Monthly Archives

October 2014

Tips for companies attending office hours

By | Startup general interest | 3 Comments

Every month we run an open office hours. It’s a great way for us to meet with lots of founders, improve our deal flow and hopefully give a little back to the community.. Many other VCs do something similar.

We’ve just had our October office hours, and we’ve now met with approaching 100 founders through this programme. Most entrepreneurs come here to pitch us. They don’t have to, the session is theirs to do what they want with – take advice, ask about market trends, anything – but most choose to pitch. Some do it well, whilst others do it badly.

The meetings are only fifteen minutes, and that makes them difficult. Here are some tips you could follow if you are pitching and want to get the most out of the session:

  • Don’t talk fast. The meetings are only fifteen minutes, but the trick is to choose your words carefully and not try to say everything.
  • Try not to be nervous.
  • Do your research on Forward Partners ahead of time (or other VCs if you are meeting them) – you want the whole 15 minutes to be about you.
  • Think about what you want to say before you get here and leave more time than you would think for discussion.
  • Paint the big picture AND show you have a grip on the detail of execution in the short term.
  • Don’t use slides, or if you do keep it to one or max. two.
  • Be clear what you want to get out of the session. Tell us.
  • Ask what the follow up will be.
  • Respect the 15 minute time limit.

Our next open office hours will be on November 21st. You can apply here.

NB 15 minute meetings are a little painful, but I think that’s worth it because we can meet more people. Literally twice as many as if they were 30 minute meetings.

The rise of native advertising

By | Advertising | 8 Comments


There’s an interesting post up on Stratechery asking whether we are approaching Peak Google which features the graphic above. The central argument is that in the way IBM fought to protect their PC platform and missed the Windows opportunity and Microsoft fought to protect its Windows franchise and missed the web opportunity Google will fight to protect their search platform and miss the native advertising opportunity. Search is a c$50bn out of a total advertising market of c$450bn, and hence a winner in native advertising winner could be bigger than Google.

I’m a big believer in the increasing importance of native advertising. The best companies these days have interesting products and brands that lend themselves to this new medium. That said, I’m not sure that means another company will eclipse Google. Search always looked like it might have one major winner, but I don’t see the same network effects at play in native advertising which will find its audiences on the multiple content sites where they hang out.

More big IoT numbers: 33bn connected devices by 2020

By | Startup general interest | 3 Comments

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33bn connected devices in the next six years, up from 12bn predicted at the end of this year. That will be four for every person on the planet. As others have said before me, our grandparents could count their electric motors, our parents could count the things they owned with a chip inside, and we can count our connected devices….

Here’s a quick list off the top of my head of inventions enabled by integrated circuits and/or electric motors.

  • Computers
  • Plasma and LCD screens
  • Remote control cars, copters etc.
  • Satellite and cable TV
  • Washing machines and dishwashers
  • Modern radio and television

Most, if not all, of these things would have been impossible to imagine one hundred years ago and it’s reasonable to expect that similarly unimaginable inventions will be spawned by the internet of things. And it will happen faster this time.

Our goal is to partner with the companies creating that future.

The best of times, the worst of times

By | Startup general interest | No Comments

I read two startling different commentaries on the health of the UK as a society this morning that made me recall the “best of times, the worst of times” quote from Dickens.

First up was a highly optimistic piece in the Financial Times titled Miserablism risks causing Britain serious harm which argues that we should all wake up to the fact that times are good right now and be wary of policies and politicians proposing radical moves that might well make things worse – e.g. price interventions and exiting Europe. This is the money quote:

Look at Britain as an informed foreigner might. Here is a country that responds to a secessionist threat to its existence by holding a free and fair referendum. It has evolved an economic model that is more hospitable to business than much of Europe and kindlier to the poor than America. It cuts public spending year on year without any civil disorder to speak of. Crime is falling. Unemployment is at 6 per cent. The politicians are small-time but basically honourable. The capital city is a miracle of the modern world.

Then I read the Guardian’s Bleak figures show a relentless slide towards a low-pay Britain which featured the graph below showing that real wages in Britain have now been declining for seven years in a row – only the third time that has happened in the last 150 years.


Between them these too perspectives capture the overall situation well. On the plus side the economy is performing well and society is stable, but on the downside, the spoils of growth are going to the rich, wage inequality is increasing and the social contract is in danger of falling apart.

The important question is what will happen next. The Guardian suggests two possibilities. The first is that unemployment is now reaching levels where there is little slack in the labour market and employers will find themselves having to increase real wages for the lowest paid. The second is that technological advances will continue to take jobs from mid-skilled workers, forcing them into lower paid jobs and driving real wages down. I’ve written about this before: Robots and artificial intelligence are replacing jobs.

