Fundraising in London
When I started building a startup I was painted a picture by the people I met and by what I read. “Build your prototype, get traction and the money and fundraising investors will come rolling in”. We did the first two but three (e.g. money) was ridiculously tougher than painting a picture. The truth is the only thing that seems to matter in London is revenue (lots of it). From my experience, scalable companies do not receive the love they should.
I’m 23 and I set up my recruitment website Weavee because of my own personal experience as a graduate jobseeker looking for a job in IT. Every time I tried to find a new job via recruiters it was always the same frustrating and lengthy process. Even though my skills were getting better it was still almost impossible to find something that suited me. Looking at it from a top-down angle, and the continuing problems that you hear in the news about recruitment, I decided that something must be done about it.
The methodology of London can be incredibly limiting. Rather than focusing on ideation and creation of innovative new solutions to existing problems a company has to focus on activities which only generate revenue from the start. Therefore those companies with a proven ability to scale are left in a dilemma, meaning that the new “revolutionary” features and methods become harder to create.
With sales come challenges around branding and growth, customers only value the product at what it is worth today, not what it will be worth within 6 months or a year. London is well known for not providing enough support to scale-ups (Guardian), an existing customer base demands results. With those demands comes pressure to improve the existing process, meaning that the new “revolutionary” features and methods become harder to create. Focus is drawn to refinement rather than innovation.
We achieved a private seed fundraise of £70k at a valuation of £700k. Reaching out to our network we found people able to invest in the vision of Weavee as a platform that could solve the problems they face within the job seeking world.
However, the clear stipulation of the cash was to only focus on revenue generation. Meaning activities that I would like to explore further would need to take a backseat. We need to focus on increasing revenue generation on the existing platform.
I personally google a lot, I find articles online and read of valuations on companies that raise X amount. I use this (to a small degree) to benchmark the success I have compared other companies. What these stories often don’t tell is how companies find the investors in the first place. From my experience it is networking combined with existing connections and your own track record. The problem is that great business ideas often come from new entrepreneurs and, like me, they likely have none of this when starting!
My tip for new startups is to remove the idea you will get investment, scrap the attitude of fundraising. By doing this you will look critically at your business for making money, then use this business to explore your idea.