Energy storage: generation’s forgotten twin

In recent years, the conversation around renewable energy sources has grown broader and louder. Although wind, solar, and their lesser-known cousins do not (yet) represent a majority of energy generation in the vast majority of countries, they form an increasingly significant part of the grid’s energy mix. Indeed, in 2017 – and for the first time in its history – Britain generated more of its electricity from renewable and nuclear sources than from gas and coal.

Great news. Onwards and upwards! But there’s a small hitch… Renewable energy is famously intermittent. The wind blows when it feels like it and, to the ire of many British beachgoers, the sun shines any time other than when you want it to. Ok, some renewable energy sources such as hydro are more predictable but let’s focus on the intermittent side of things for now.

Because of our historic dependence on ‘predictable’ conventional generation, we often overlook a critical component of energy provision in the next 10… 20… 100 years: storage. All too often, energy generation and storage are unhelpfully divorced from one another. Yet, we will never successfully achieve a renewable future without realising an equivalent investment in, and evolution of energy storage technologies. The yang to generation’s yin, if you will.

It is only really since the advent of Tesla that the world has started to think seriously about energy storage (good Tesla). We have been talking solar panels and wind turbines for several decades. Storage has some catching up to do. Indeed, it is the automotive industry which is really driving the flow of investment into energy storage technologies. This is also why many people are limited to thinking that ‘storage equals batteries’ (bad Tesla), predominantly lithium-ion. Yes, I know we use the same chemistry in the batteries that power our phones, laptops, etc. but this isn’t the coalface of chemical battery innovation.

The potential problem with this battery-focused view is that it will not be the best storage technology in all situations. Lithium-ion isn’t even that good: it doesn’t store that much energy, it’s expensive, and it’s not entirely safe. You can pick figurative holes in all batteries, all technology types, but my fundamental point is that this is not a ‘one size fits all situation’.

For example, a remote monitoring sensor requires short, large bursts of power that might be provided by a supercapacitor. Electric vehicles of the future might run on fuel cells, instead of batteries. And grid-scale renewable generation will need to be paired with grid-scale storage which could take the form of giant flywheels, compressed air energy storage in vast underground caves, or something we simply haven’t invented yet.

Successful innovation leaders will remain agnostic as to what future storage solutions will be required by each industry and application. My point is that, by focusing on batteries, we may limit the development potential of other technologies, some of which could be essential to our energy future.

Secondly, and to go back to where I started, we will need a myriad of solutions to support the energy transition to a cleaner, renewable grid. Unless we re-establish the critical link between storage and generation, innovation in the former will continue to lag behind. In practical terms, we will produce all the energy that we could possibly want from the sun and the wind, but it will have nowhere to go.

Fifteen Thousand Pounds – The Cost to Dig Your Own Hole

“Fifteen thousand pounds”

 

That’s the point I knew the client had lost the deal.  And with the deal, the long term viability of the company.

 

One of the most fundamental tenets of a successful growth company is ‘making yourself easy to do business with’.  I think sheer greed got in the way here, or perhaps a total misreading of the strategic situation.  It was explained to me post-meeting: that development work would be costly, so something would need to be charged to the client.

 

Rewind.

 

I’d started working with the client two or three years earlier.  They were selling services, charging an annual subscription fee on a headcount basis, into the people management space.  Human resources has plenty of critics (/administrators), so I will not repeat them here – but to make matters worse, the client was disorganised and emotional, but worst of all it learned slowly and was subscale.

 

I cannot even remember quite how they got into the situation, but one of the major UK water companies was brought round to the idea of doing a pilot of the service.    They certainly needed it – the management systems ‘human resources’ had in place were poorly implemented, and the Head of People knew it.  The client’s service offered the opportunity to solve the problem, and in order to get well embedded (knowing such a service would always go to public tender), it was manoeuvred into a three month limited-headcount pilot.
Remember I said the client was slow learning?  It must have been obvious to the water company throughout the pilot that the client was learning on the job.  This is not necessarily a bad thing – learning together, which certainly needed to happen, can build bonds between a company and its customers.  Quite why I was directing the learning was never clear – but I knew someone had to grip the situation, because the opportunity was too important.