Cycles in the economy and labour market will come and go, but the trend towards automation will run and run. For me the most likely scenario is that tightness in the labour market will force wages up over the next few years, but when the cycle turns again real wages will cycle sharply downwards. Our opportunity is take action now to help the situation. A couple of weeks ago rich Americans were worrying that The pitchforks are coming … for us plutocrats. That will be our fate too, unless we do something.

The solution is not to protect jobs or try to limit the adoption of technology, but to invest heavily in programmes that help people re-skill and get back to work. That would be the play that keeps us as when of best performing societies in the world. If we get through the current period of austerity successfully there might just have the money to do it.

Optimism and skepticism in evaluating startup investments

By | Startup general interest | 4 Comments

In a recent interview Marc Andreessen said:

I’m optimistic arguably to a fault, especially in terms of new ideas. My presumptive tendency, when I’m presented with a new idea, is not to ask, “Is it going to work?” It’s, “Well, what if it does work?”

That got me thinking. Andreessen is a smart guy who has a lot of experience with startups and who spends a lot of time thinking about the best ways to invest and build businesses. I don’t agree with everything he says, but when I don’t agree I always stop to think why. In this case I half agree, but think that only asking “Well, what if it does work?” is too simple.

I half agree because asking “Well, what if it does work?” forces you to think about how big something can get and to focus on the upside. The startup investment game is, as we know, all about finding big winners. For us that’s £100m+ exits. For Andreessen I’m sure it’s over $1bn. Thinking optimistically about the upside helps you find those big winners.

However, there’s no point in backing something that has no chance of succeeding, so it’s also important to think about whether an idea will work. In particular, it is important to think about whether the company will deliver it’s plan over the next twelve months (or at least something resembling it’s plan). This has two parts, asking “Does the plan work?” and asking “Can the team execute on the plan?”. Skepticism is helpful when asking these questions.

Time is plentiful when it comes to delivering the upside and it’s reasonable to assume that entrepreneurs can and will figure a way to make things happen – provided there are no fundamental reasons why they won’t be able to (e.g. it requires chip speeds we won’t see for another ten years). When it comes to delivering the next twelve months time is short and there is limited scope for experimentation and re-work. If Plan A fails badly everyone is going to wish they had done something else so it makes sense to think hard about whether it’s going to work. There will inevitably be lots of unknowns but identifying those assumptions up front leads to smarter investments and better plans.

Software is eating the pop world

By | Startup general interest | No Comments

I’ve just seen the video below of virtual popstar Hatsune Miku, a virtual popstar from Japan, as a guest on the David Letterman show. If that’s not enough for you check out this video of her performing live in front of thousands of fans in LA (caveat: the quality is poor and you have to wait until near the end to see her). She’s a blockbuster in Japan with hit video games, sold out shows, #1 singles and a virtual opera, and opened a tour for Lady Gaga in the US earlier this year.

Hatsune was created seven years ago by Japanese company Crypton Future Media as a visual representation of their song making software, i.e. a marketing gimmick, and developed into a phenomenon when people started remixing her tracks and an open source remixing community exploded online. Crypton Future Media says that Hatsune Miku fans have created over 100,000 original songs for her, over a million pieces of art and 170,000 YouTube videos. Google “Hatsune Miku fan site” and you get close to 150,000 hits.

The interesting question for me is whether Hatsune is a one off, or a sign of things to come?

From an emotional perspective it seems to me that absent human level artifcial intelligence engagement with a virtual popstar can’t be as rewarding as with a real person, but from the perspectives of engagement, participation and a feeling of co-ownership a virtual popstar community offers much more. I suspect we will see more of this.

Prioritisation: The difference between efficiency and effectiveness

By | Startup general interest | 2 Comments

The following quote is up on The Heretic today. It’s a great reminder:

Efficient people are well organized and competent. They check things off their to-do list. They complete projects. They get stuff done.

Effective people do all that, but they check the right things off their to-do list. They complete the right projects. They get the right stuff done.

I guess we all know this but great entrepreneurs always focus on the thing that moves the needle the most. No matter how hard or personally difficult, they take on that problem. Company needs profile: they take the stage. Distribution deal not working: they pound the streets looking for direct deals. Co-founder no longer pulling his weight: they have the difficult conversation. Biggest customer not profitable but investors don’t want to let go of the revenue: they take the hit. Burning too much cash: they act sooner rather than later.

Other entrepreneurs however, are clearly efficient but keep themselves insanely busy chasing the wrong opportunities of focusing on tangential tasks.

