BeBettr Afternoon Session pt2

The next speaker is killing time while the IT guy sets up her laptop. She’s talking about VC and Angel money. Her name is Modweena Rees-Mogg and she’s here to talk about funding and angel news. She’s asking if we know about VC and we say ‘no’, she asks if we know about Dragons Den and we say ‘yes’. Well it’s the same thing but the real investors aren’t as horrible So what is the process people go through to get funding. You’ll set up a company at the cost of £50 with the help of a lawyers. You’ll fund this yourself a little and will usually get ‘friends and family’ money by knobbling your granny, then you might go to the bank and they’ll say no! You might get between £10,000 and £20,000 but then Zuckerberg got $100,000 for his first round of funding for Facebook.  Once you’ve shmoozed and told people about your product you might get some Angel money, this will typically be a middle aged man (sounds dodgy), they’ve made their money in business and their motivation is about helping, giving back and changing the world. They are not there to make money. Perhaps 50% of these deals fail. They know there is a 50/50 change when they lend the money. only 3 in 30 will get a return. You have to understand why they want to back you and be able to sell in the big story and you need to be able to deliver on it. It’s all a big game, making your story sexy so they agree to give you the money. This process, between pitch and delivery of cash can be up to 9 months. You need to think about how you can run your business in this interim period. You need to split time between business and fund-raising. Entrepreneurs choose to do what they’re doing but you can pay someone to raise funds for you rather than doing it yourself. Paying good people to do this can reduce the time it takes monies to be raised. This can be through networking as well as selling in the sexy story. With this money you can afford to test and make mistakes but how much of that money can you afford to do this with. The IT is still not working but everyone thinks that she’s doing fine without the slides. She’s not resorting to describing the slides, but we understand what you’re talking about Modweena, so that’s OK!! Investors want to see your projections even if you don’t think they are going to go smoothly. You have to be realistic so they can see that in the end they will make their money back. What are the back up plans for when it’s not all going to plan. The big question… what to investors want? Ego is a big part of it. They want to back great things. There is a lot of you backed that? we rejected it! You need to be strategic about how you raise money from them. Some people have raised money through direct advertising. This is also a successful way of raising funds. Angels are less worried about returns and dividends. They are less stressed about it and what capital return. Venture Capitalists have investors in their funds and they will want dividends or annual payment. So, how are you going to pay this money back? Don’t just think about the big win at the end. They will also want to have influence in your business. The first round will mean selling 1/3rd of your business. Best ask for more money up front. Having 1/3rd gives them enough say but lets you still feel that it’s your business. The more you rounds you go through the more of your company you give away. You can get in to a situation where you own less than 50%. In the USA it’s more acceptable to be part of something big whereas here people want to be in control. This often leads to the investors removing you from your business because they feel you are not suitable and you need a ‘new challenge’. You might be a tech genius but you’re not the best CEO. They also want an exit plan to get their return on investment. Your ROI can subsidise other failed enterprises! It can take 7-10 years to from investment to exit. Unusual in 3-5 years. You could make a trade sale or another part of the venture industry. You could float it on the market too. Ultimately you won’t get rich!! You might have to wait to cash in your shares and the buyer might close the business before you can cash in. What is liquidation preference? What happened when they want to take their money out? VC takes their cut first. This can be worse if everything goes well. She begs us to raise money and get a good lawyer to protect you from things like this to make sure you get your fair share in the end. Angels invest their own money and might want to get involved or not. For VCs it’s a job so there are fees to be charged like banks do. There might be management fees for them being your board and beats you up for not delivering. You will need to understand the cash implications of this. She says she’s not raised money for her business because her ego would not allow it! Are the VC’s goal realistic? Out of 100,000 companies in the UK only 1800 make an EBIT of £3m a year. To get into that elite group you have to achieve a lot. More to it than your spreadsheets. Think about margins rather than sales. She recommends borrowing from your bank rather than VC’s as banks are lending again. Your equity is the most precious thing you have and borrowing from your bank will allow you to retain this. The talk draws to a close and was well received even without a hint of a Powerpoint presentation!! Well done Modweena.

