Once Will and I signed a deal to try to bring the CISA to the UK, I immediately got to work figuring out how to make this unique instrument comply legally with UK law. Will sent me the SAFE and ISA agreements and suggested I go talk to some lawyers to get some quotes for editing. After spending quite a bit of money and time on a couple of law firms around my network, I started getting a bit worried. FCA regulations looked dizzyingly long, the process was challenging, and the costs were climbing. All for a chance to be rejected.
Finally, after a bunch of back and forth with lawyers, I looked online to see if any other companies had attempted to do the same thing I did so I could get a blueprint. I got in touch with the first startup to ever bring the ISA to the UK, Stepex. I sent Dan George (the founder) a cold Linkedin DM and to my surprise, he answered. I say to my surprise because these days, Linkedin messages have an insanely low reply rate…
We chat on Google Meet a few days later and I tell him about our mission. He becomes a fan, and agrees to let us use his version of the ISA (called the Future Earnings Agreement, or FEA for short). This saves us a massive amount of headache, because we then don’t have to go through the FCA approval process and thus we could start business a lot faster.
I guess this was Lesson #1: Success comes with a lot of luck and right timing. Had Stepex not existed and had not Dan agreed to let us use his materials, we’d still be paying lawyers and navigating the legal process at this point.
With the agreement material out of the way, I turn my attention to the next set of challenges. Firstly: building a team. Will suggested that I build out a broad team with a diverse skill set and some “grey hair” experience, because our team makeup would come in handy during the fundraising process. I recruited my first teammate in Angel Investing School (George Quentin), a developer with startup and investing experience with a keen interest in alternative structures. I then tried bringing on a couple older investors to our board with no success. Later on, I read a book titled “The Innovation Blindspot” which talked about why VCs miss a lot of great deals due to outdated pattern recognition and selection committees that have never had experience building startups. Thus, I wanted to avoid that, and recruited an investment committee team solely out of “Indie London,” a community of bootstrapped SaaS Founders. Within 4 hours of me posting the blurb, I got about 4 responses, which turned into the team members you see today.
Lesson #2: Dare to be different, and dare to be bold.
Next challenge was the fundraising and the bank account. The fundraising wasn’t as challenging as I thought- I stitched together a deck that was based off of Chisos’ pitch deck and sent it around to family and other angel investors in my network. The angel investors in my network didn’t bite, but my family offered me £150,000 as a trial fund to invest in about 6-8 companies.
The bank account part sounded really easy until I made my first call to Santander. Here’s how it went:
“Good morning sir. How can I help you today?”
“I’m fine, thanks. I’d like to open a business bank account for an Alt-VC Fund. I just need a place to store money and make investments…
“Unfortunately we don’t open bank accounts for purposes like that under our policy. Thanks and goodbye.”
The online neobanks didn’t help very much either. When I tried signing up with Starling, they asked me for a bunch of incorporation and business plan documents and after submitting my forms, never got back to me. When I tried signing up with Tide, they claimed that their bank account limit wouldn’t allow me to do business properly (and to be fair, 100000 GBP isn’t a very high limit). When I tried signing up with Silicon Valley Bank, I filled out an online form and to this day (4 months after I filled out a form), they still haven’t gotten back to me.
I worried that I was never going to get a bank account. Until I gave one last platform a try, Wise. After a few rounds of questioning and a few document submissions (one of which was a written statement explaining why we didn’t need FCA approval), we finally got our first business bank account.
Lesson #3: Sometimes the “easy” processes aren’t as easy.
Next two things I had to think about were our deal flow sources and wiring up our dealflow process technology. The dealflow sources were relatively more straightforward, because prior to embarking on this project both my team and I have extensively networked in and around the UK and European startup ecosystems, so we generally know where to dig around to find the best young founders. The tech was a lot more challenging. Chisos provided us with an Airtable and a comprehensive application system, but a lot of edits had to be made in order for it to match what we wanted at Horizan VC. Collectively over time, we went through about 10 question edits, a bunch of text reference changes from “Chisos” to “Horizan VC,” a change in chatbot, and additional automated status changes that would send automatic emails.
Stepex’s process took some patience. The agreement took a while to arrive, and the digital process came shortly afterwards. After testing it a few times, we realised that it wasn’t wired up to anything, and couldn’t really give us any application status updates afterwards. Luckily, in that same week I was meeting Dan George for coffee, which allowed me to relay to him the results of our testing after some banter and catching up. He then agreed to wire us up a process that would allow us as a team to approve/disapprove a FEA, as well as automated system recommendations.
We ended up reconstructing the website twice. My cofounder, George Quentin built it first on Wordpress before collectively our Investment Committee team (which consisted of 100% CTO-type entrepreneurs) wanted it redone on Webflow so it linked up with n8n and Coda. So that set us back several weeks as we attempted to rebuild the whole site in Webflow.
Lesson #4: Patience is key.
In the midst of all of this I realised I hadn’t built out any social media for us yet and so quickly got on with it. Per usual protocol, I set up a Linkedin and Twitter page, and because I didn’t have a whole lot of updates to give periodically (things take time to develop), I did a lot of article reposts and “VC Twitter” tactics (real blunt one liners filled with irony). I also began to learn about different ways VC Funds and other organisations grew their SEO through the use of keywords and backlinks, and got introduced to platforms like Ahrefs, Keywords Everywhere and Backlink Manager.
I also started vlogging. I remember one of the VC associates at the Mountside Ventures Summer Party suggesting to me that it was important to find ways to stand out with marketing, and to not copy everything that other firms around you do. Taking inspiration from Matisse Thybulle and Casey Neistat, I started filming short film type scenes from my day to day working life and splicing them into 15-20 min vlogs I’ll most likely film once every 1-2 months. These series of videos will help showcase our working life behind the scenes, some of the events we attend and conversations we hold. We hope these sets of vlogs will allow people to connect with our brand more and watch our story unfold.
Lesson #5: The more you work, the more you uncover what you don’t know.
When we launched, we had this naive idea that everyone would just send us dealflow because we put the word “investor” on our Linkedin profiles and made a big announcement. This could not be further from the truth. On Day 1, we only got 2 applications for investment, leaving us to scratch our heads, “what do we do next?”
We then proceeded to turn a big chunk of our attention to hunting dealflow and building partnerships with various startup organisations, accelerators and communities. So for the last few months, we’ve been at almost every IRL demo day, founder networking event, and VC networking event we could find. Gradually, this helped push our dealflow to where we wanted it to be, but it took us a lot of effort for us to get there. Through that work, we realised just how much London’s tech ecosystem organised itself into different “pods” of communities, with not a whole lot of overlap.
We also learned that the education piece in terms of our investment model was extremely paramount. To this day, many founders still don’t know that they can come to us at the idea stage with a landing page and a little bit of traction. Most of them still believe that they have to build an MVP/prototype to raise a 6 digit SEIS equity round, which doesn’t actually suit the majority of founders (see my previous articles on this). We’ve been working on this by appearing on podcasts, panels and different articles, but we still have a long way to go.
Lesson #6: Get ready to say lots of no’s.
Out of 35+ Phase 2 applications, we only managed to put money into 3 founders.
We originally thought it’d be really easy for us to say “yes” to founders, until we’d usually uncover one reason or another why we weren’t a huge fan of the founder/startup. Here are the common reasons we found:
Tune in next time in a couple months for part 3!
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