 

Remember I said the client was subscale?  Getting the water company on-board probably would have trebled the ‘people under management’, which was the key metric for this particular client.  The investment in the technology and outsourced relationships needed to deliver the service was a leveraged investment – and they were short of break even.  Trebling the numbers, almost at any price point, would have been enough to put the company into that happy space where bills were covered, cash was being generated, and everyone would be able to sit down and think about what to do long-term now the company was ‘washing its face’.

 

Pilot was completed, a big thumbs up for the concept from the water company, and then to public tender.  Everyone knew three people would be pitching at the final round, and despite the obvious learning going on during the pilot, as an ‘incumbent’ (in the loosest possible use of the term), one would expect to be at that pitch.  And the client was.

 

Now as I said before, it didn’t matter what the price point was (within reason) – all that mattered was trebling the number of people under management.  So basically, unless the water company decided to totally reframe the tender at the last month, all the client needed to do was ease into pole position (with a three month head start) and they were good to go on a three year contract.  On to thinking about the business and how to develop it now faces were being washed…..

 

Water company: “So one of your competitors, being open with you, is offering us a set of metrics over and above those which you are currently providing.  Can you produce the same set of metrics?”

 

The data set was identical – same information going into the database, so:

 

Client: “Of course, not a problem …. But, er…… there will be a cost – that’s out of scope.”

 

(hold on, we prepared for this meeting – I don’t remember any additional costs being discussed)

 

Water company: “Oh …. right …. Er, how much?”

 

Client: “Er …… er ….. fifteen thousand pounds”

 

Talk about dropping the ball.  This was a knock on by the wing, once it had run round the opposition’s tardy back line, and was clear through for a try.

 

I was asked to speak to the water company’s procurement people to get feedback, once the client had received notification that the pilot was over and the tender was lost.  Apparently, and of course unsurprisingly, the water company hadn’t wanted to switch the client out – too much effort – but fifteen thousand pounds was not in the budget, and the other company was levying no extra charge.

 

I was on the team that put that company into administration a couple of years later.

 

The fifteen thousand?  That would have been made in margin in year two; the client CEO, for whatever reason, justified the unilateral action to themselves at the time and came out with it.  The company never ceased to be subscale.

 

The moral of this story?  Focus on what’s important (your company’s key metric); don’t get greedy; be easy to do business with.

When should I start commercialisation?

The lean approach to software creation has brought market testing much earlier in the life cycle of a product.  Its aim is to try to find market acceptance as soon as possible so that companies minimise the risk of building products that turn out to be not sufficiently compelling.

How does this translate for non-software technology products?

If a product is based on new IP, it’s likely to have quite a long period before a first trial version is market ready. So how early should you start your commercialisation?

There is a concern that ramping up commercialisation efforts too far in advance of production readiness could lead to a loss of any momentum that has been built with potential customers and go-to-market partners. There is a temptation to think that it is better to put your head down and focus on getting to a production-ready model.

However, it’s important to remember that engaging the market serves a number of purposes:

  • There are often multiple parties that will be involved in the sales, implementation, operation and maintenance of a technology. Engaging with them is essential to understand what is required for each of them to adopt the technology. This will be central to the go-to-market strategy

 

  • Working with these parties will give a clearer sense of where the orders for the product will come from in the first 12 to 24 months post-launch. This is a period where sales velocity must be built. Only when they are prepared to shape up distribution or sales deals will it become clear that there is product-market fit. Confirming in advance where the actual orders are likely to come from will help mitigate commercial risk for investors and support valuation

 

  • Understanding why and how these parties will engage and buy is key to structuring a go-to-market strategy and sales process

 

  • In the process of verifying the needs of the market, it is quite possible that information will emerge that will result in changes to the product development path.

 

If market engagement is left too late, this information may not be uncovered. The cost of this in terms of lost time and missing targets will be considerable.

Want to succeed? Get used to failure.

A few years ago, at a startup networking event, a colleague of mine asked a budding entrepreneur how he was going to grow and scale a business. His response? “Build the app. Marketing. Go viral.”

Now, while I admire this individual’s chutzpah and ambition, this is not likely to be a successful strategy. Why? Because it does not allow for failure.