Now were listening to Stefan Richter owner of scribblar.com .He’s the guy that created that brilliant fridge magnet website where you could see people moving the letters around and you could all post swearwords together. He also did a collaborative drawing site and other tools. This was in the early days when the web went from being something you interacted with rather than a medium that enables you to interact with others. He’s also showing a collaborative free for all online puzzle game too. The images for the puzzle game were pulled in using the Flickr API so images were always new. From this he wanted to make this into something more useful. New technologies like FLEX came a long that allowed this approach to be built to make a more useful tool. The first tool is like a collaborative interactive white board that enables you to pull in text, images and drawings. He went through several iterations of this idea to get to scribblar.com (it’s scribbler, with an A!). Got a bit more branding and marketing behind it but he says it’s hard to keep on top of hit. It marries the collaborative creative element with live chat and sharing making it quite an effective teaching and learning tool. You get live student feedback and can link listening with writing. Poeople upload all sorts of things like Dungeons and Dragons maps that they can create together. They could write an opera collaboratively and other school districts have use it to connect campuses. They use Scribblar to teach maintenance people how to look after energy management systems too. There seems to be endless possibilities for the uses of Scribblar. It’s intersting that they are providing creative tools and interaction but don’t define how it should be used. It very much fits in with what previous speakers have been saying. There is also a hacking element to it but pulling in CC licensed Flickr images and can also pull in data from WolframAlpha to use various pieces of learning information, formulae and information. Stefan can be reached at @stefanrichter

Edward Upton comes on to the stage to tell us ‘I don’t have a PowerPoint presentation!’. Yay for Edward, he is our hero! It has been noted by Owen that there is definitely a uniform for the speakers. They’ve thought, ‘Shit! I’m standing up in front of people and talking. I’d better stick on a shirt with my jeans today, instead of my usual regulation t-shirt.’ Well that’s what I did, and I’m not even speaking, so well done, and thanks for making the effort!!! Edward is talking about ‘Who profits from excellent education’. His product is called Teachables. Content is uploaded by teachers and peer reviewed before appearing live as a resource on the website. Teachers pay to use the service but Teachables pay Teachers for content. The site is values for delivering quality content. 50,000 teachers use the service, not all paying users. What is radical about this service that people find unusual. Perhaps it’s the money factor. He makes the following statements: Education is a noble act and people shouldn’t profit financially from education. 20% of teacher hold this view. There are people who do profit from education. Uses BETT as an example of a forum from lazy products from dull companies sold by aggressive sales people!! Second statement. Individual teachers should not be profiting from content that has been made as part of their school work. Someone says if they are publicly paid they shouldn’t privately profit. He says this all depends on contracts etc… There is a lot of teacher produced content that isn’t out there and is locked up inside teachers laptops where it should be available to other teachers and schools. He says, practically this content should be unlocked. They do work with schools as sellers of content. The contributor gets 50%. Some give to charity and others split between the school and the author, some between school and charity. This is a public service that could and should be run centrally by government for the benefit of the education industry. The government need to encourage entrepreneurs to produce services that support education. He refers to a service called curriculum online supported by the government. It was a total failure and was ultimately shut down. Seems that it was ruled by committee and this led to it’s failure. To sum up, there is a future where private enterprise can profit from education in terms of development and innovation. It can help schools to get revenues by sharing their content etc… He says it’s a great thing that government quangos have died because it makes the industry more competitive now the government isn’t holding it back. Now questions… They use quite a restrictive CC license to stop people reselling their content. Resubmission needs to be more than 50% changed or improved. They need to be able to track ownership. They don’t align themselves with the OER (Open Educational Resources). His business model enables the users of the system to fund the service. Thanks Edward… you can put your t-shirt back on now!!