Finding that funding fit

As with all new businesses and entrepreneurial activity the biggest hurdle to start a project like ours is finding the finance necessary to go from idea to reality.

Back in 2012 the idea for Moti-Lab had been cooking for a while, I had a bit of money aside to concentrate on the project and decided along with my wife that, despite the risks, we should “go for it”.  Looking back it was with a huge naivety that I set out on this journey.

I had the beginnings of a great product, it was an amazing idea with a large market, I was truly passionate and was ready to attack it with all my zeal.  There was no question – investors would be mad not to, we’ll be up and running in 12 months!

It’s been a long 5 years since and I’ve probably aged twice that over the same time period.  What I hadn’t realised was that I was blinded by the entrepreneurial / inventors’ fog.  It is human nature to only see life through your own eyes and one of the most difficult things we can perform is to empathise – to see things through the lens of others.  This condition is made 10 times worse when you have a “brilliant idea!”

I realise now that what I should have been concentrating on was the negatives.  The product was innovative – so it might be difficult to convey the value of it to the market.  The market is large and predominantly publicly funded – it is therefore as volatile as any market, especially in current times of austerity.  The financial rewards would be there – the start up costs are a huge risk. I’d run a successful landscape design and build business – who’d give a shovel monkey a load of money?  In short I didn’t have a clue – why  the hell would anyone want to get involved?

In 2013 we got our first break, Innovate UK looked favourably on the project and we got our first bit of funding in the form of a SMART (remember them?) award.  This year was spent prototyping and getting any help from whatever source I could; locally through workshops, professionally, badgering friends and acquaintances running around getting as much free training as possible.

It was during this time that I got my first real lessons and warnings of how difficult the task would become.  Some professional work commissioned, from firms with a good reputation, turned out to be absolute rubbish (I’d use stronger words in reality).  You realise that some people, despite their proclamations, aren’t there to help you at all.  They are looking after their own interests, they don’t share your vision and commitment to your project and are only interested in getting what they can – no matter what it does to you.

This is generally a very expensive lesson for a fledgeling business and something that leaves a bad taste in your mouth for a long, long time.  The strength of this feeling of wrongdoing does lessen, after time has passed (as long as you’ve survive it), and it does work in your favour – you’ll do a lot more homework on picking your partners.

It’s not all negative, at this time I found help from some amazingly talented people.  They were generous with their time, experience and advice.  Some of these people did it out of pure altruism and some saw their gratification coming later once the business is a success.  It’s these people who really help spur the inexperienced entrepreneur on, and can be invaluable.

This is a really strange stage for an entrepreneur where you feel at your most vulnerable and conflicted.  I was poor – but there was no way I could show it – don’t look desperate – they can smell it.  I wanted to shout about the idea to anyone who would listen – but the inventors’ paranoia meant that even the merest disclosure to someone who might steal the idea makes you feel physically sick.  You want to keep shouting about it to your family and friends – but their glazed look after listening again to how you are going to “make it” adds to your doubts.  This sort of thing brings real fear.

Those of you who’ve attended the free business training / entrepreneur events will have assessed other hopefuls and consciously written most of them off.  Like watching Dragon’s Den you muse “the idea’s s**t”, “he’s not got a clue”, “how could anyone work with them?”, “the market’s not there”, “she’s deluded and will lose everything” and a myriad of other ways to write off someone else’s idea, and at the same time reinforce to yourself that you’ve still got a brilliant idea that’s going to fly.

Twelve months down the line and you are sat in another entrepreneur event and see the same agitated faces as before, possibly in the same venue as before, and it dawns on you – you are one of those hopefuls.  They’ve written you off, you are deluded, you are going to lose everything – Nooooooo.

It was at this point where I needed a lucky break, and, through graft and good fortune – I started to meet “Investors”.  This is the biggest part of the roller coaster.  A new lead brings renewed optimism.  It blows away all the doubts, and the elation of feeling that things are about to change (think Only Fools and Horses “this time next year Rodders….”) takes hold.

These highs can bring with them the biggest lows.  It can be like sitting down to an amazing meal and just before you take a mouthful the waiter knocks it off the table and you get third degree burns to your crotch.  This. I believe, is all down to the type of investor and whether they are a good fit for you and your venture.  I’ve met a few different types of “investor” over the last few years and they fall into a few select types.  The first was meeting with not a dragon but more of a lizard “investor”.

It was to be a skype meeting as he sat by his pool in The Dominican Republic and I sat in my crap kitchen in Sheffield, moving the computer round to show a backdrop with the least amount of mess.  Nerves were high and I felt slightly ridiculous sat in my suit next to the washing up. The call began – not well though.  “Hi can you see me?” “No sorry” “Well I can see you – hold on a second” – Imagine my surprise when his camera clicked on. I was met with a large amount of sweating middle aged spread taking up the full screen.  As the man retreated from his screen I got the full view of a naked chest and belly adorned with Hawaiian shirt and chunky gold necklace – I sputtered and stifled a laugh.  How the hell was I supposed to concentrate now?  I got used to the view and spent the next 10 minutes listening, “I got the document, I really like the idea, I’ve got loads of property, loads of cars, loads of connections, loads of everything” and so on.  Part of my coping strategy was to not stare straight ahead- this wouldn’t work in a face to face meeting but over Skype I thought it was safe – so I looked beyond his shoulders to a doorway in the background.  This worked for a while until I saw a fully naked, large, middle aged women walk in through the doorway and hand him a cup of tea!  I lost it.  I can’t even remember the last 10 minutes of the conversation but the call ended with an agreement to meet up the following month.