There are plenty of stories to be told of hugely successful entrepreneurs who started with failure before finally ‘making it’. Bill Gates with Trof-o-Data, Henry Ford with numerous failed automotive ventures, and even the iconic Colonel Sanders who, penniless at 65, decided that age was no barrier to starting a business that would eventually spawn a global food empire.

Inspiring and intriguing as these tales are, they do not explain why it is that failure is such an important part of the tapestry of success. Before I go on, I should say that yes, some people will achieve success at the very first attempt. But I would venture that there is always an element of good luck in this and, more often than not, this will not be repeatable.

 

Ffion's Blog

 

It is important to learn to fail but to fail fast. More often than not, we will learn what works from learning what does not work. That is how we as a firm enable both ourselves and our clients to achieve commercial success more quickly; we have been there, we have made those mistakes, and we know how to avoid repeating them. Now, this isn’t to say that we have a magic wand for avoiding failure. We will and still do experience it. But, having become familiar with some of the pitfalls facing early stage companies trying to commercialise their technologies, we now know how to navigate around them, and that makes for a shorter road to success.

Think about how you would approach a challenge. If you did not know how to overcome it, would you put all of your eggs in one basket and go with one approach? Unlikely. Would you be more likely to employ a tactic of trial-and-error, taking slightly longer to find the solution, but also avoiding fatal errors and, eventually, learning what works? I’ll wager it would be the latter.

In this way, we are naturally predisposed to learning from failure but for some reason, this is a bit of a blind spot when it comes to building a business. Too many of the entrepreneurs that I meet, fear failure. When things don’t go as expected, I tell my clients that it is a good thing. We learnt how not to do something and can therefore quickly move on to trying a different approach. This process of constant iteration is very much at the core of what we do.

As Samuel Smiles said, “We learn wisdom from failure much more than from success. We often discover what will do, by finding out what will not do; and probably he who never made a mistake never made a discovery.”

A conversation with RIG’s founder

RIG Engagement Manager, Ffion Rolph, sat down and interviewed Founder and Managing Partner, Shields Russell, over a series of face-to-face meetings. Here, Shields shares his thoughts on RIG’s history, its evolution, and its future.

 

FR: Is it fair to say that RIG’s market focus has evolved significantly in the last few years?

SR: I think that ‘evolved’ is the key word. We have certainly increased our focus on energy, natural resources, and major industry. This was deliberate and we now have some portfolio companies with terrific technologies in this area.

 

FR: But you didn’t just stumble into these areas?

SR: No. In part, it has been a decade long evolutionary process of reflecting on where we have had most success and greatest impact.

 

FR: I assume that the emphasis around IP rich technologies emerged out of this process?

SR: Very much so. There are several sources of competitive advantage that are defensible to varying degrees: brand, business momentum and market dominance, business model, and intellectual property (IP). We strongly bias IP for the simple reason that proprietary technology is the most defensible advantage a company can possess. It reduces, if not eliminates, the threat of replication. Unburdened by the threat of commoditisation, it less susceptible to pricing pressure. In a B2B context, it is an asset that can be exploited exclusively by the ‘creating company’ or through that company granting rights to other organisations.

I would say that while we are attracted to IP rich technologies for these reasons, I am conscious that the technology must be decisively better than what it replaces. It must do a much better job. You can make money though delivering marginal improvement but you can make a whole lot more if your product is in a different class.

 

FR: What other factors have informed the current focus?

SR: In my case at least, getting older has also played its part. It’s the big, global, long run challenges that most engage me. These challenges have really important social and environmental dimensions. They really matter. And, of course, addressing massive challenges can offer huge economic opportunity.

I am never oblivious to the mission and political aspects of these challenges. My second job was as a teacher in Botswana. I earned about the same in a month as I had in a half a day in my first business in New York but the mission was more important. More meaningful. For me, commercialising a technology that directly contributes to sustainability is simply more motivating than building a sales operation for a B2B SaaS application that delivers greater efficiencies. Mission driven challenges have a great ‘why’ and I love that.

 

FR: The largest group of companies in RIG’s portfolio is focused on energy challenges. What has driven that particular angle?

