As someone who is new to the startup scene in Scotland it was very interesting to head along to the iVentures talk last night on ‘What Investors Really Want’ with representation from the Angel Community in the shape of John Waddell of Archangels and Sandy McKinnon of Pentech Ventures LLP in the blue corner for the VC’s.
I thought I would share a few of the key points as I saw them and offer a little opinion:
There was a general agreement that a business doesn’t need a fully formed business plan to secure funding. What is important is that there is some degree of momentum and product/market fit. Sandy suggested that he’d much rather see a business model canvas with everything laid out on one page than a 60 page document. According to John the most important (and often overlooked) element is: what is the problem you are solving and what will it allow the customer to do? This is a sentiment hammered home by Dave McClure (and he’s seen a pitch or two in his time).
After the numbers the most important thing is the chemistry of the team involved. Do they have passion and belief with real clarity of what can be achieved?
Sandy suggested that there is a real lack of ‘hustle’ and passion manifests itself in a fear of failure among many Scottish startups. Startups need to get out there and move quicker, there is a general reluctance to get a product out into the market and into the hands of potential customers.
While skills such as accountancy can be learned by attending a course, you can’t buy passion and a relentless drive to make your vision a reality.
A SCOTTISH GOOGLE?
The question was asked whether a giant company was possible in Scotland and secondly whether it was actually desirable.
Sandy believed that it would be more advantageous to have many ‘large’ companies than one behemoth. Whereas John believes that it has already happened just not in the tech sphere and pointed out a list of very successful Scottish companies such as The Wood Group, Clyde Blowers (Jim MacColl will be speaking at the next iVenture talk), Aggreko and Stagecoach.
I think a large win in the Tech space in Scotland would provide an increased amount of ‘have a go money’ as Sandy referred to it. There is no denying that there are many successes in Scottish business but are the companies and the money that flows from them the right people to be investing in tech startups?
The question of why Scotland hasn’t seen the uptake in tech companies was raised and skirted around but not really answered.
There is no denying that there is a degree of friction between entrepreneurs and the investment community but as with most things in life there are always two sides to every situation. Scott Allison in Forbes stated that:
“The problem with building a startup outside of Silicon Valley is that the further away from startup culture, the less this is understood, by founders, investors, or any other stakeholder. Probably 99% of books written about business are addressing the issues of scaling, managing, and building an established business. As well as that, education and business support services are generally skewed towards that understanding of traditional businesses.”
However, all too often I hear startups in Scotland talking about investors and the investment community not getting them. While the Lean Startup movement is very trendy at the moment and most startups (particularly in the Tech space) are aware of the concepts, I just wonder how many startups are rigorously following the principles laid out?
While there are a lot of things still to be done to realise the full potential that Scotland has to offer, there was a general optimism about the future of Scottish startup scene. There are lots of great things happening in Scotland with Entrepreneurial-Spark on the West Coast and TechCube launching soon in Edinburgh. While the increasing number of startup incubators and accelerators in North America is seen by some as a sign of a bubble, it can only be seen as a positive thing in Scotland.
I know that I am excited about what the future holds and although I am not 100% sure why, I left the event last night committed to dreaming bigger!