We’ve cracked it I thought.  The elation was only tempered by an uneasy feeling of what the hell I might have to do to come to an agreement!

It turned out after the next meeting, when presenting the facts and figures, the “investor” baulked at the size of the investment and didn’t really have any money – back to square one.

The second big investor meeting was with what is probably a real dragon, invited to a nice cafe or “his office” as he liked to convey, I sat and engaged with him about the project and gave a pretty good account of myself.  As an inexperienced entrepreneur, and one who is desperate for investment, you are often on the back foot – sometimes this is as it should be.  I was talking a language I’d only just learned and was happy to learn from those with greater knowledge.  Sometimes though, this is not how it should be.  This investor talked over me, ignored the research I’d done, rewrote the idea as his own and came up with something completely inappropriate for my market (primary education), based on his knowledge of his market (heavy engineering).  The buzz words of minimum viable product were thrown about and the idea using a machine gun box to house Moti-Lab with metal fixings threw up the picture of a supremely macho version of what I had in mind.  “We’ll get it made cheap then and make a killing” the macho rhetoric went on.

I was uneasy about the way things were going and this was not made easier by his actions.  The handshake that I would now term “trump like”, the long stare out competitions, to see who would flinch was followed by him actually feeling my bicep.  Under the thin guise of a business story with some Russians he actually squeezed my bicep – to test if I was strong armed enough to handle investment?  This was freaking weird.  The meeting ended up with us agreeing to meet again and the words “I can see myself having a desk next to yours Richard, and really getting involved”. I shuddered, I needed the money but at what cost?

It was this meeting that really made me evaluate what I really wanted from investment.  Yes I needed money to get it off the ground and it was always intended to be a profitable business.  It wasn’t however, just building a box to make money – it was always supposed to do good and help kids learn.  Whatever investment I sought needed to reflect this.

The dragon story ended with an offer (I think my landscaping work helped with the bicep bit), but like on TV, for a much higher equity than I was prepared to give away – especially if I had to sit next to that guy day in, day out.

2015 was completely different. The project had taken it’s toll on me and my family, the treading water, the constant scrimping month to month, the one small disaster away from bankruptcy feeling and the glazed look from friends and family had turned to hostility to me for wasting my time (tempered only by an English reservation for hurting other people’s feelings).  It was time for a rethink.  I’d kept my hand in on the landscaping getting  a few days or weeks work when things were particularly tight.  These felt like wasted days as I was away from the project – but no amount of entrepreneurial zeal for a project that hasn’t happened, can pay the mortgage or stop you getting divorced.  Back to the graft it was.

Returning to the landscaping pushed the project forward in other ways.  It reminded me, after what seemed like constant failure and frustration, that I could be pretty good at some things.  It allowed me to take a step back and evaluate what the project was and where I could take.  I worked hard all of 2015 with Moti-Lab taking a real backseat and it allowed me to earn enough to give it “one last crack” (although in hindsight though I don’t think it would have been my last crack).

2016 was different again.  The reassessing and reflecting had helped enormously.  I’d realised that Moti-Lab didn’t just need money it needed a certain type of money.  It was at this time that I won a place with The Young Academy – an incubator, training programme, mettle testing type affair with a chance to go forward for funding.

It was here I realised something that I was previously blind to.  I’d been so busy chasing money, any money, that I hadn’t realised Moti-Lab was actually a social enterprise and even better, there was a whole set of investors who wanted to do more than make a box to make money.

This incubator process allowed me to really think about the value I could create with my product – the original intentions of making a great learning tool and turn it into a business was again a possibility.  I’d previously hidden the “good” it could do behind the figures that I thought investors wanted but this process allowed me to realise there was no conflict.  The more good we could do, increasing engagement and attainment in learning, the more this would help us reach our market as ours goals aligned with our customer base.

So here we are in late 2017 we’ve been funded and will be in the market soon.  There is still so much to do that it is really a new beginning and a really exciting and daunting time for us.  But we’ve finally found the right investor in The Young Foundation.  They share our goals both financially and in terms of social impact so we really couldn’t ask for more, and bringing about the realisation that our goals are the same as our customers’ will make Moti-Lab a greater success.

It’s been a crazy and exhilarating journey.  There are many lows and questioning of sanity, but without the naivety and entrepreneurial blindness coupled with stubbornness it would never have happened.

I imagine thousands of “brilliant ideas” fall by the wayside because of the hazards of this journey.  I also am not suggesting that there are bad investors for a startup (although there are) – as money is money.  But I would advise, whatever stage of this journey you are on, think hard, keep stubborn, learn from your mistakes and find your funding fit.

By | 2017-11-07T17:01:00+00:00 October 12th, 2017|News|0 Comments

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