SR: Energy is such a critical space as it lies at the heart of the climate change challenge. I cannot see any other way of tackling the acute energy challenges the world faces other than through adopting new, more efficient technologies. You cannot dispute the need but that is not the same as saying that new energy technologies can just turn up and the world will be their oyster. I think that is where a lot of the first wave of cleantech companies were wrong-footed. There was a lot of vision and a lot of big numbers but finding that market that could give the company traction often proved a bridge too far.

 

FR: So market discovery is a critical element of the process?

SR: That is the essence of the challenge and perhaps no less challenging than creating the technology in the first place. Finding high momentum applications and engineering adoption is a huge, often quite complex, challenge and that is where we can play a pathfinding or scouting role. In terms of building a market, innovators need to think small to get big. They need to identify and then offer a superior solution to a specific energy challenge. That is very much what we do. It is where we fit.

 

FR: Is it accurate to say that RIG’s more focused approach also reflects a broader trend in the venture space?

SR: Yes, that is a good observation. When I was first involved in what you might call the ‘start-up’ scene, entrepreneurial ventures where generally lumped together. Many start-up events reflected this. Now, of course, you have events for different tribes – those involved in FinTech, EdTech, or CleanTech for example. Many VC firms used to have partners focusing on investments in a several fields and, of course, many still do. But now you see much more focus which makes a lot of sense. I imagine that several VCs all with a focus on a single area, let’s say consumer internet, makes for a much better conversation and investment decision than a group of VCs each with a different specialisms. I think it is a reasonable assumption to say that the most successful Series A investors are the ones with the most focus and the most evolved investment theses. So in our way we are very much aligned to this trend.

That said, as a firm focused on innovative technologies, I think we must remain open to possibilities that lie outside our declared areas of focus. Those areas of interest we call our ‘column’. That ‘column’ is permeable with purposely ill-defined parameters. It is in many ways a tool that drives our internal discussion. What’s in? What’s out?  What’s happening out there? What’s emerging? What are the grand challenge that engage us? We have to remain alive to the non-linear developments and the emergence of new challenges that cannot be addressed simply by improving on the thinking and technology that can rise to them in the first place.

For example, we are working on a fascinating and important cyber-security project. It does not lie within ‘our column’ but we are totally committed. It ticks the interest box of one of our partners and that is always an important factor for me. You get the best from an individual when their ‘desire’ coincides with ‘opportunity’. So our focus will always in a sense be negotiated. We are that type of firm. We attract people to come and work for because of what we do and the areas we work in. Equally, we are influenced by how their interests develop. What interests people drives their development and when we work on things that interest us that gives us passion. There is nothing harder than doing a job that commands zero interest. It is like the class you hated at school.

 

FR: Does a more focused RIG mean the firm is becoming more specialised?

SR: We have made some choices that undoubtedly makes us not only a more focused outfit but also a more specialist one. Our future is very much centred on building out market practices where we can combine specialist knowledge and relationship capital with our more generalist ‘how-to’ knowledge. That combination packs a powerful punch. It is an approach that enables to us to codify our knowledge and utilise our contact network much more effectively. In terms of how we allocate our time, engineering licensing deals, building out networks of distribution partners, finding solution partners, or executing high value – and by value I don’t just mean revenue here – direct sales, consumes most of our time. Over the last ten years we have done a lot of business building. We will do a lot less of this type of work going forward.

 

FR: Why put the brakes on what is a valuable activity?

SR: We have accumulated a great deal of business building expertise over the last decade. This widened the scope of our operations to the extent that we had specific experience vested in individuals rather in a shared company-based capability. But the big question for me now is where we best apply this expertise. Helping a company find some product-market fit and achieve some early traction is without question valuable. It is the first staging post on the way to building a valuable business. Building organisational capabilities to take advantage of this is also undoubtedly valuable. There are lots of managers that are well qualified to grow an organisation. The know-how and experience required to build a revenue-generative organisational capability from its early evangelist stage to something that is more repeatable and scalable is fairly hard-to-come-by competence. As it often the case, companies with the beginnings of organisational capability believe that hiring a manager from a larger company in their space will help them navigate this stage. They are nearly always wrong. They have hired that individual too early. Building something from scratch is not what they do.

