The Ups and Downs of Startup Life

Applying to the NDRC Launchpad Accelerator

March 5, 2013 / No Comments / Posted in: Accelerators

Reverbeo was a graduate of the 7th Launchpad programme which kicked off September 2012. To date there have been 8 Launchpad programmes and the NDRC has been crowned the 6th best accelerator in Europe, a pretty impressive bragging point considering the competition.

Programme Summary

Typically anything from 100 to 200 startups apply for a place which if awarded entitles them to €20,000 of investment (15,000 for team members and 5,000 in expenses).

Out of the initial application group around 50 are selected to pitch the NDRC board, 15 of whom are awarded a place.

Personal Experience

As a graduate of Launchpad I would say it is definitely worth while. Whether you have your product or service built or you’re just walking in there on the back of good slide deck. The initial seed investment and mentoring is a great way to focus and drive a project team.

The purpose of Launchpad is to get you investor ready allow you to reach product market fit and prove to investors that you have a validated scalable idea. Various different mentors in marketing, finance, development, and presentation help to hone your vision into something that can be presented clearly within a 5 minute pitch and has all the due diligence an investor will look for in terms of financials, traction and customer validation.

Perhaps the biggest bonus of the programme is being locked in a room for 3 month’s with 15 other like minded companies. Starting a company is a hard thing to do and anyone who passed though Launchpad will tell you it’s an emotional roller-coaster. Being surrounded by peers going through similar issues is a great help.

The Lean Mindset

If you haven’t heard of Eric Ries and the Lean Startup Movement, stop everything get The Lean Startup and take two days off to read it cover to cover. Eric’s philosophies on customer validation are very closely aligned to the Launchpad programme. If you are thinking and presenting that way it’s a very good start.

Online Application

First of all the application form needs to be taken seriously to secure a spot to pitch. This should not be left to the application deadline. Download it a week or two in advance, print it out and take the time to formulate well thought out responses for each field. When it comes to submitting the online form this also should be done at least a day in advance as there may be issues with the form or it may not save properly.

The Pitch

Here’s where you need to shine. Launchpad graduates are known for their high standard presentations. If you can’t sell your idea to the investment panel they are going to wonder how will you ever sell it to customers.

  • If you’re not good with slide design get help. Presentation Zen is a great book get your hands on it study it!
  • The less content on those slides the better, if the panel are reading the slides they are not listening to you.
  • Remember that the panel may have seen 10 presentations that day, aim for 3 take away points above everything else and make sure you nail them.
  • Have your presentation ready a week or more in advance, leaving you enough time to practice (We spent a month on the slides and pitch practice)
  • Present to as many people as possible and use your slides. Ask your audience to summarise what you said only then will you know if you are hitting the mark.
  • Video yourself and get rid of the AAaaaaammms and any other ticks that you were unaware of.

Resources That Might Help

Make it Crisp (Bill Laos badly designed but fantastic advice about presenting a story and pulling your audience in)

The Pitch (I read this book while on Launchpad and found it very useful, delves into the psychology of your audience)

How to Pitch A VC (Dave Mclure from 500 Startups offers his advice via slideshare, humurous and apt)

 

 

 

Guide to the Seed Capital and Employer Investment Scheme

December 10, 2012 / No Comments / Posted in: Funding

If you are an early stage company or startup with some capital to invest either from one of the founders or through a potential angel it’s well worth taking advantage of the Seed Capital (SCS) and Employment & Invest Schemes (EII used to be called the BES).

I’m by no means an expert but I am a big fan of laymans terms so the following is a brief breakdown of the Seed Capital (SCS) and Employer Investment Schemes (EII).

Both of these government schemes are what are called tax relief incentive schemes. The government is encouraging investment in SME businesses in certain sectors in order to boost small business and increase employment.

Seed Capital Scheme

Who can Invest?

  • If you are unemployed and starting a company
  • If you are leaving a PAYE (Pay as you earn tax) job to start a company
  • If you have been made redundent from a PAYE job
  • You can’t apply if you own more than 15% of any other company outside of the one you intend to invest in. (unless that companies turnover is under a threshold of €127,000)
  • You must be a resident of Ireland in the year you make the investment

What type of Companies can and can’t apply?

The company has to be a new venture and registered as an Irish company. Must be under 250 employees and have a turnover 50 million (I think that covers most startups!). It’s easier to break the list into who can’t apply:

  • Import export of trade goods (Taking a bet on taking a shipment of iphones to resell)
  • Dealing in commodities or futures in shares, securities or other financial assets
  • Financing activities
  • Professional service companies (Consultants)
  • Dealing in or developing land (Developers)
  • Forestry
  • Operating or managing hotels, guest houses, self catering accommodation or comparable establishments or managing property used as a hotel, guest house, self catering accommodation or comparable establishment
  • Operating or managing nursing homes or residential care homes or managing property used as a nursing home or residential care home
  • Operations carried on in the coal industry or in the steel and shipbuilding sectors
  • The production of a film (within the meaning of section 481)

How it Works

Lets say a founder deposits 100,000 in the companies bank account in exchange for shares. The Revenue then refunds that founders past income tax payments up to 41% (The current higher tax rate) in the form of a cheque. That means a cheuque for 41,000 for the founder so essentially they are investing 59,000 and getting €100,000 worth of benefit for the company.

Claiming the Refund

The refund is matched against your previous income tax payments over the last 6 years. You can claim a refund from any or all of the previous 6 years.

Small Print

  • The shares have to be kept for a minimum of 3 years meaning you can’t sell them on two weeks later
  • The founder has to hold a minimum of 15% of the company for in ordinary share capital
  • The founder takes up employment in the company with the tax year of the investment or within 6 months of the investment date, if not the money can be taken back
  • Taking advantage of the Seed Capital Scheme means that you may be subject to a reduction in other state based finance schemes; in exception for the R&D Scheme (I’ll cover that in another post)
  • The can only claim back a maximum of 41,000 in any one year
  • You can’t get your spouse to contribute their income tax payments to max out the refund
  • You can only take advantage of the scheme twice
  • The investment can be made in two parts as long as they are within 2 years of each other.
  • You can’t leave employment in a company and setup a separate company which benefits or has a trade relationship with the your previous employer (A subsidiary). There seems to be a grey area around this however some transactions are acceptable.
  • If the company has not started generating revenue it may be in Green Tech or in R&D the investment has to have been spent within 3 years.

Employment & Investment Scheme

The SCS scheme and the EII are very similar and the criteria for one apply to the other. The Employment Investment Scheme is aimed at outside investors rather than founders of the company.

Small print

  • The EII allows maximum investment of 150,000 as opposed to 100,000 on the SCS
  • The tax refund is 30% with the further 11% issued if after 3 years the company has hit it’s employment goals
  • If you are raising SCS and EII the maximum you can raise is 2.5 million in any one year and 10 million over the companies lifetime. So potentially you can earn 2.5 million a year for 4 consecutive years.
  • The shares alloted must not be preferrential shares meaning that the investor has rights to dividends or first dibs on assets.
  • You can’t pass the investment back to the investor in any
  • The investor can’t own more than 30% of the company already

Deadline

At the moment the deadline for this scheme is December 2013, there is no information at the time of writing as to whether this will be extended or not.

References and Links