Investing in good startups is not about hyper-activity but patience. There are endless opportunities but good opportunities don't come along very often so good investors have to know the people behind the business and act accordingly when the time is right.
Hosting SG Innovate
This week DMG hosted Hsien-Hui Deputy Head of Investments at SG Innovate, the Sovereign Wealth Fund of Singapore. SG Innovate has two funds (one for Singapore only and one international) and HH focuses on investing in 'deep tech' startups around the world.
As well as two DMG portfolio startups (Coconut and Century) we met with four other startups we have known for between 18 months and 6 years. All the startups are working on difficult technological challenges and the DMG 'M.O.' is to patiently get to know the founders over time to observe how they execute and to find out how (if at all) we can be helpful.
Some observations of the startups we met:
- They are working on deep technological challenges. They are not working on something they have seen a startup be successful with elsewhere and have copied (there are enough food delivery services for now).
- They have been working on this when the timing was 'wrong'. Founders have to be ahead of the rest in their thinking - this means working and getting some sort of traction with a product that is obscure and risky. After doing this for some time it will become obvious (Note: what3words launched in June 2013).
- They take on feedback and are constantly learning and improving but always have a core conviction about what they're doing. Because when you strip everything else away the 'WHY' must be so strong it gets you through all the dips and doubts.
We ended the day with a drink in the Chiltern Firehouse and reflected on our excitement for 2018. This year feels like the time in the cycle where new and exciting technologies begin to hit their stride. The smart people who have been working on AI and ML in FinTech, EdTech and 3D/AR have got their timing right. They've been working on this for the last few years while others dabble with yet another food delivery service.
2018 will be a strong year for those who've patiently done the hard work.
As reported in Wired, Coconut were among the businesses that won the second round of Nesta's Open Up Challenge. The Open Up Challenge is in response to Open Banking, which is all about enabling individuals or companies to give other companies access (via APIs) to accounts so that they can provide new products and services to help securely move, manage and make money available more easily and efficiently. Read more about Open Banking via Wired here. The list of prize winners is here.
Today I started getting the generic, “Congrat’s on your work anniversary!” notifications on LinkedIn so it must be around a year since I updated LinkedIn properly and put DMG on there. It’s been an interesting year - lots of learnings and achievements, some frustrations, periods of intense activity and a couple of lulls, steps forwards, steps back - all in amongst investing in five terrific startups.
Here’s a review of some things we’ve done and a bit about how we think about founders and startups. If you’d like to get in touch please do here.
Things we’ve done
- Invested in D&D, NoblyPOS, FanBytes, Century and Coconut.
- Helped the above with strategy, negotiations, hiring, further fundraising and finding office space, customers and more. Three of the above have already raised more funding.
- Run a number of ‘briefings’ for example this one for British Land.
- Met for coffees like this with the founders of 87 startups to talk about investment specifically, and many more about the general challenges and opportunities for their startup.
- Visited San Francisco to meet investors and startups over there.
- Spoken on panels and given talks at events by Escape the City, Fast Forward, Courier and Imperial College.
Relevant for entrepreneurs - from the best founders I’ve seen that:
- There is no such thing as being on time - you’re either early or you’re late. An hour early is better than a minute late.
- There is still a lot of investment money available but it still takes longer to raise it than you think/hope.
- Regular updates (ideally monthly) are essential for investors and entrepreneurs alike. Founders should also have a 'potential investors to update' list - investors invest in ‘lines not dots’.
- Pace of execution is key. The default deadline for replying to emails should be 24 hours.
Things we look for in founders
- Something we can all be proud of building.
- A startup that can return lots of money to its shareholders.
- Good execution - please scare us with your genuine resourcefulness, discipline and determination.
- Things we can help with - we want to be very active in helping startups.
- Aligned vision & values (with the product, and us).
- Frugality - great things take a long time so save money. "A penny saved is a penny earned".
Dot Matrix Group has invested in Coconut, a bank account serving freelancers and independent workers. Coconut is a business bank account that works out freelancers’ tax, expenses and invoicing.
