🏦 New fund, EIS rants, micro tumors, green retrofitting and more!
Here's your Campfire for the 9th of October, 2023.
Before we begin: Fill out the Founders Survey and share your views about the investment landscape in Scotland. It's an entirely volunteer-led initiative, so we need the support of the community. You can use this link for sharing.
💼 This issue of Campfire is sponsored by Shepherd and Wedderburn's initiative to supercharge start-ups and scale-ups. Be sure to follow the Start to Scale LinkedIn page for useful videos and posts designed to help founders.
💰 Show me the EIS
By Robert Gelb
This week on one of the Scottish founder groups, someone shared a meme going round about the two kinds of angel investors:
It was funny, but also kind of sad, as it illustrates several core issues with how angel investors and startups see each other, especially in Scotland.
The SEIS/EIS system which gives tax incentives for investing in very early stage businesses was designed to incentivise more money to be available for early, high-risk startups. In some ways, it's largely worked - there is less of a barrier for a higher-net-worth individual to take a higher-risk stance on an investment.
But it's also a problem, because it attracts investors that really shouldn't be engaging with hyper early-stage companies.
What's the motivation?
Investors that don't understand the risks and how their investment is placed in that risk landscape cause headaches for founders. This happens all over the world, and not just the UK. It's almost become an adage to say that the smallest investments will lead to the largest headaches. It's often true, and if unchecked, the behaviour often leads to stunted growth and early exits (not the good kind).
I see this quite a bit when I'm talking to founders based in Scotland. There's a reasonably well-known 10 slide deck template that folks like Y-Combinator advocate for founders to use. Often in the UK (and especially in Scotland), there's an extra slide: the financial forecast. For some reason it's seen as not only reasonable but required to scrutinise a full 5 year set of financial projections on a pre-revenue startup raising £50k.
What's the expectation?
"The expectation for my investment of £5k is regular financial reports about my investment, access to the founder at all times, and a strong expectation that you'll listen to my advice, even though I have absolutely no experience or expertise in your space."
👆 This behaviour kills tech startups, and the investors who engage this way aren't being sophisticated. It's not just UK investors that behave this way - it takes place in the US and around the world. But the UK's SEIS/EIS set-up compounds this as an issue because it encourages a de-risking of an investment in a way that appeals to those who require de-risking. Or in other words, those who don't actually have a risk appetite for this class of investment.
Being a better angel
If you believe in a startup founder and want to invest in them at the earliest of stages, do it. But know a few things:
Startup investing is about a small chance of earning a massive return, and there's a higher than 95% chance that you'll lose your money. If that stresses you out, put it in an index fund instead
The way you decrease the chances of losing your money isn't by taking up a founder's time with extra admin or useless work, it's by actively engaging in ways that make their hours more valuable. Connections, Expertise, Counsel
Unlike the stock market, you can have a role as an investor in an early stage company. You're part of the team. Figure out how you can be valuable, make introductions, and otherwise, give your founder space to do the thing that made you believe in them in the first place
And please stop obsessing over 5 year financial projections at the earliest stage. The only 100% accurate thing about them is that they'll be wrong. Understand the business model, the potential scale, and what success can look like, but for the earliest stages, financial projections are a waste of time.
Disagree or want to write about an aspect of being a founder? Get in touch and suggest a topic!