But for us the problem with this type of work has been one of value perception. Clients place a different order of value on securing first revenues and consequently we have the opportunity to make a healthy return on our efforts here. The same cannot be said for business building work which is time consuming and less glamourous. It is ‘airline’ work – it takes a lot of planning and organisation, creates a lot of value but is rarely profitable. But while we will do less of this type for clients, we shall look to apply this expertise in building more of our own ventures.

 

FR: Where does starting new ventures fit into the picture?

SR: I am agnostic as to whether we are working for companies that are client partners in the traditional sense or companies that we co-founded and part own. What is certain is that in the next five years we will increase the number of companies in our portfolio that we have co-founded and are significant shareholders in. To date, we have been opportunistic. Going forward, we will be much more systematic and objective driven about it. We have learnt from the ventures that we have started not least from our failures. Where we can make things happen is on the commercial side, in mitigating market risk, in introducing the customer into the product development process, and in establishing distribution channels as early as possible in the commercialisation process. In contrast, our natural co-founders are the product-centric CEO or technologist with a prototype operating in our areas of interest.

 

FR: What has prevented RIG from starting more ventures?

SR: The lazy answer would be time. I think we have huge potential as an entrepreneurial platform but in truth we have been reactive rather than working out a more systematic and proactive approach to identifying opportunity. One key element of this is resolving the funding challenge. If you are starting from scratch with each venture, then securing seed funding can be a drawn out process and take an ordinate amount of time. One of our goals in the next 12 months is to develop ‘a bench of investors’ that can fund not only new ventures but can take advantage of opportunities within our client base. I am interested in creating a tight knit group that become intimate with and confident in the work we do, that share our approach and values, and are interested in markets and technologies we are engaged with. We have started talking to some HNWIs and we shall also look to some family offices. I am most interested in investors that will place value on social and environmental benefits alongside financial return.

 

FR: What is RIG offering this investor group??

SR: What we will offer our investor bench has a few dimensions. If we take opportunities within our client portfolio then I think we can offer fantastic dealflow with our involvement acting as a form of due diligence. We know our best clients inside-out and we know the size and nature of their market opportunity. There are two scenarios we will bring opportunities to the table. The first is essentially ‘follow-on’ investment opportunities where the investment is made on the back of substantial market traction and the where the business model has been defined. The second scenario is less straightforward and is best characterised as addressing a short term funding need. Even those companies that are well established and firmly on the path to success are not immune from a variety of problems that can result in funding challenges. Few if any emerging companies can get all their ducks in a row. But if the core product and market fundamentals are in place then there is a great opportunity. The critical thing is to be able to move quickly, to ensure a problem does not become a serious distraction, and to preserve or re-establish goodwill.

With regard to new ventures these may attract a different type of investor. What we want to here is to establish a very structured, gated approach whereby we chunk the commercialisation process in a fairly granular and transparent way and then align funding to each specific stage. I believe that by engaging with the market early, by co-developing solutions to high value problems with industry partners, and by confirming, prioritising and sequencing demand, we can accelerate the time to revenue while reducing both business risk and a new venture’s early funding requirement.

 

FR: What still surprises you after running RIG for more than 10 years?

SR: I suppose I thought that as I got older my curiosity might wane but it hasn’t. I thought I might become more conservative with age but if anything I feel more adventurous. We play in such interesting spaces. There is so much to learn and engage with. I spent a little bit of time on my summer vacation doing a deep dive on the ‘circular economy. It is so relevant a concept that it must become part of our internal discussions as to which companies and technologies we work with.

 

FR: Are you ahead or behind where you might have imagined you would be when you started?

SR: Definitely behind. I am impatient person who has had to learn patience. What I have learnt is that developing talent takes time, sometimes much longer than first imagined. But I have stuck with people. I made the decision early on to hire young people and to try and give them the type of challenges that could drive their development. I think you have to commit to talent and be prepared to wait. It probably takes six years or so to get really good at what we do.

 

FR: Last question: Why are all RIG’s partners male?

SR: It is a fair question and it is something that I would like to see change. I started with four male graduates; one is now the CTO of a crowdfunding platform, another left to join Roland Berger, and the other two are senior partners at RIG. So we started off with an imbalance which was compounded by an early failure to attract a sufficient number of female candidates. Foolishly on our part, and mistakenly on theirs, we were viewed as being overtly ‘techie’ which is a mile from the truth. But we are well past that now and so the situation should rectify itself over time. I think that will have a very positive impact on our culture.