Sam O’Connor, Co-founder and CEO, said “It’s great to have DMG invest in us at this stage - really good to have them alongside Techstars, Capella Star and others. I know DMG will challenge and stretch us too - Adam and I have already had a bit of this and (I think!) are looking forward to more”.
Matthew, Co-founder of DMG said, “I’ve known Sam and Adam for a couple of years now, since the successfully exited their last business together. London is the centre of the world for FinTech and with the growing (and to-date underserved) freelancer community in the UK there’s a great opportunity to help simplify finances, reduce the anxiety of a looming tax bill and a lot more”.
To find out more about Coconut, click here.
Dot Matrix Group has invested in CENTURY, an education tech platform that provides a personalised learning environment that improves learning outcomes and saves teachers time. CENTURY’s technology provides teachers with detailed insights into each student’s learning so they spend less time is on marking, reporting and data entry. This enables the teachers, department heads and headteachers to make better decisions about their students educational journey.
Priya Lakhani, Founder and CEO said, “We’re really happy to have DMG invest - as with all our investors we will work them hard to help as we continue to grow CENTURY and help the education of all the people who use the platform”.
Kash, Co-founder of Dot Matrix Group said, “We’re delighted to be able to invest in CENTURY - there is going to be a lot of disruption in the education sector and Priya and her team are very focused on improving learning outcomes with AI and Machine Learning - very exciting”.
To find out more about CENTURY click here.
In August 2014 I was introduced over email to Richard Koch, the 'K' of LEK Consulting and the author of (amongst other best selling business books) The 80/20 Principle: The Secret of Achieving More with Less.
We emailed a few times but Richard rarely spends anytime in (rainy) London. However when a friend said he had recently bought and couldn't put down The 80/20 Principle I bought it from the book shop in St Pancras on my way home. I emailed Richard that evening and said after far too long I'd bought his book. He replied enthusiastically and said he'd love to meet up sometime but was still rarely in London as he much preferred the sunshine.
Then I remembered that I'd read somewhere that he had a place in Portugal (as well as Spain, Gibraltar and Cape Town). I said I was spending the summer in London except 10 days in Portugal...
That lead to a terrific lunch with Richard a couple of weeks ago. I was very excited to meet him, to talk business, judging entrepreneurs, investment strategies and the weather.
There's nothing quite like sitting down and sharing a meal with good company and interesting conversation. Even if it did take 3 years (or perhaps especially because it did) I'm glad we made it happen.
British Land (LON: BLND) launched their new flexible working offering yesterday and DMG are proud to share that we were part of the process. Our work and contributions have resulted in Storey (press release here).
Beginning in January DMG hosted a series of our executive briefings to connect British Land with key influencers and decision makers in this space - people we know well who have grown (and shrunk) businesses around the 20-70 employee mark.
During these briefings a small team from British Land were able to build relationships, gain insights, be challenged and really get stuck into a discussion with the most appropriate people - those who are making decisions, suffering the pains and aware of the hidden gems gained through experience only when growing a company.
Some big questions to answer
- What's the biggest pain point when searching for a new office?
- How much time do you spend on this?
- Should there be free beer and ping-pong?
- What's the dream scenario?
The need for flexible working has greatly increased in recent years and just one example of this was given by the founder of a startup that had gone from three friends in their spare room to 40+ staff and a multi-million pound exit in the space of three years. Companies, and in particular startups, don't need and don't want long leases of whole floors in buildings. And nor do they want free beer! So what does good look like?
- Why isn't onboarding as easy as plugging into 'Stripe'?
- Why can't there be a two-page agreement with no jargon?
- Why can't we deal with just one person who takes responsibility for services like WiFi, coffee machines, kitchens, onboarding and leaving?
To request a briefing please contact Matthew on firstname.lastname@example.org
The first DMG trip to San Francisco had one overall aim - to learn. What’s the buzz in coffee shops like compared to London? What do people think of London, Europe and Brexit? How do startups get the best investors and vice versa? Will the outliers always come from SF? How can DMG be helpful to our portfolio and our network?
