected for that moment in time. We failed to raise money to get us past the end of our runway though.<p>Annoyingly, whilst the startup failed the product is still growing as an open source thing. It now has over 75k active users and has multiple installed instances.
The headline suggests that it was their choice of London as a fundraising location that almost killed their startup but I don't think that's true. While it's certainly more difficult to raise money in London than in San Francisco, the real problem seems to be that they ignored a critical piece of advice:<p><i>> The lead investor encouraged us to get it closed quickly and not try to do anything fancy.</i><p>Having said that, it's deeply disappointing that they still haven't heard back from HMRC on the advance assurance for SEIS.
Welcome to Europe.<p>Comparison between Europe tech startup scene vs the Silicon Valley one is quite unfair. I am based in Switzerland, you cannot imagine how hard is for a tech (worser if service) company to raise money. The model is extremely broken because the mind of an average European investor is completely different respect to the average American investor. In US the normal startup funding process works around a working prototype and how fast you can ship, in Europe, mainly here in Switzerland is about the protection you can give to a product with trademarks, patents and other things. So when you ask for money the first question is: is it protected? Or, can we protect it? Are barriers good enough so we can skip short-term competitors?<p>The second huge problem is the exit. In US, the IPO is a kind of fallback alternative to the acquisition, that is the main goal in a reasonable amount of time, so this makes the IPO not the favorite exit-strategy at all. In Europe it's actually the same, but the acquisition model simply doesn't work. You don't have any big tech company here giving the real exit-strategy option to investors. So the only chance you have to get them, is to prove that you can literally make a certain amount of money even in the worst case. Nobody believes that Apple, Amazon, Google, Facebook or whatever can acquire a Swiss startup company in the first 5 years of its life, so the result is that tech companies can barely raise money.<p>IMO, the Silicon Valley model is very risky, the motto "fail fast, fail often" is certainly attractive, but has a lot of downsides for funders and people involved, on the other hand the European scene is too slow, too hard and is always complaining about the fact that we are unable to compete against the Silicon Valley. I think the right balance is required, but it's just an opinion.
In a nutshell,<p>- Had a funding plan
- Got there quick with angels
- Got too big for your britches
- Discounted adviser's advice and got in bed with a big VC firm, doubling target funding
- Got bit by the big firm legal and the money got cold.<p>I kinda feel like this is going to happen even in the bay area if you start playing with major industrial investors or get too big for your britches.<p>Way cool that y'all were able to recover from the experience and are much wiser for it. But, other than the (not small, for sure) difference between US and UK laws (which your firm should have figured out), is it not so much an issue of raising funds in London as it is business practice maturity?
Funny how i just spend a few minutes reading something about a company, followed a few links and all I know is that the founders like sunglasses. No idea what they are doing.
TLDR: We had our funding lined up. Our lead investor advised us to keep it simple. We made it complicated. It almost killed us.<p>Apologies if that comes across as snarky, but that's honestly what I got from this.
> I know what you’re thinking. Why the f*ck would you move out of the mecca for startups?!?<p>Actually no, I can understand perfectly well why you would move out of a ridiculously expensive city - but not why you would move to one of the few cities on earth that is about equally ridiculously expensive.
It is great that you survived this near-death experience.
From my experience VC's and Angels from Europe and US are two completely different animals.
For fun just watch Dragons Den UK vs. Shark Thank US.<p>Venture capital firms in Europe vs. America: The under performers<p><a href="http://iveybusinessjournal.com/publication/venture-capital-firms-in-europe-vs-america-the-under-performers/" rel="nofollow">http://iveybusinessjournal.com/publication/venture-capital-f...</a>
As I was reading the article a voice in my head was shouting "TIME KILLS DEALS! GET IT CLOSED".<p>Clearly the difference in approach here in the UK versus our cousins in the US caused delays that even a large self-sustaining business would seriously consider before undertaking.<p>Sorry it didn't work out but very important lessons learned I'm sure.
I am the angel investor and I have helped many companies raised many times. The simple fact is that the UK has lots of money looking for a investment home ( £1 billion plus invested last year ). Three years ago tech investment in the UK was almost zero. This money was offered but the deal was not simple as can eb seen on my post:<p><a href="https://medium.com/@doug_scott/response-to-raising-money-in-london-almost-killed-our-startup-71d83db6479b" rel="nofollow">https://medium.com/@doug_scott/response-to-raising-money-in-...</a>
I guess the risk is higher in London because the funding pool is smaller, so if it goes to pot there's less places to turn, tho well done for getting all those commitments. What is your relationship with the funders now? Is there anyway to expedite the legals? When Ron Conway speaks about "getting your round over quickly" are the legals conducted differently in SF? Ultimately I think xkcd could draw a nice graph showing how the delay between commitment and consummation is directly (exponentially?) proportional to the probability of the deal falling over. It's never closed Til the money's in the bank is one thing I've learned.
Glad you guys made it through. An off-topic question here. Why not facebook? If the goal is to reach out to genuinely interested people which you guys seem to do quiet successfully using twitter and instagram, why neglect facebook?
Glad you guys made it through. Fund-raising is hard. Doing it across an ocean is even harder. It definitely feels like trying to raise in another country is a massive burden that may not be worth it.