Revoco Talks Start-up Investment with James Church of Robot Mascot
Welcome to the first Q&A in our series, ‘Revoco Talks’!
This Q&A sees us discuss all things investment with COO of Robot Mascot, James Church. James and the team at Robot Mascot are the ultimate port of call for start-ups and scale-ups looking to launch and grow. So, if you’re a start-up looking for investment, you’ll want to read this!
Here James fills us in on some of the key things investors are looking for when it comes to backing a start-up, as well as some of the common pitfalls founders can encounter when getting their venture off of the ground.
James, thanks so much for joining us for our first Q&A! Could you start off by telling us more about Robot Mascot and the work you do there?
Robot Mascot is the UK’s leading pitch agency. We specialize in helping entrepreneurs and founders, create pitch materials that convince investors.
Our clients are 30 times more likely to raise investment. And we’re the trusted pitch partner to Crowdcube, Seedrs, SeedLegals and a number of incubators and accelerators, such as Dent, a global accelerator operating in three continents.
Essentially, we create business plans, financial projections and pitch decks, that help our clients convince investors.
What is it you like most about working with start-ups?
What I really love about working with founders and entrepreneurs, is being so close to incredible innovation. I genuinely believe that when great innovation meets inspiring communication it has the power to change the world. It’s what creates brands that people want to follow. It’s what creates movements and causes that change in the way we think about society. It’s what creates business ideas that change their sectors in unparalleled ways.
I love being at the very beginning of that journey, helping them in the very early stages of their business to secure the vital capital they need.
When it comes to the pitch phase, what is one of the main challenges a start-up could face?
For me, and for many investors, the biggest barrier to raising investment is the communication of the idea and the communication of the business case. About 80% of the investors that I talk to all say that communication is the biggest barrier to them wanting to engage in meaningful conversations with founders.When an investor, can’t understand the concept, when they can’t understand the idea, they really struggle to buy into the potential and will fail to look deeper and find out the in’s and out’s of the investment opportunity.
Being able to really clearly articulate your idea and your vision is a fundamental challenge that founders face. And that ultimately leads to them not having success with investors or meaningful conversations around the investment opportunity.
Equally, some founders are brilliant inspiring people in their vision, but they’re not so great at articulating their business case – how they plan to turn that vision into reality. And again, a lot of the time, that’s down to communication. It’s all in their head, they do have a plan, but they really struggle to get that plan out of their head and into a form an investor can understand. And in a format that answers all of the questions that they’re looking for.
For example, founders are great at talking about ideas, potential, possibilities and opportunities, but they’re not so great at talking about the things that investors are really looking to understand. Things like the underlying assets in the business, the implementation plan, the steppingstones to a profitable exit.
All of these things need to be answered, but few founders are able to articulate them in a clear and concise way through their investment materials, so that in just a few minutes, an investor can grasp your both your short term and your long term strategies.
View this post on Instagram
We work with a number of #investors who have all expressed how the communication of the idea ultimately seals the deal, not the idea itself💡 Have you got a fantastic idea, but struggle to convey it to others? Why not get in touch? Our passion is supporting entrepreneurs in the investment process.
From your experience, what are the main things investors are looking for from start-ups looking for investment?
The biggest thing investors are looking for is credibility. There are actually three things that they’re looking for, in order to determine credibility in a founder.The first is that the founder can demonstrate that they have a credible plan for success and that they can make a commercially viable business out of their concept. The second is that they can demonstrate that they understand the financial risks and rewards of following that strategy – so how much capital is at risk and what’s the potential reward on that capital.
The final thing they’re looking for is a founder that’s highly resourceful, someone who can get people to buy into their vision. By demonstrating to an investor that you can get people to buy into your vision, you’re not only convincing them that you’re able to get other investors to join you on your journey and raise the capital that you need to make it a success, but you’re also demonstrating to investors that you’re able to get buy-in from the top-level talent and attract them to your organization, you’re demonstrating that you will be able to create corporate partnerships that create value, generate new ways of reaching your target market, or even create new products.
So essentially, they’re looking for someone who has the ability to inspire, and the ability to get people to join them on their vision understands how to turn their idea into a commercial success and someone who recognises the financial risks and rewards.
We often see marketing budgets far too small for the type of scale that a founder is expecting. At the very least, I would say you should be looking for 10% of your revenue to be spent on marketing, and in the first couple of years that’s going to be much, much higher as you look to scale rapidly. By the end of year five you should be looking for between 5% and 10% of your revenue being spent on generating that revenue.
Our #strategy sessions 👩💻are an essential part of the journey to creating irresistible pitch decks for our clients.
Whether you’re looking for the perfect pitch, projections, plan or if you’re looking for the whole shebang to get PitchReady – we can help. pic.twitter.com/J63QNOeenF
— Robot Mascot (@robotmascot) August 2, 2020
What is it investors are looking for when deciding to back an entrepreneur?