Some things we learned
- Coffeeshop buzz is the same as London - this is different to 5 years ago of course when Londoners were still slightly embarrassed about starting a startup. Now though SF coffeeshops seemed just ordinary - part of me thought there would be huddles of hackers coding away but the people hunched over laptops seemed to be blogging, not hacking.
- London is well thought of - particularly by angel investors - valuations are still much, much lower. VCs tend to think that all the best startups are still in SF but things are starting to change. Both kinds of investors want to be 'smart' and add value, which makes it more difficult if the distances and time zones are very different.
- Getting the best investors (as everywhere) is incredibly important. Things can happen quickly in SF but the best deals go to the more established investors so it's as important for the angel investors to bed themselves into the community as it is for entrepreneurs.
- The outlying 'decacorns' are still SF startups - Ubers showing up in 2 minutes, being cheaper than a London bus and AirBnB key boxes on every other house remind you that SF is the place of the mega-startup.
- SF for us is about building relationships - we'll be back again early next year and will always have this recent trip in mind when thinking about how DMG can add value to our portfolio and our network.
If you're going to San Francisco...
- Let us know so we can help connect you if you need it.
- However don’t arrange to meet people until the week before - a few days before we went there was no accommodation booked and no meetings in the diary.
- Meetings will lead to other meetings - keep plenty of space in the days ahead once you arrive.
- Talk to everyone - bar staff, Uber drivers, receptionists - they all have a view on startups, whether Uber is a good thing and how Trump is performing. It's a great pulse to check.
- It's an expensive place - Uber Pool is incredibly cheap but SF is more expensive than London for dinner and drinks.
AK arrived for a packed week of meetings, brainstorming and DMG strategy - only 6 months in and we have completed 3 investments, worked with a FTSE listed company on their strategy and hosted dinners and other events to make some terrific connections. Good progress but there's much to do.
Meetings with potential investments dominated the week - we want to be involved in businesses that are executing well and that we can help with our experience and connections, particularly at the right time for international expansion.
We met up with Desmond & Dempsey (who kindly took the photo, above) and talked fabric, funding and furniture over lunch at the terrific Dishoom, King's Cross. Molly had just come back from a successful trip to New York and were travelling again the very next day so we were pleased to be able to catch up in amongst it.
If you would like to meet up please get in touch here - we're always keen to meet entrepreneurs, investors and large organisations.
Dot Matrix Group has invested in NoblyPOS, a cloud-based point of sale technology company for the hospitality sector.
George Urdea, Co-founder of NoblyPOS said, “We’re really pleased to have DMG onboard as part of this latest round – we’ve had strong growth over the past year and are keen to leverage DMG in order to continue accelerating.”
Sebastiaan Bruinsma, Co-founder, also commented, “DMG have already provided some relevant connections and have involved us in innovation work with a major prospect – so we’re making good use of them already!”
Speaking of this latest investment AK was keen to emphasise DMG’s ASEAN connections. “What we want to do with DMG is make investments that we can be proud of and really help – George, Seb, Royce and the team are executing well, working really hard in the UK and I want us to be able to help them expand to new markets when the time is right”.
To find out more about NoblyPOS click here.
Dot Matrix Group has invested in Desmond & Dempsey, a luxury pyjama company in London.
This funding comes 2 years after Molly and Joel launched Desmond & Dempsey to give women luxurious pyjamas that don't cost the earth and are perfect for lounging around all Sunday in (and not least so that Joel could reclaim some shirts...).
Kash, co-founder of Dot Matrix Group commented, "We're delighted to be investing in D&D for the next phase of their journey - we love what Molly, Joel and the team are doing and can't wait to be as useful as possible to grow the business. We look for clear focus and strong execution skills and D&D have proven they have a great deal of both".
Joel, co-founder of Desmond & Dempsey said, "It's great to have Dot Matrix on board - we're really excited about the expertise and network they bring - this funding and their network will help us boost UK sales and begin to expand overseas"
In the meantime read The Sunday Papers.
Emails that turn down some investment opportunities are tricky. Each of these emails is one that needs a lot of time in order to craft and communicate well the positives and negatives so they’re well balanced, clear and articulate.