Hardware funding in the UK and Ireland

Funding is the bane of most founders’ lives – with what can seem like never-ending rounds of meetings with people who nod and smile and say nice things and then never get in contact again. It can be even worse for founders of hardware start ups who have proportionally far fewer funding sources to approach than the more widespread mobile app/social platform/retail funding availability.

To take some of the pain out of the procedure, we’ve pulled together a list of places – accelerators, angel networks, VCs, grants, loans, and so on – in the UK and Ireland that will specifically offer funding to hardware start ups. They’re arranged alphabetically below with short descriptions attached. If we’re missing any, drop me an email at helen@rapidinnovation.co.uk.

Amadeus Capital Partners

Amadeus has funded over 90 companies and have a broad swathe of interests – most interesting to us is their small portfolio of advanced materials and cleantech companies.

 

Angel CoFund

A £100 million fund investing solely in UK-based companies. Initial investments are between £100k and £1 million, which is done alongside syndicates of business angels.

 

Business Growth Fund

Their focus is on late stage investment – they’ll typically put in between £2-10 million in companies with a turnover of £5 million +.

 

Doughty Hanson Technology Fund

Their head office is in London, but they have several offices throughout Europe.  Hardware interests lie in cleantech. Late stage investment.

Entrepreneurs Fund

Investing primarily in Western Europe, they favour resource efficiency in transportation, energy and water, as well as smart materials. Typical investment is between €1-2 million, although actual range is anywhere from €250K to more than €10 million.

Enterprise Ireland

A government organisation responsible for the development and growth of Irish enterprises in world markets. They offer grants to companies in any stage of development. Solely available to companies in the Republic of Ireland.

Frog Capital

Frog Capital invests in companies based in resource efficiencies (alongside its software offerings). It’s looking for companies turning over more than €3 million, and expects to put in up to €20 million.

 

Google Ventures Europe

Google Ventures will invest in any field but they have a primary focus on machine learning and life sciences. Their European office is based in London.

Innovate UK

A government body based in the UK who will fund, support, and connect innovative businesses. They’re based in Swindon and have competitions for up to £536 million of government funding available in 2014-2015. They’ll also provide advise on EU funding available, such as Horizon 2020. Only available for UK companies.

Longwall Ventures

They’re a venture capital management with £40,000,000 behind them. They’ve got a strong interest in science and engineering based start-ups. Located in Harwell, Oxford.

Maven Capital Partners

Maven Capital has £370 million under its management. Its Scottish Loan Fund provides loans from £250,000 to £5 million to SMEs in Scotland and its Greater Manchester Loan Fund will provide loans of between £100,000 and £500,000 to businesses in the Greater Manchester region. It will also provide funding packages of £2-10 million to UK businesses valued at up to £25 million.

Octopus Ventures

Octopus Ventures invests between £250,000 and £5 million with a team of 18 people. Their focus is on renewable energy.

OION (Oxford Investment Opportunity Network)

An angel network operated by Oxford Investment Opportunity who look to invest between £20,000 and £2,000,000. They charge 5% of funds raised.

Oxygen Accelerator

They invest €21,000 per team in exchange for 8% equity as part of a 13-week programme. Open to all sectors.

Par Equity

Par Equity is based in Edinburgh. Their Par Innovation fund provides venture capital for post-revenue companies, alongside their Par Syndicate angel network.

Scottish Equity Partners

SEP invests in the technology, healthcare, and energy sectors. They predominantly invest in growth stage companies, but can make investments in earlier stage companies with outstanding potential. They tend to concentrate on companies based in the UK.

 

Summit Partners

Summit has raised over $16 billion. Although primarily based in the US, they have a London office. Hardware investments tend to be limited to energy and industrial-based start-ups.

Sussex Place Ventures

A London-based venture capital firm, they’re interested in science-based companies. They additionally have strong ties to the London Business School.

First impressions

So after many hints, nudges and threats from our editor-in-chief, I am excited to put the proverbial pen-to-paper for my inaugural blog here at RIG.

