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Is Now A Good Time To Raise

Overall, Crunchbase is showing 521 recorded raises in Q2 for UK-based startups at preseed to Series A, with total investment of over £1B. Compared to the same period in 2019 (which was a record-breaking one), that’s a volume drop of 69%, but that doesn’t mean there isn’t money out there - many startups will have voluntarily decided to delay starting a round due to the pandemic, which will contribute to the lower numbers. Across Europe, the first half of 2020 still beat the same period in 2018 by more than a billion dollars and investments into the UK market were still more than double that of Germany, the next highest European market.

There’s also been a focus on follow-on investing, with investors supporting existing startups to weather the storm, rather than quite as many new rounds as we’d normally see.
Angels – When it comes to Angel investment, there is definitely still money out there – our clients are certainly still bringing money in via this means – and interestingly, the Angel Investment Network are reporting increased focus from Angels on sustainable investment since COVID struck.

Venture Capital – VCs have money now that has been committed to funds and they are required to invest it; longer term we might see less money coming into VCs as institutions tighten their belts, which means you’re better off raising sooner rather than later, while the money is available (providing, of course, that your startup is actually ‘investor ready’ and at the right point in its trajectory to raise).
In the crowdfunding world, Crowdcube are reporting really positive results for Q2, with 59 businesses funded (9% up on Q1, and importantly, a 16% increase on the same period in 2019). They also saw the amount invested increase by 25% versus Q1 2020. These results were across a mix of raises from startup to later stage, with 7 companies raising over £1million. Raises also covered everything from financial service products to new TV channels and sporting goods.

With a pretty bullish investment market (considering the circumstances), using the summer to prep for an autumn raise makes a lot of sense – if you get your preparation right, you can run a smooth raise and ensure you have required funds in the bank before conversations turn to Christmas dinner.

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Returning to ‘Normal’ After Lockdown

Returning to ‘Normal’ After Lockdown

While we’re definitely not out of lockdown yet here in the UK, it’s important to turn your attention to how you return your company to ‘normal’ after this unprecedented period of change.  Just as every good company should have a Crisis Management Plan to govern how they behave during crisis, they should also have a ‘return to normal’ plan.

The simple truth in this instance is that you won’t be able to return to your old ‘normal’.  The impact of COVID-19 will be felt for years, if not forever, in the way businesses run.  The 6-9 months post-lockdown will see as much, if not more, change than we saw as we entered lockdown.  This change will manifest across two key themes: People and Money.

People

People management will be one of the highest priorities and time drains for businesses over the 6-9 months post-lockdown.  It isn’t as simple as opening the offices again and getting everyone back at their desks.

Furlough

Some staff will have been furloughed, and complex thought will be required about how to bring them out of furlough in a positive way; their employee rights to things like holiday need to be considered, as well as their mental health – furlough can feel much the same as redundancy.  For some staff, furlough may indeed turn into redundancy, if the company they work for cannot immediately regain its previous revenue.  If redundancy isn’t an issue, rebuilding your team might be – the daily rhythm has been lost and you may find the new rhythm that establishes is not the same as the old one.

Flexible Working

More people than ever before have been working from home during lockdown – and many people are finding that they really enjoy it.  Companies who previously said working from home was ‘not possible’ have proved it is and every company should expect to see a higher number of requests to work from home some or indeed all of the week.

Family

Those people who were in lockdown with their families may have treasured the extra time with their loved ones and find readjusting to office life hard – how can you support them?  Likewise, how you behaved as company leaders during lockdown will dictate your employees actions on their return – did you take account of their need to homeschool or look after elderly/sheltering relatives by finding and delivering food, or did you expect them to perform exactly as they do normally?

Retention

Just as the Christmas holidays and New Year always trigger a higher number of resignations and new job applications, so will the return from Lockdown – either because the period out of the office has allowed reflection, or because your company’s actions during lockdown have driven staff to want to leave.  This means extra cost for your business in new recruitment, plus the performance drop while new people are found, brought on board and trained.

Holidays

Many staff will have missed holidays and will be keen to take them as soon as travel bans are lifted – managing holiday requests fairly may seem like a minor thing but done poorly could foster resentment in your workforce.

Customers

How did you interact with and support your customers during lockdown?  Will they want to come back to you afterwards?  Did your customers learn to buy from you in a different way during lockdown and will they want to continue doing that?

