After a few weeks of putting the word out, here is a summary of my experiences of the angel investment situation here in Scotland.
first there were ten
Of the ten or so contacted, it has been relatively easy to arrange meetings, once I learned that I have to talk about level of investment and equity, nominally £30k for 16%. Of the few who request written info before even contemplating a meeting, they all respond with a negative, saying it does not match their criteria. I usually have to reply with a rather forceful email requesting what criteria exactly, and on two occasions this has led to a meeting.
from five to two
Of the five I have met, one did not have a clue what I was talking about. I am on point, and I do explain how the gifting mechanic works. This can be overwhelming. For all but two so far, the app-server combo does not conform to the criteria they use to evaluate and subsequently pass on to their syndicate of funders. Most of these syndicates consist of reasonably well off professionals who are looking for different investment opportunities. In comparison to ISAs or playing on the stockmarket, investment in any kind of company or startup is a high-risk. They are not looking for innovative. They are looking for a niche product, something which fits the current market and makes a reasonable case for growth. Most are physical companies, many biologically orientated for some reason, and only a few in app development, eg controlling household boilers or lights with a mobile app, that kind of thing.
Of the three that said it was not suitable for their syndicate, they did offer to pass on my proposal to specific individuals they thought might be interested. None have honoured their word. The quality of response of individuals I have met here in Scotland is higher — where what they say and what they do match more closely than business people I have met south of the border. It is a tiny sample, for sure, but I suspect there is more hardness in the Scottish businessman. He doesn’t want to promise anything he can’t deliver. But still, I find the gap between word and action is still wide enough that I mistakingly take a barge of bullshit for a trustworthy relationship. I am learning. I am now entirely skeptical. It doesn’t matter what anyone says they will do now, it means less than the vapour from their tongues, insufficient to moisten a stamp let alone a letter of intent, or anything resembling useful action.
Why this behaviour? Because there is no moneyflow. I have dabbled with the notion of introducing MTTP into the initial engagement, but I have found that it appears to be too much of a gimmick at the moment. Only when I have sufficient funds and a body of practice behind me, will it operate well. Indeed, operate for anyone on the planet. Point is, we need to have moneyflow from the initial conditions. The current system has all this hot-air, talk, preparation — which could go on for months! — until eventually ‘gold’ is struck. And course, the investment has to be worth the time and effort that everyone has put into make the decision. I wouldn’t be surprised to find that upward of 25% of money funded goes to pay the time and effort before funding is released. Absurd, and also makes for a distrusting business environment. The alternative? Money flow from the start.
I am tracking people’s contributions through the app, of course. So, when moneyflow does arise, I can distribute it to those who have have actually been helpful. I tell people this, but because this is early days, they can’t ‘compute’ the significance of this. When I end up distributing £1,000,000 to these critical first-steps, the world will be a different place — it will pay to be sensitive and helpful.
two interested — why?
Through this relatively painless procedure, two have shone through. Despite the obvious challenge of comprehending the app in the first place, they were open-minded enough to listen. This indicates a qualitatively different mind-set. Both were quite unlike the others. First, they were investors themselves. Second, they were not simply going through a checklist, establishing what other products our app is like. They were genuinely looking for newness.
One began to relate ecosquared to trust networks already out there. For example a child-sitting service which was growing slowly in the US west coast (where else?). He talked of the importance of sharpening the pitch so that it was super-clear what was being offered, giving me examples of mechanical buzzards, of all things. Of course, the problem I have is that the tool has potentially ubiquitous use, but what I need to do is pin-point some specific potential user-cases. Specific problems solved, so the ‘market’ will find the offering obvious. And this chap offered to do just this.
Another had direct experience of equity investment and he was specifically interested in the gifting mechanism of our app. He recognised what I call the ‘fractal seed’ of the gifting mechanism, and revealed that another company was pitching this for £500,000. Good news to know there is a competitor, so I don’t feel so bad when I meet someone who has no idea what I am talking about, their response being more a reflection of what they don’t know or haven’t come across. The bad news is, they are putting together a professional bid with plenty of commercial bells and whistles. Another bad thing is that it was intimated they are using a traditional business model and will not be using the gifting mechanic themselves on their own product. That is, those who are tinkering with the gifting mechanism may be first to market, appropriating our one last great chance to escape the capitalist system (or thing-ownership strange-attractor).
In both cases, these individuals were genuinely engaging. Genuine potential here.
a final surprise
My nephew did something unusual, in fact doubly so. Firstly, it is unusual for (my) family members to mix business with blood, and secondly, it is unusual for someone to recommend something when they do not understand it. Both, I believe, are natural to the human state and once ecosquared has some validity, people will find it is healthy to trust friends and family first, whilst also developing the courage to explore things they do no understand or feel is right. That is, genuine trust network, and thus a strong enough existence to explore new experiences. Strong roots, strong branches.
So, my nephew showed a few slides to a neighbour of his who is a successful entrepreneur, and his response was positive. From what I heard, very positive. It looks like the most positive response has occurred indirectly, ie not through me directly — which is a good sign. It indicates that whatever is presented is reflecting what the viewer already knows. That is, they have observed the elements in society themselves, and my composition brings these elements together in a rather pleasant composition. Thus, resonance and acknowledgement, followed by appreciation and excitement. I am only speculating at this stage, since I haven’t met the gentleman. But I do know how the psychology of discovery works based on my experience with young adults.
I am, in fact, envious, that my nephew witnessed the buzz. Had I been present though, I am sure I would have white-washed whatever their excitement was with my own. This is a major problem with inventors or creators, at least for some. Without recognition, the creator internalises the lack of response, and so whenever even a glimmer of appreciation appears, it can often lead to an incandescent explosion of delight from the creator, which all too often snuffs out the joy of the receiver. I don’t make this mistake with kids. Or rather, when I see a kid start to light up with a discovery, I add my passion like fuel to their flame not just for having a new enlightening perspective on fractions say, but expanding it out to the joy of mathematics in general, and the ability of any one of us to learn! I have found that this genuine learning flame is weak in adults and can get easily snuffed out, whereas with young adults it has the radiance of nuclear fission, all-at-once intellectual, emotional and indeed spiritual.
So, who is to know what may emerge? It is slow progress. I am certainly not excited about a positive response any more, because I have had people say ecosquared is genius before and very little came of it. In fact, the opposite — I trusted their perception and their direction and risked too much, losing my family in their enthusiastic promises. I won’t make that mistake, indeed I can not.
I have also begun the route through the public funding maze. Very nice engagement with managers at Business Gateway and Scottish Enterprise so far, with potential matched funding or 70% funding, but it is going to be 12 weeks putting together the proposal and then a further 12 weeks getting a decision. We’ll see how far I get along that path before I run out of steam, though perhaps some business-minded people may be attracted to complete that journey. Again, the method justifies the accretion of more ‘business folk’. The more money involved, the more people, and the more it costs to get anything to happen. Something which our app has the chance of cutting completely.
Meanwhile, Colin continues to develop the back-end engine and I fund the front-end app, which can be found on Google Play, ‘ecosquared’. I’ll write about user-cases in another post — feel free to submit your interest in the comments, via the app itself, or from the ecosquared.co.uk website.