Tuesday, 18 March 2008

The Collaboration Cycle

The Collaboration Cycle
Originally uploaded by Edward French
Three months into licensing or pursuing a market entry for a new technology everyone involved always feels like they're a few months away from a deal, and no more than a year from revenue. Time and time again we've found it always takes much longer. You can expect to see at least one change in the bigco's team, and if it's an international collaboration each cycle of meetings takes months. This graph tries to compile the wisdom from all our companies licensing and collaboration projects- the conclusion being that, even without any hiccups, it's likely to take around 3 years from first meeting to revenue. This is a real opportunity, in my view, for the largeco's to steal a march on their competitors- getting really quick and sharp about technology acquisition would buy them a great advantage.

Monday, 17 March 2008

Rahns law of investment propositions

Mark Rahn, the newest member of our technology team, is doing a great job and took to the job like a "duck to water". He came up with a real gem of an observation the other day, which I've taken the liberty of christening, "Rahn's Law".

"The quality of a proposition is inversely proportional to the amount of time the plan or team spends extoling its virtues."
In other words, propositions that tell you repeatedly how exciting the sector is, how transforming their stuff will be, that wax lyrical about the great qualities of the people are often compensating for the weakness of the product, opportunity or team. The very best plans are short, factual, and rely on evidence rather than weight of self-praise.
This links nicely to four tests for any business plan which I've always urged our investees employ:

Four tests for business plans

1. The superlative test

Have you obliterated all superlatives? Leave it to the judgement of the reader if something is really "exciting","superb", let alone is someone's track record is one of "success".

2. Have you used facts/numbers wherever you can?

It's a good discipline to try and replace each superlative with a number or fact instead: it makes writing much punchier! Don't say there's a "multi-billion dollar market for mobile software", try and say something like "there's a £n million market for GPS software on mobile devices". It's a great deal harder to write this stuff, but it helps convey real market knowledge and understanding.

3. Check that jargon is appropriate/necessary

If I was writing a plan associated with "WiMax", the I probably need to refer to "WiMax"; that's appropriate use of jargon. However, it doesn would a proposition really benefit from using "ARPU" when you're not talking about anything that's not encapsulated by the word "revenue".

4. Can a non-specialist reader tell what the company provides?

Include a laymans explanation of what your product or service is/does. A good case-in-point is a company I've been reading about tonight: they provided three documents in total describing the business, but after reading them, I have only the vaguest idea what the business does. Without this information all the stuff about the team, route to market and competitors is really hard to understand, relate or assess.
I'm sure there are some other great suggestions out there...?

Later ammendment

5. Did you really describe your competitors and their comparative attributes?

This is often one of the most revealing sections of a plan- it's amazing how often it's missing!

Monday, 10 March 2008

Updated: Role of Chairman in Pre-Revenue Tech companies

The role of the chairman in RisingStars companies is a little different from the standard in a small company due to the emphasis on growth and support of a growing team.

Updated version, also I've added the highlights to emphasise particular areas that are unusually important in a pre-revenue technology company.

Team Building
  • Contributing to the management development plan
  • Mentoring and support for the CEO- acting as their private sounding-board
  • Leading the process of recognising when there is a need to change CEO and to lead the search for the new CEO.
  • Making sure that team changes get recognised early and supporting the CEO in taking quick and early action
  • Monitoring the executive team's relationships and bringing action if conflicts arise
  • Monitoring the performance of the executive team and actioning required change
  • Providing discreet feedback and guidance for the CEO
  • Conducts formal CEO appraisal/performance review
  • Assists CEO in selection of exec board members
Financial Governance
  • Ensuring financial reporting is regular, clear and appropriate
  • Taking a lead role in negotiating remuneration
  • In the absence of a dedicated FD, having oversight of the accounting process
  • Recognising future cash requirements and ensuring the board deals with cashflow planning well in advance
  • Leading on the development of the company strategy
  • Ensuring that investors interests are properly represented by the strategic options presented to the board
  • Mentoring the CEO on the strategic development
  • Being the first to spot a dead-end market entry strategy and to call time on it.
  • Spotting well in advance when fundraising is likely to be required; making sure there's always 3 months cash in the bank and that fundraising starts as soon as there's less than 12 months of visibility
  • Attending many/most/all fundraising meetings and helping prevent it taking over the CEO's time and to improve the level of feedback.
  • Providing a second voice in fundraising discussions
  • Opening contacts for fundraising and corporate events
  • Providing independent feedback to investors on fundraising comments
  • Gathering feedback from investors on their view of the exec team
Representing Shareholders Interests
  • At all times to remain clearly focused on the interests of shareholders over management
  • Providing independent feedback to investors on the state of company and management
  • Ensuring transparency of information flow between management and shareholders
Proceedings at Board Meetings
  • Collects input from all directors and management on the board agenda - this facilitates surfacing difficult issues.
  • Creates the board meeting agenda with the CEO.
  • Ensures report(s) have been issued well in advance of the meeting
  • Runs the agenda of the board meeting, holding items to schedule or extending the time spent on them if the consensus is to spend more then the appointed time on an item. This frees the CEO to focus on content and allows the Chairman to keep the meeting on track.
  • Gathering input from, and providing feedback to, shareholders from the board meetings.

Tuesday, 4 March 2008

Top 30 Internet Start-ups- erm not!

Top 30 Internet Start-ups

Real Business published on "Thursday, 30th August 2007"

I stumbled across this fascinating article today.
The top 30 includes Beenz.com and Boo.com- so somehow I think that their content management system isn't getting the date of the article quite correct. Anyone care to guess the correct date?
Seriously, it makes interesting reading if you want to compare the original .com bubble to the web2.0 situation today. I don't think you'd be left with the impression that there was too much in common?
A more interesting comparison for me was in the IT suite of my kids (primary) school, the end wall had been peppered with around 25 Web2.0 services that they were suggesting the children might like to use for entertainment or for coursework. Interestingly very few of these were actually targeting children, no doubt many are putting out a free product with a view to building paying customers later. The most sobering thing was how few of these services I'd actually come across!