When I do this I want to get across things along the lines of:
Encouragement but don’t flog a dead horse – no one knows what the future will hold and any decision not to invest is a snapshot based on the information available and the investor’s opinion right now. Founders will get more rejections than offers so in no way should they take a rejection as a sign that the business will not work. If it seems like a dead horse, however, it should be said no matter how tough it is to write and read.
In the words of Brendan Hodgson, “Make a pest of yourself”. If an investor has rejected the chance to invest then they can still be useful – use them as a source of advice and feedback on why the proposition didn’t make the cut. (Founders should not, in my view, ask for introductions to other investors if they’ve been rejected – seems a bit weird that I should pass on prospects I’ve passed on to other investors (unless there’s a specific fit for them that wasn’t there for me)).
Teach me – if a rejected company/founder goes on to make a billion then I want to know about it and learn. Another reason to keep in touch.
“No, not now”. The ‘not now’ is a genuine, not now. If the founders can execute and turn around the risks that are too much right now then investing in a later round is an option. Sure, the valuation will likely go up but the risk will be lower.
The “No” part is a no though. It doesn’t help anyone if the founders think that after the rejections email they can persuade a change of mind. Words won’t change the answer – execution over the next few weeks and months will (see 4, above).
Trust – giving some bullshit fluffy excuse isn’t helpful. Genuine, precise and focused reasons to exactly share the reasons(s) for the rejection are helpful for all concerned – a long list of reasons is pointless if it was only one major one that made the difference. Again, it’s not a criticism but if they’re aware of the investors concerns this can help the founders move forward.
The risk - explaining what risks and issues there are and provide guidance towards a path the company can derisk. This could be getting the major customer, adding to the (advisory) team or cutting costs.
To talk about getting involved with DMG please email Matthew on email@example.com
Dot Matrix Group has invested in FanBytes, a technology platform and influencer network that enables brands to connect with market influencers via YouTube and Snapchat.
The company was started by Tim Armoo and Ambrose Cooke whilst they were still students and has grown to be the UK's largest network of influencers attracting clients such as Disney, Adidas, GoPro and New Look.
Matthew, co-founder of Dot Matrix Group said, "I first met Tim and Ambrose when they were just starting out - I helped with their very first investment round so I'm really pleased that I can continue to support them and the growing team via Dot Matrix".
Tim, co-founder of FanBytes said, "It's great to have the DMG guys on board - there are some cool opportunities for us all so it's going to be an exciting year".
When all delivery trucks are 'driverless'; what will the human drivers do? What will happen to truck stops and motels?
'Agony Ent' is a regular DMG column for which an entrepreneur from the DMG network answers an anonymous challenge from a leading corporate.
We’re already seeing the social and political instability that comes from ignoring the effects of jobs lost to automation. Delivery truck drivers can’t just be cut loose without a safety net, and solutions need to come from both business and government. Logistics companies should capitalise on drivers’ industry knowledge, retraining and upskilling them for other jobs in the business that still require a human touch. Government revenues collected from industries moving toward automation need to be focused on helping those people affected by it. This means providing education to build the skills needed in growing industries where jobs are more plentiful. A guaranteed basic income might be another way to support workers whose earning power is permanently lowered by advances in technology.
Some service jobs, like those at truck stops and motels, will suffer second-order effects. But those skills are more easily transferred to the restaurant across town or the hotel in the next city. In these cases, we need incentives both persuading people to move to where the jobs are and encouraging companies that need staff to move to where there are willing workers.
Above all, we need to acknowledge that some jobs are never coming back, and rather than treating that as a threat, we must turn it into an opportunity for greater prosperity for all.