🌊 Updates & Opinions
💸 New fund: The British Business Bank announced a new £150m fund for loans and investments to fund Scottish Businesses. Loans: £25k-2m, equity investments up to £5m. Loans are managed by DSL Business Finance (£25k-100k) and FSE Group (£100k-£2m), and Maven Capital will manage equity deals (up to £5m). SFN SBN UKTN TS DGT IN
🔬 Converge Challenge awards were announced. Projects included tackling waste in the agricultural industry, antibodies for fungal infections, ethical fashion, greenhouse gas leak prevention from legacy drill sites, and more. Full list here. IN
🌬️ Aberdeen-based Encomara (tech solutions for renewables) has launched SQUID, a quick connector tool for cables and mooring lines. Like a marine-ready plug. It's expected to reduce the costs and risks of installing offshore wind turbines. DGT
🏡 Dundee-based Heero (guiding homeowners for green retrofits) raised £550k from Tricapital Syndicate, Scottish Enterprise, and Mint Ventures. IN SFN TS
💻 The Scottish Women in Tech Awards shortlist was announced. There was one startup, Sam Rhynas from Effini among the list, the rest were corporates. DGT SS
🦠 Edinburgh-based Carcinotech (3d printed micro-tumors) announced a partnership with CELLINK (3d bio printers and bioinks), making Carcinotech's protocols available on CELLX platform for others to utilise. DGT
⚽ Edinburgh-based Recast (live streaming for sports), which went into administration last month following a funding round that collapsed, has been acquired by Content Technology Partners (CTP), with 4 members of staff retained. IN
🛰️ Building something that has space applications? The UK Space Agency has put out a £65m call for innovations and new space technologies (called the NSIP) looking for high-risk/high-reward projects. More info here. SS
💰 Thomas Gillan, CEO of BR-DGE and founder of SIS Ventures writes about how closing the late-stage funding gap will lead to more unicorns in Scotland (disagree? let us know.) IN
🤝 New meet-up focused on startup founders! Starting at the end of October, the Startup Founders Meetup will focus on networking and tactical fireside chats specifically designed for folks building companies in Scotland. Limited space; register below.
New direct flights TH
✈️ GLA -> Budapest 🇭🇺 (Wizz Air)
✈️ GLA -> Bucharest 🇷🇴 (Wizz Air)
📣 Asks & Offers
📣 We've launched the Founders Survey! Please fill it out, it takes less time than you spend making that artisanal pour-over coffee in the morning. If you have a mailing list of startup founders, and would be willing to share the survey, let us know!
🏎️ Fancy working for an Accelerator? Geovation Scotland is hiring an Innovation Delivery Lead. More info here.
🔒 Cyber Security Questionnaire: Rada Cyber Security is looking for anyone working in small or medium sized businesses in Scotland to fill out a quick questionnaire about cyber security to help in their research: Answer here.
👭 Interested in connecting with possible co-founders? Fill in your listing on Cofounder Curious today! Connect with others for possible cofounder matching here.
🙏 Looking for a mentor? A senior software engineer with a background working for early to mid stage tech startups as well as running engineering teams for NGOs providing data analytics to public health in the developing world is looking to mentor a junior developer. They have extensive experience in DevOps, API design and implementation, data analytics and cloud security. They are looking to find a junior to mid-level software engineer who would enjoy one-to-one mentoring in technical skills as well as early career development (no cost). Reply if interested.
✍️ Want to write something for Campfire? Have an opinion you'd like to share? get in touch!
🦸 Absolute Superheroes
"John Morrison and Joe Fitzgibbon are absolute superheroes within the Scottish ecosystem. They're always there to help my company and other startups. From free mentoring in the early days, quality advice, even the occasional office space to use in Edinburgh and London, they are genuinely there to help out while still being cost-effective." - John Gordon, CEO & Co-founder, Incentive Games
Shepherd & Wedderburn's innovative and personable approach helps companies from first incorporation onwards (including through to an exit – if that’s the goal). Their global reach means they can scale and grow with you, like they have with clients like Epic Games, FanDuel, Parsleybox, and TVSquared.
👉 To learn more, send an email starttoscale@shepwedd.co.uk & set up a chat.