They say that first impressions are important and, for me, it was that first impression that RIG made on me that set me on the path to joining the firm.  Having come across the firm at an event on strategy for start-ups (one which I was ultimately unable to attend), I was greatly impressed by their value proposition; shared risk model (a rarity among advisory firms) and their track record of positively impacting their clients’ businesses. Furthermore, with a focus on strategy and execution, an approach to managing risk, and a hands-on approach to working with their clients, they addressed some of the flaws that I had experienced advising major corporates.

In my experience, corporate clients are inherently risk averse when it comes to implementing new strategies, adopting new business models, or commercialising new technologies. Big companies are rarely built with the ability to innovate and to address evolving macro needs as it implies sacrificing today’s revenue/profit – with management measured and rewarded on the past, not the future, there is no motivation to be bold and daring. But here was a firm working to enable those entrepreneurs who were striving to address major global needs, who had high growth potential, to do so in a de-risked manner all the while linking its success to that of its clients. I wanted to be a part of this.

The client that I am currently supporting is a perfect example of how RIG delivers value and helps its clients to have a positive impact on the world. Our client has developed a world’s best disruptive technology in the wind turbine market that works where competitors cannot, and which enlarges the addressable market by many multiples. The key for this client is to develop distribution and revenue models that enhance their competitive positioning and makes it even more difficult for prospective competitors to enter their space. Working hand-in-hand with our client’s management team, we are helping to devise and implement these final two elements of their business model. A very exciting challenge with immense responsibility.

Do robots dream of electric tweets?

Amelia Stubbs, Social Media Marketing Consultant for Twitter marketing startup Torqbak, is our guest blogger this month. Here, she tells us a little bit about Torqbak’s journey so far, as well as the challenge of combining technology with human intelligence in order to get the most out of one of the world’s fastest growing social platforms.

Twitter is in its umpteenth incarnation and is still finding its feet. Marketers don’t know what to do with the huge amount of data it provides, and the platform itself doesn’t know what to do with the marketers. What better time to be working in a Twitter based startup?

We started TorqBak before Twitter’s IPO – at a time when marketing on a micro-blogging social media outlet wasn’t seen as standard. As Twitter grew, so did our company, and we saw the marketing potential develop in the off-the-cuff comments and observations of the 140 character limit. Brands have been engaged with Twitter since it started, but searching beyond those users who actively follow the brand’s profile was not yet a widely used method of outreach. We can now find audiences outside the brand’s Twitter followers, but engaging with them in a meaningful way from that point requires diligence and creativity. Technology can only get you so far.

In a very young company trying to make itself heard in the white noise of a multi-billion dollar social media network, it seems on the face of it a silly idea to try and dictate to brands how to market themselves on Twitter. At TorqBak we’re still very much in the middle of an uphill struggle (as is life for any startup). However, the deluge of data that Twitter provides – and the confusing way in which it is currently being presented – has already proven to be a rich breeding ground for data analysts and social media marketing tools.

This new ecosystem of Twitter based companies sees the social network’s terabytes of data and thinks that automating their subsequent analysis is the only way to make it meaningful. True, in part. However, automating every aspect is risky. If the well-publicised mishaps and triumphs of social media teams has taught any lesson, it’s that the human touch can be a blessing and a curse. Neutral, robotic brand responses to tweets are cold and unengaging, but a team of barely motivated interns replying to a swathe of tweets mentioning ‘brand x’ also carries risks. The incident with U.S Airways sending a graphic image in response to a complaint shows that human intelligence only goes so far. You are always one click away from a viral PR disaster.

On the other hand, automating your brand’s social media presence is also risky, especially when relying solely on keywords to find your next lead. Machine learning technology is still not anywhere near advanced enough to gauge sarcasm, for example, and sentiment analysis is only skin-deep for many language-based technologies. Social media marketing tools are being utilised by all manner of companies to make their Twitter presence more efficient, but your brand must appear human even if your marketing tools are not.

It’s important for marketers not to assume that technology is ‘smarter’, or that it ‘thinks’ in any meaningful way. It’s simply a series of processes trying to replicate something resembling human thought. There is no magic button that creates leads and engages customers. Computers go so far as doing the leg-work and present results based on what you – the human brain – have taught it. It takes a person, and a sensible one at that, to reach out on an interpersonal level and say ‘go’.