Money

People Requirement

How did your business function with some of your people furloughed, or with people not working at full capacity?  Did it reveal you don’t need as many people as you thought?  As a business, the lockdown will lead many businesses to evaluate their staff needs, especially as it will be key to keep costs low in the months ahead.

Cost Management

What other costs did you cut during lockdown – do you need to reinstate those costs straight away or indeed at all? Revenue will not return to ‘normal’ straight away for many businesses, so keeping costs as low as possible for the next 6-9 months makes sense.  You may also have taken on a CBILS loan, so that cost will now need to be factored in.

Pivot products

You may have pivoted quickly to offer alternative services during lockdown – as lockdown ends, you’ll need to decide whether you continue these alternative services: will there still be a market for them and is that market big enough to warrant continuing the product?  A ‘pivot product’ could even become your new major product, displacing your previous core products – a decision that could require wholesale transformation of your business.

Buffer

The shocking thing to me is how many businesses - big or small - were operating with little to no cash buffer to support them through a crisis.  If you did have one, that may well be heavily depleted, so the next 6-9 months will be a key time for every company to build up a good cash buffer and find a way to invest it so the money can work for the business – some companies such as Prudential offer up to 5% interest for long-term ‘cash in business’ scenarios.

Revenue

Just as we’ve found there has been massive ‘noise’ and ‘hustle’ from companies trying to generate revenue during lockdown, the same will be true afterwards.  Returning to your planned revenue path will be hard – you’ll need to find a way to stand out from the noise.

Summary

 

There are many things to consider for your business on the way out of lockdown.  You could look at them as a series of problems to be overcome or, you could see this as a golden opportunity to reinvent your company into its best form yet – best for you, for your staff and for your customers.  What path will you choose?

 

 

 

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Why the UN Sustainable Development Goals are vital for your startup

A basic requirement, from an Investor’s perspective, is that a startup can articulate the problem they solve.  That problem can be quite small, or it could be a global issue.  Whichever it is, increasingly investors are looking for investments whose problem-solving delivers social impact and/or makes positive contributions to sustainability – and this is where the UN Sustainable Development Goals come in.

The UN describes them as “17 Goals to transform our world”, and they range from eradicating poverty to protecting sea life and reducing inequality.  By committing your company to a UN Sustainable Development Goal, it helps to communicate the impact of the problem you solve on a larger scale, and it shows that you provide positive impact in the world as part of running your company.

What does ‘committing’ to a goal mean?

This very definitely isn’t about just putting something on your website (although you definitely should, there is a full logo pack on the UN website for you to choose your goal icons).  By committing to a goal, you are committing to take action, to do good through your company.  If your actual product or service doesn’t do this directly, you can use websites like www.b1g1.com to easily support existing programmes or do something on your own in your local area.  The goals break down into specific targets, so you can choose one target within a specific goal to focus on.

Here at Spark! we support three Goals:

What are we doing?

Helping women who have been stay-at-home mums back into the workplace by offering employment and work experience to build up their CVs

What are we doing?

We donate 2% of all our revenue from working with startups to a charity called SafeSteps, which helps survivors of domestic abuse and their children to build new lives in safety.

What are we doing?

We support and mentor people from minority backgrounds to achieve success as Entrepreneurs or in employed careers, through working with Generation Success

What could you commit to today, which would do good for the world and improve your message to investors?

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Forget Tech. Customer Experience is the new Revolution

Forget Tech. Customer Experience is the new Revolution.

There’s a common misconception that the startups doing well, the ones really soaring to Unicorn heights, are there because they’ve built amazing tech that differentiates them – the buzzwords of FinTech, HealthTech, PropTech continue to dominate. While it’s true that 18 of the top 20 valued Unicorns have a heavy tech emphasis, what actually lifts them from a ‘tech’ startup to a Unicorn is not their tech itself, but the Customer Experiences they create.   Whether it’s Uber enabling customers to order cabs to their location, AirBnB completely turning the hotel experience on its head, or Coupang taking on Amazon in the e-commerce marketplace, what stands out is how the customer experience leads their evolution.

Interestingly, it doesn’t have to be an incredible customer experience, just a service which significantly outperforms the industry standard: bank accounts that take less than the standard 3 days to set up are extraordinary in comparison; business productivity technology that runs at the pace people actually work at instead of constantly lagging is extraordinary by comparison. In reality, it’s often actually no more than you would hope for, if someone designed this type of service from scratch – it’s just that the current customer experience is so poor across that industry (remember ‘allow 28 days for mail order delivery’ anyone?), that any significant improvement seems extraordinary and revolutionary.