📅 Events
🇮🇳 10/10, 10:00 🗺️ Online: India Ecommerce Opportunity : Fastest Route To Market For Scottish Business: Join this webinar to learn about the opportunities for your business in the India e-commerce sector. MORE INFO
💦 10/10, 09:30 🗺️ Newton St Boswells: South of Scotland Hydrogen Workshop: The main themes will include: the opportunities and challenges in green hydrogen production and product development. MORE INFO
⛓️ 10/10, 17:00 🗺️ Edinburgh: Monthly Scottish Blockchain Meetup: "The Use of AI in Trading Cryptocurrencies: Opportunities and Challenges" by Maysara Hammouda, Co-Founder and CTO of Predictiva and "Be your own bank with MELD" by Endo Rivers. MORE INFO
🌐 11/10, 09:30 🗺️ Edinburgh: SEWF23 Community Hub: Over the two days you will have the opportunity to participate both online connecting with a global audience and in person, hearing from local Scottish based entrepreneurs. The focus of the two days will be 'Collective Action, Sustainable Change'. MORE INFO
💸 11/10, 11:00 🗺️ Edinburgh: Fintech Festival Fireside Chat: During the session, you'll hear about the differences between raising from UK and US investors, and what you can do to maximise the possibility of securing international investment. MORE INFO
🏄♀️ 11/10, 13:00 🗺️ Stranraer: Women's Enterprise Event: open to all women in business, enterprises and those just starting to consider their enterprise journey! A friendly welcome awaits where you will hear from local women in business and get a chance to widen your business network of support. MORE INFO
🧩 12/10, 13:00 🗺️ Edinburgh: Neurodiversity Meetup: The theme for this month is Neurodiversity in the workplace. We'll be talking about reasonable adjustments, unreasonable treatment, benefits and more. This is a group-led discussion. MORE INFO
🤝 Series: Unplugged: Open to everyone, Unplugged is a networking event for professionals working in, or interested in, tech startups and tech innovation.
📆 11/10, 16:00 🗺️ Fraserburgh MORE INFO
🚌 12/10, 16:00 🗺️ Aberdeen: Future Tourism - How will Tech transform the Travel Industry? Envisioning the future of travel and bringing innovative ideas to life. Learn about the current state and emerging trends in travel, hospitality and tourism courtesy of Joshua-Ryan Saha, Director, TravelTech Scotland.. MORE INFO
🛋️ 12/10, 17:00 🗺️ Stirling: Fireside Chat with Nadeem Sarwar: Nadeem Sarwar is the Founder and CEO of Phlo, the number one on-demand digital pharmacy service in the UK. Nadeem was formally a career commercial banker before founding Phlo in 2015. MORE INFO
🤝 16/10, 12:00 🗺️ Dunfermline: Dunfermline Founders Meetup: This gathering is a celebration of diverse perspectives, designed for visionary entrepreneurs, tech enthusiasts, and industry leaders to come together, connect, and inspire one another. MORE INFO
🏄♀️ 17/10, 13:00 🗺️ Peebles: Women's Enterprise Event: open to all women in business, enterprises and those just starting to consider their enterprise journey! A friendly welcome awaits where you will hear from local women in business and get a chance to widen your business network of support. MORE INFO
🚗 18/10, 18:30 🗺️ Stirling: Techmeetup Stirling: This month the talk will be "Autonomous driving, how hard can it be?" by Douglas McCallum. MORE INFO
🛋️ 23/10, 11:00 🗺️ Glasgow: Celebrating Black History Month: A roundtable with black founders: joined by guest speaker, Tynah Matembe, founder of Moneymatix who will join us as we explore how Scotland’s ecosystem could progress inclusivity of the untapped skills, talent and innovation within BIPOC communities. MORE INFO
🤝 30/10, 18:00 🗺️ Edinburgh: Startup Founders Meetup: Each month, we'll have a combination of tactical fireside chats with experienced entrepreneurs and plenty of opportunities to network with other founders, potential cofounders, and investors. MORE INFO
🎯 Deadlines
🇬🇧 Upcoming Innovate UK deadlines:
SSPP: Liquid food and beverages in refillable packaging Applications close 25 October
Collaborative AI Solutions to improve productivity in key sectors Applications close 8 November
MyWorld Collaborative Research and Development: Round 2 Applications close 23 November
Are we missing your event or deadline? 👉 Submit it here!
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That’s all for this week - have a great one!
Team 🔥Campfire