Technology is a science, but getting people to implement it effectively is an art.

What does the Chancellor’s extension to the Seed Enterprise Investment Scheme (SEIS) mean?

In his March 2014 budget the Chancellor announced that the Seed Enterprise Investment Scheme would become permanent.

This is the scheme that allows companies that have been trading for less than two years and that have less than £200,000 of assets to raise up to £150,000 of capital from UK investors with a tax treatment that makes it very attractive for the investors to invest.

For their part, investors can invest up to £100,000 per tax year spread across one or more companies.

How does it work?

UK tax-paying investors get a 50p tax credit on the monies that they invest as equity in SEIS-qualifying companies, regardless of the marginal income tax rate that they pay. Investors also receive capital gains tax relief of 50% on any capital gains they use to invest in SEIS-qualifying companies: for every £1 of capital gains invested, higher rate tax-paying investors get a 14p tax credit.

In the event that an investee business fails, the investor gets a further 22.5p in the pound tax write-off.

In summary what your recovery per pound invested is:

Tax Credit given

Company succeeds*

Company fails

Investor not investing capital gains

50%

72.5%

Investor investing capital gains

64%

86.5%

*providing the shares are held for 3 years or longer.

 Plus, any capital gains made on the SEIS investments themselves are exempt from Capital Gains Tax.

Looking forward

While SEIS tax reliefs have only been available for investment in ordinary equity to date, the government is exploring whether similar reliefs can be extended to other investment instruments such as convertible loans.

SEIS is here to stay. Having an environment where entrepreneurs can de-risk equity investment for their early investors to such an extent is a big positive for innovation. While it means the Taxpayer will have to pick up the bill for the investments that will fail – and there will be many due to the nature of early stage investment – for those raising or investing money, the benefits are compelling.

If you want to find out more about this, contact Simon Jackson

Accessing expertise beyond your company: A practical guide to building an advisory panel

There are many points in an entrepreneur’s journey where they will want to access specific, targeted guidance and experience beyond that of their employees, investors and professional advisors.

At RIG, we work with technology entrepreneurs to build the environments that will help them succeed, and this includes accessing strategically valuable external expertise.

There are a number of ways to do this. What comes into many people’s minds is going the Non-Executive Director route. While this can be done, the strategic advice that the entrepreneur needs can be separated from the fiduciary duties that go with being a director of a company. And in fact, many people that would volunteer to provide strategic advice would not want the responsibility of being a board member.

Our suggestion is to create an advisory panel. I say ‘panel’ rather than ‘board’ advisedly – in the research for our process, we spoke to many people who had set up advisory boards, and learned that in practice the word ‘Board’ can carry connotations, both internally and externally, of governance and decision-making responsibility.

The principal we follow is to design the best advisory panel that we can. Rather than working from who the entrepreneur knows, we work out what the objectives and requirements are and then find the best people we can to fill those roles.

Our starting point is to work with the entrepreneur to analyse the strategic needs and weaknesses of her company. By setting this against the vision of where she wants the company to get to, we can identify the areas where external advisors can add the most value. Some of these areas will be appropriate for an advisory panel to address, while some – such as coaching of senior management – are better kept out of scope and addressed by other means.

This analysis also prepares the ground for articulating a set of objectives to be given to the advisory panel. This shapes what the panel members will be asked to work on and what will be expected of them.

With the objectives clearly understood, the next step is to identify the ‘required’ versus ‘desired’ skills and experience for panel members. Knowing what these are, it is possible to think about where we might find the right people.

It’s important to remember that in building the panel, we are looking people not only with the right kind of experience; they will need to be able to identify with the entrepreneur and the journey that they are taking.

How large should an advisory panel be? It’s a trade-off between being large enough to provide a breadth of input, and small enough that all of the members are very involved. We have found that a panel of three or four is a good size to work with.

Knowing how many people you will have, it is then a question of finding the required mix of skills and experience. No one will have all the elements of experience, but the group should do overall. Importantly, they should work together well as a group, and this will be an important factor in determining which people are ultimately selected from the shortlist.