The Unicorns are providing their customers with a feeling of transformative change. The product speaks to the customer, because it understands their pain points, and makes a significant dent in them, while not removing them completely. This applies whether it’s a B2C or a B2B relationship. The challenge, though, is staying ahead of the pack – as their ‘extraordinary’ becomes the new ordinary for everyone, how do they continue to break the norms and outstrip the competition? Apple have historically been a leading example of how to deliver comparatively extraordinary customer experience, but their last few launches have been less revolutionary, and the customer experience they offer now is not dramatically different to that of their competitors.

So how do you create a comparatively extraordinary Customer Experience?

First you need to build a body of knowledge around 4 key areas:

  1. What do your customers actually want to achieve?
  2. What frustrates them about trying to achieve it?
  3. What are the ‘rules’ and accepted standards within your industry?
  4. What are the business processes needed to achieve what the customer wants?

Once you have that information, then the ‘secret sauce’ is working out how you can break some of the rules to delight the customer instead of frustrate them, while not bankrupting your company. Its always worth challenging every ‘rule’, even if it’s a regulator-driven one – regulators are usually open to exploratory conversations, providing your aim is to improve customer experience and not commit crime!

Technology might be a massive enabler to these highly successful startups, but what it comes down to is that they paid attention to their customers and were willing to break the mould to serve them better. Even if you aren’t setting out to establish a Unicorn, taking time out to assess your current business and see if you can make small changes that will delight your customers will pay you back ten-fold. Try it!

 

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AI Human making complex calculations on a blackboard

Do you really need AI?

Do you really need AI?

AI, or Artificial Intelligence, is the latest buzz-word. Everyone wants it… but the real question is, do you need it?

To be able to answer that question, you need to know two things: what AI is capable of – the ‘art of the possible’ – and how your business works:

What is AI capable of?

Artificial Intelligence is a form of computing that allows previously human tasks to be carried out by a machine. AI can theoretically do anything a human can do, from decision making, to translating, to checking if IT servers are still running and taking the correct action if they aren’t. It can be an incredibly powerful tool, as long as it is trained and applied in a way which means you can trust the outcome.

AI can remove boring tasks from humans, so they concentrate on higher value work, reduce errors (as long as you train it properly in the first place!) and increase the amount of work that can be achieved. It can mine huge amounts of data, to reveal insights about your business and/or your customers, and even predict future behaviour. It can also improve customer experience – a chatbot that can answer basic customer queries while you’re asleep can mean you keep sales leads alive that might otherwise drop.

Things to watch out for

Training AI is somewhere between a science and an art form. You need exceptionally good tech resource to build your AI in a way that means it has good controls and is easy to edit and manage. Likewise, your AI trainer needs to have an in-depth understanding of the process or customer interaction you are trying to replicate, to ensure the end result is the same or better than when a human handles the process. This relies on you, or your staff, being able to really understand what good looks like and articulate that in a way that can be translated into AI.

You need to accept that AI works really well when the conditions are always the same – it isn’t great at making unique judgement calls in exceptional circumstances.

Also, while AI can help you reduce your operating costs, AI itself doesn’t run for free – it needs constant training, checking and updating, so you need to be clear about how much money you would actually save, and whether that makes it commercially viable for you.

Does your business need AI?

First you really need to understand what happens in your business:

- What processes are carried out? How often, and with what kind of volume?

- How do you interact with your customers? Do you have lots of repeat interactions on the same topics?

- How much data does your business need to handle on a daily, or even hourly, basis? What do you need to do with the data?

If the answers to these questions reveal you carry out basic processes with very high volumes, you get asked the same basic questions by lots of customers, or you need to mine huge amounts of data to get vital business information, then an AI solution could be a good answer for you.

If your answer is no, but you still feel you could improve how your business is running, then you may be better carrying out a review of your processes, how you interact with customers, and how you manage data, to see where there are opportunities for improvement. You could achieve those improvements by simply changing the process, or by using other tools and technologies, such as a Customer Relationship Management (CRM) tool, to help you.

Overall, it’s really important that you make a choice that will help your company achieve its goals – no-one actually cares whether you have AI or not – they care about whether their salaries get paid or whether their customer experience is a good one, so it’s vital your decision is based on those key criteria, and isn’t focused on having the latest cool tech!