In a discreet town house just off St James’s Square in amongst hedge funds, antique dealers and art galleries is a bank. This bank has no ATM and no posters in the windows shouting about their current accounts. It’s a modern, private bank, with traditional values. Established in 1983 and now part of the Royal Bank of Scotland, Adam & Company is a private bank that discreetly goes about looking after its clients. Part of these traditional values is a focus on developing good business relationships for the long term, something we very much share at Dot Matrix Group. Only in patiently getting to know people do we go on to build the best and most trusted business relationships. And there’s no better way to begin than a good meal in the right setting…
Bringing startups including MixCloud, FanBytes and Headliner together with larger organisations including Havas Media, Universal Music< and The Future Laboratory we curated a dinner and discussion for leading people in the media and music sector. Conversations ranged from influencer marketing through Snapchat, the future of music investing and if eSports are the next generation’s football clubs, what other fringe sports should we be watching.
We all want great things to happen as quickly as possible but we also know that developing trust takes a long time - so why do we still try to rush it? Patience is indeed a virtue and having the confidence to bring good people together for the potential long term is a rare and increasingly valuable endeavour. Thankfully it’s a virtue DMG, Adam & Company and our guests share and we look forward to meeting again and doing business in the immediate or distant future - we’re in this for the long run.
To get inspiration, insight and innovation by working with us please email: firstname.lastname@example.org
The GEP is part of the Government’s Department for International Trade and includes assistance relocating to the UK, guidance on how to grow internationally and mentoring from experienced entrepreneurs. More information on the GEP.
On 18th October Dot Matrix Group hosted the latest dinner for entrepreneurs who are alumni of the Department for International Trade’s Global Entrepreneurs Programme to learn from successful entrepreneurs especially curated from the DMG network.
The theme for this dinner was sales and customer development - often we expect to be able to find a magic wand for sales or we think that if we can just shove more in the top of the sales funnel more will come out at the end. But what’s the reality that the more experienced entrepreneurs have found?
After introductions and as the food arrived and the wine flowed the conversations, tips and shared experiences ranged from how to make use of wide networks such as the other GEP companies to handing out posters and talking to dog walkers on Hampstead Heath...!
Sales can be a challenging subject - entrepreneurs instinctively want to find something that works at scale but the greatest ‘intel’ is found by talking to customers and potential customers one-to-one.
The benefits to sitting down to a good meal in the right setting are endless - all the guests took away new connections, solid insight and too much cheesecake.
If you would like partner on an event like this please email: email@example.com
Guest post written by Simon Jones, Co-founder of ONTY.
The extent of communications today, mediated between now-uncountable connected devices, is so impossible to appreciate that awe has given over to banal. The possibilities created by such largely costless technological advances as instant global publishing (from text to photo to video) are so large and their rate of accretion is so high that acknowledging what is happening is not really possible. There’s just been so much in such a short time. Just a cat’s lifetime. Perhaps it explains the millennial blasé.
So, a new, giant machine is with us. Impossible to know, truly know, and certainly difficult to recognise. Yet undeniably powerful. But it’s got to be paid for. Something else which is, or perhaps was, associated with blasé is the notion of selling yourself to fund this machine; selling the picture of ourselves that we sketch, resketch, touch-up and embellish every day, every time we interact with any recording, measuring, probing connected device, and that includes such input-passive processes as just having a phone in your pocket or driving a modern car.
This appropriated user data monetisation model, exploiting the picture of you gathered explicitly or, less palatably, often by stealth, has plenty issues in itself, ones that have been deeply discussed elsewhere. Be those as they may be; there are other, less instantly obvious consequences. One important, less considered effect is that the economic framework of prostituting your user data to pay for your communication services has defined the nature of the services themselves. By and large, it has prevented alternative media and tools from coming online as the current dogma (aka business model) doesn’t allow for them.
Some very basic and long fought-for human rights do not sit well with user data monetisation. Such concepts as privacy, control, autonomy and hence freedom. I include the latter as it requires the first three. It is increasingly becoming clear that freedom is now incongruous with respect to the internet business status quo. Very significant ethical / moral arguments are now ensuing. Renata Sampson of Big Brother Watch, on the recent BBC radio doc ‘The Online Identity Crisis’, commented “there is no way now that you can pretend you haven’t had a thought process if you’ve typed it in online.” Once cogitated, once terrified.