They are looking for you to be what I call an Investable Entrepreneur. An Investable Entrepreneur can demonstrate that they are highly resourceful, they understand the financial risks, and they have a strategy for creating commercial success, and you demonstrate these three things by creating three different fundraising assets. These fundraising assets are your business plan, your financial projections, and your pitch deck. Unless all three of these assets are credible, you’ll be unable to demonstrate that you’re an investable entrepreneur, and therefore you’re going to struggle to convince an investor to back you over somebody else.
Essentially, all they are looking for is a good risk. If you can demonstrate that you can inspire people with your vision, have a strategic plan for success and understand the financials at play, then you’re singling to investors that you are an Investable Entrepreneur. You’re telling them you are a good risk. If you can’t demonstrate these things, then you’re not the type of founder and investors are looking to invest in.
In a recent article by Wired they discussed how off the back of the Coronavirus crisis, there are concerns that the rise of remote working teams has meant serendipity has been lost, and that innovation and collaboration in tech start-ups will suffer because of it. What are your thoughts on this?
That’s really interesting. I’ve not read the article, but I can see what they mean. Until now the start-up culture has very much been about working together in accelerators and incubators, and I can see how that lack of collaboration might harm the development of innovative ideas in the short term.
However, I think with all the developments in remote working, and the general trend in recent years towards remote working, the Coronavirus crisis has simply accelerated the idea of a virtual and remote workforce.
I think it’s up to the founders and entrepreneurs of this world to adapt to this change. I don’t think in the long term it will cause a massive loss of innovation; I think we just need to adapt to a new way of working.
I read a report the other week about the way the Coronavirus crisis has accelerated what they’re calling “generation virtual”. We were heading towards a life of virtual work and virtual collaboration; it’s just been accelerated by 5 to 10 years. We’re now in that period of time.
The trouble is that we don’t have the technology yet to make it as effective as it could be. There’s actually going to be a lot of opportunities for entrepreneurs to build products and create innovation that allows for remote collaboration to thrive.
So, while in the short term it may have an impact. I don’t see there being a long-term implication of this. I think if we were to look back at the FTSE 100 in 10 years from now, we’re probably going to see at least one, if not more, companies that were born during the Coronavirus crisis.
These founders wouldn’t have been hindered by innovation and the loss of collaboration. Instead, they’ll have taken the bull by the horns. They’ll have seen problems that needed solving and they’ll have found a way to collaborate with great teams, all over the world. And they’ll have created a unicorn business in the process.
If you could name one key mistake, the majority of start-ups make when trying to scale, what would this be?
I think it’s true to say that following getting access to capital, being able to effectively sell and market your product is the second biggest killer of start-ups.
Investors know this, so we’re always very keen to make sure that in any business plan or pitch materials that we create, that founders demonstrate a really thorough understanding of their go-to market strategy or their growth marketing strategy.
Investors understand that if you can’t get the marketing of your product right it doesn’t matter how much money you have, you’re going to end up failing.
So, I think the biggest mistake – once a founder has received investment and is looking to scale their business – is not properly understanding the marketing strategy that they need to implement to achieve the kind of results that they have projected.
Are there any emerging trends within the start-up community that are on the rise?
I was quite surprised to learn the other day from the Beauhurst report for H1 2020 that EdTech investment had actually fallen. I thought the with the coronavirus crisis we would see an increase in investment in EdTech, as in a similar vein to the remote working that we just talked about, there’s also going to be the need for remote education. But interestingly that has fallen in the first half of 2020.
It’s quite clear the reasons why HealthTech and MedTech would be big trends, but I do wonder if that will be for the short term until all the panic around Coronavirus has calmed down.
I think looking at the longer term – looking at trends over the next decade, rather than just the short term of this coronavirus crisis – we’re going to see massive shift towards Internet of Things, largely because that’s going to be powered by the introduction of 5G. So just like how when 3G was launched it empowered companies like Uber, to combine the technology of 3G, geolocation and the smartphone to create a product that revolutionised the way we hail a cab. So too is the Internet of Things going to completely change the way we behave and operate yet again.
I can see time, in the not too distant future, where we’re going to simply walk down the street flick our wrists in a certain manner, and a camera on the street is going to pick that signal up, communicate with your phone and automatically hail an Uber to your location – all powered by the Internet of Things. I think that space is particularly exciting.
Of course, the areas of AI, machine learning, and virtual reality are always going to be very interesting spaces as the technology develops and becomes more sophisticated. So too with Blockchain as larger corporations and Unicorn FinTech’s start to experiment with it and throw larger and larger budgets at innovation projects that seek to maximise its potential.
And we’ll undoubtedly see the continued rise of FinTech – simply because of the vast amounts of money to be made in that verticle of the ecosystem.
You can learn more about becoming an Investable Entrepreneur in James’ new book Investable Entrepreneur: How to convince investors your business is the one to back. Due for release later this year. You can sign up to be notified of its launch here, where you’ll have the opportunity to buy the book for 99p here.
Got something to share with the wider tech community? Join us for a future ‘Revoco Talks’ installment by contacting Georgia here.
We’re helping start-ups scale their businesses whilst saving them time and cash. Find out how here.