If you would like to discuss opportunities for improving process in your business, whether with AI or not, please contact us on enquiries@juliebarberconsulting.com or 07973 801682.

#AI #knowyourbusiness #businessprocess

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Human Using VR to view the worlds connections

Get Your Virtual Reality Headsets on, its time to look at your Vision.

Get Your Virtual Reality Headsets on, its time to look at your Vision.

Whenever someone comes up with a list of corporate terms they hate, you can pretty much guarantee that ‘Vision’ will make the list, along with ‘Mission Statement’ and probably ‘Blue Sky Thinking’. Some corporate terms have undoubtedly earnt their place on the list, but Vision is a term that gets an unfairly bad rep.

When you set out to grow or change a company, your Vision has to be your starting point. And it has to be in 3D, full Technicolor, with Surround Sound. Your Vision should be so real, so clear, so well described that you could put on Virtual Reality (VR) goggles and be immersed in your Vision as an experience.

VR-level visions are incredibly powerful. They tell you lots about how you’ll know when you’ve achieved your Vision, and what needs to change to get there. Your VR-Vision is the start point for building your business strategy, and the transformation plans that you might hang off of that strategy.

Let’s use an example: say you’re a newish FinTech and you’ve developed a product that helps people save for their children’s education. It achieves that in a very specific way, with weekly/monthly savings targets, current student financial data compared against inflation to give you an idea of how much to save, and access to savings products that will make the most of your money, plus any tax breaks. (I don’t think this exists, by the way, so if you want to launch it as a startup, you’re welcome).

You could have a flat Vision that’s about as much use as chocolate teapot, and it would look something like this: “It’s our Vision to develop an app our users love and get a million people using it within five years”.

Or, if you go full-VR, you could have a Vision that looks and feels like this:

“It’s our Vision to improve our app to suggest savings amounts based on a mix of cost data and parental income. Our app will have links to savings products across the financial spectrum, offering our customers access to everything from traditional savings accounts to ISAs, Credit Unions, online banks and Premium Bonds. We will hit the 1 million active users mark in year 5, which based on current data means we need to achieve 1.4 million downloads, to take account of user drop-off. Our customers will give us 4.7+ feedback that tells us they love feeling that they’re providing their children with future security. We’ll have started working with some large companies, providing a white-label version of the app through their staff reward/remuneration schemes. To achieve all this, we will have grown our team by 10, and moved to new premises to accommodate us all. We will have funded the app development, staff increases and premises move through a successful funding round.”

The full-VR Vision is rich, as detailed as it can be, based on current data, and has some clear indicators that will tell you if you’ve achieved what you set out to do. You can see it, feel it, taste it and smell it. Its your truth. It’s something you can print out as a poster and frame on the office wall, to remind you every day what you’re aiming at. Every new opportunity that crops up can be held up against the Vision - does it help make it happen? If not, either don’t do it, or take a step back and check your Vision is still right (it’s about 99% certain you’ll need to refine it some point).

But, just before you get busy applying creative fonts and colours to your printable version, do a sense check: What does this mean for you and your co-founders personally? What does it mean for your existing staff? Make sure that Vision is something you want to do, versus something you think you should do. You might realise that of course the app will continue, but actually what you love is the invention of new products, and you’d rather aim to sell out in Year 4, and move on to a new idea (tip: if that is your preference, don’t print that Vision and put it on the office wall, it might not be great for staff morale - but still put it somewhere that you will see it every day).

Three final really important points:

1. Dream big. If you don’t, no-one will do it for you.

2. Be realistic (I know, this sounds like a contradiction). This is where your research comes in. If 50% of the adult working-age world globally don’t currently have access to banking, plus you know that statistically only x% of adults have children, and only x% of them go on to further education, your target customer base needs to not be larger than that amount of people.

3. The Vision needs to not take you more than a day to put together, including any research you need to do. This will be a living document, so it’s got to be easy to create and easy to update. Don’t turn it into War and Peace, or you’ll stick it in a drawer and never touch the thing again.

If you would like help with creating your Vision, or you’ve got the Vision down but need some extra brains to work on the business strategies and transformation plans you hang off of it, then please get in touch on contact@spark-consulting.co.uk. Our VR goggles are ready...

#Vision #Strategy #Growth #Spark!

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