Alongside the undeniable moral can of worms we’ve typed, clicked, tapped and swiped our way into, the neglect of rights such as privacy means that, despite the huge potential reach of our communication today, the types of that communication available to us are actually stymied. To communicate without the ability to be private in that communication is to restrict your degree of control of that communication. Communication, and all its bedfellows like research, networking, learning, bonding, matching, connecting, teaching, assisting, contributing… loving can be profoundly influenced by or be dependent upon all these rights. We are stripped of confidence when we cannot contact in confidence. We are intimidated when each and every one of our probes is recorded and stored beyond our control. Many questions then go unasked when we know everyone hears the question. We have, in fact, accidentally built a form of digital-data-totalitarianism. The GDPR is no pre-emption.
Social media’s what have you got to hide?-ism prefers a basic broadcast function on the communication / publishing platforms we now depend on. Targeting, filtering and selection are difficult or impossible using these tools. Exhibiting ONTY on a stand at Thinking Digital recently, someone said something so profound to me which exemplifies this perfectly: “We had a miscarriage last year, it was very difficult. I couldn’t go to my Facebook profile with that, that’s too much, too many people. With ONTY I would have been able to contact anyone on my street who’d experienced this, in confidence.” So that’s the first point of our work, ONTY. It’s to enable the opening up of communication channels on a basis of privacy and confidence. Match yourself with what you want to know, do, offer, give or receive. Make yourself matchable in the process. And to do this to the fullest extent possible, this time you have to be private. You have to be autonomous. You have to be in control. You might imagine specialist rose growers trying to find each other on the web, Facebook springs to mind, but also other excellent services like MeetUp or specialised forums. But what if you were bipolar and had discovered rose growing to be particularly beneficial; you’d be less likely to use the web tools we have today to try and connect. It doesn’t have to be so personal. Imagine the effect of being empowered at work by being able to ask a question privately.
So this is a very serious consequence of how our digital communication platforms have evolved; they don’t allow you to ask a question of only those who know the answer; they don’t allow for selective search/match; they don’t allow you to control your own selective matchability. You have a single moulded digital identity and you may not express the true plurality of self. It doesn’t sit well with user data monetisation. But of course that is not why this data disenfranchisement exists. It’s there so you transfer all your data exploitation rights over to the platform owner. We’ve got big plans for that too.
Simon Jones, Co-founder of ONTY
Simon is a co-founder at KnoGno – a collaborative research company in web development and product design. KnoGno researches and develops web service and product solutions across diverse fields.
KnoGno is the developer of ONTY, a versatile and anonymous matching engine – put simply, ONTY is an online, private, but searchable, notebook for users to tell their own stories then anonymously match with other users to communicate in private.
After posting that I like meeting entrepreneurs on Tuesdays and only for 25 minutes, someone asked me to write a follow up on how they could make the most of those 25 minutes.
Here are some thoughts on how to make 25 minutes work best:
- Know the 3 things you want to get across – are you there to learn something, to ask for specific advice, for money? A short meeting makes it OK to ask a bold question straight away.
- State the following at the beginning of the meeting, “OK, we have 25 minutes – here’s what I’d like to talk about…”
- The 5 minutes between meetings can be used to email any initial links/thoughts/feedback. Keeping to time or even finishing early will allow whoever you’re meeting to follow up immediately with anything they promised – don’t stop them from doing this by going over 25.
The 25 minute meeting serves a number of purposes:
- It forces both sides to focus – if you’re 5 minutes late and talk about the weather for another 5 then there’s on 15 minutes left to get down to business.
- Both sides become more selective of who they meet – it’s easy to justify crossing town for an hour’s meeting, but 25 minutes? Do you really want to do that? (Although the thing is it’s better to cross town for a 25 minute meeting either way).
- You will rarely forget a rapid, 25 minute meeting – we’re all encouraged to build our networks and rightly so, but the more unusual meeting times, places and people will stand out.
The truth is that the length of the meeting is not the critical thing here, we just seem to have been drawn into the convention of holding meetings for 1 hour. What’s important is the success, however it’s measured, is a result of how both sides handle themselves before, during and afterwards.