Prioritisation, then is the difference between efficiency and effectiveness. It’s important that from time to time we take stock and make sure we are spending our precious time on the right stuff.

Bubble watch: Elite tech CEOs are getting worried

By | Startup general interest | No Comments


Venturebeat published an interesting survey this morning which found that 42% of the tech CEOs they interviewed see evidence of a bubble. The infographic above shows the companies they are most worried about.

The market is definitely hot right now, but in the UK at least it doesn’t feel like it did in 1999, nothing like. That said, entrepreneurs and early stage investors should keep in mind that current conditions are unlikely to persist indefinitely. It’s more likely that there will be a period of meaningful market downturn at some point in their 7-10 year journey. Some will get lucky and exit much faster than that, but it is unwise to plan for luck. Better then, to keep touch with the fundamentals of building something that people love and that has attractive economics.

The very best companies combine great fundamentals with rocket ship growth, and we all want to be part of those stories, but the difficult situation that arises in current markets is investors offering big rounds before the fundamentals are sorted. Taking the money buys more time to get things working but brings with it the risk of increasing the burn, losing flexibility and running out of money if the fundamentals don’t improve according to plan. Sometimes it’s better to raise a smaller round, stay flexible, and then go for the big round when everything is ready.

What investors look for in a startup

By | Venture Capital | One Comment

The post below first appeared as a guest post by me on the Web Summit Blog


If you ask most VCs what they look for in a startup they will say great team, great product and great market. Then, if you press them for more detail most will say that for them the team is the most important (although I think they say that at least partly because it’s what entrepreneurs want to hear). Marc Andreessen wrote about this once. He was on the money when he said that for early stage investments having a great team is most important but for later stage investments the market matters more. That’s because when a company is young there is little in the company except the team whilst more mature companies have customers and a brand that tie them to a market.

Early stage investors like Forward Partners look for a minimum of a great entrepreneur and a great idea. Like many others we believe that at the heart of every great business there’s a great entrepreneur so that’s the first and most important thing to check off the list. A mistake that I’ve made in the past is to think that with my help an average entrepreneur with a great idea can be successful, but I’ve come to understand that that’s a conceit. All that said, it’s crucial that the great entrepreneur comes with a great idea otherwise the investment is likely to be wasted. There have, of course, been many instances where great entrepreneurs have pivoted away from their first idea and still been successful, with Kevin Systrom at Instagram being perhaps the most famous recent example, but that doesn’t happen often enough to bet on and it remains a mistake to invest in an entrepreneur, however good, if you don’t believe in their idea.

Much has been written about the character traits of great entrepreneurs so I won’t repeat that here (this post from Mark Suster has a good list) but I will say that in addition to those traits we want to see they have something special which gives them an unfair advantage for their chosen opportunity. Most often that’s deep domain experience. A great idea is for a company that can be a leader in a sizeable market, has enough upside potential to return the investor’s fund and can get far enough with the money to raise the next round.

As businesses develop investors start to think about execution as well as the idea and the team. The first evidence of good execution in my book is the work done to understand the customer and the problem, then slightly more mature companies should have prototypes and first releases of the product to show, and after that they should demonstrate traction and growth. Across all these areas the execution should evidence rigour, discipline and clear thinking.

Now you know what investors are looking for you might be wondering how to approach them. It’s been said many times before but the key is to build a relationship over time so that when you get to the point of asking for money you are asking somebody who already knows you, and hopefully likes you and your idea. The effort the investor puts into building a relationship with you is a good indicator of how likely they are to say yes when you finally come asking. The best way to to get a relationship started is with an introduction, but interacting on social media, networking at cocktail parties and attending office hours or other drop in sessions also works.

My final piece of advice is to understand that most good investors are incredibly time-poor – they are inundated with requests for calls and meetings and only have enough time to say yes to a very small percentage. Moreover, those ‘yesses’ will naturally skew to the people they already know and know well, making it tough to break in. It’s fine to ask for a meeting, but be prepared to begin the relationship with an email conversation. If you are approaching an institutional investor then people who are new to the firm and/or more junior often have more time, although maybe less influence.

Good luck!

Top 20 cities for venture capital – London in at #7

By | Venture Capital | No Comments

The table below was published by Martin Prosperity. The data is for deals of $5m-200m from 2010-13 and hence excludes lots of deals that are included in other studies which show a much larger market.

Given that San Francisco and San Jose/Silicon Valley are effectively one market the right way to think about this market is that 19% sits in the winning region, and the rest of venture capital activity is highly fragmented. Here in London we are 1.8% of the total market and just under 10% of Silicon Valley/San Fran combination. That said, we are growing much faster.

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