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Archive: March 2014 (Analytics Network)


Sunday, 2 Mar 2014
Sayara Beg

Starting your own Start-Up

Written by Sayara Beg, Chair of the Analytics Network

This year the OR Society will be holding its 3rd Annual one day meeting on Advanced Analytics and Big Data at the BMA House in Euston, London, UK and already the speaker line up is generating intense interest – more details can be found on www.analytics-events.co.uk.

This year one focus of the meeting will be on Analytics as a specialist skill set that is singled out as a profession in its own right.  Three of the speakers will talk about how the Analytics professional can be certified, chartered or even a CEO of their own highly successful Analytics start-up.

One of our speakers is a CEO of a string of highly successful start-ups and will be talking about how his current start-up specialises in using data for behavioural and predictive analytics.  I asked him recently about his rich and extensive experience of getting engagement from venture capitalist firms to support his start-ups and what could be shared as his lessons learnt, with our readers.

“It is important to keep in mind that venture capitalist firms receive hundreds of business plans and they do not have time to look at all of them let alone evaluate them, but essentially be aware that venture capitalist firms specialise and work in preferred markets”.

Venture capitalist (VC) firms can specialise according to industry, sector or within an investment range, for example they may have a fixed overall investment amount, referred to as their ‘bite size’ and this will dictate the size of the fund.  Many VC firms have a number of funds each with a certain ‘age’ that determines the maturity of the companies they will invest in.  As our experienced start-up CEO explains, “if you have a fund of $500m to invest, it cannot be done in $500k chunks and if that fund is 5 years old, then you may only be investing in an existing portfolio companies and not looking to take on new ones”. 

There are also firms that only specialise in the company ‘stage’ to invest in, such those that are already generating revenue, or those that focus on series A or B rounds post seed investment, or those that only focus on start-up seed investments. 

What is important is that before you approach a venture capitalist firm spend considerable time understanding them, be clear in your mind about why you have chosen them and what you are asking from them.   If you are an industry specialist start up looking for $500k seed investment, don’t approach a firm who focuses on Series A rounds of $2m or greater in a completely different industry to you.

Good venture capitalist firms will always have considerable information on their websites enabling you to do plenty of careful research in advance and this will also give you a long list of prospective firms.  Then short list it down to about five approachable firms.  Get advice from experienced friends and associates to help you with that short-listing process, as their comments will be valuable.

Once you have that shortlist and you have a complete understanding on how each of your shortlisted firms work, you are ready to approach them, but wait, how should you approach them, you ask?  With a business plan, of course!

A ‘Business Plan’ is probably the most common term known to man and yet the least understood or prepared well.  You may hear that there is no such thing as a perfect business plan template to follow, but I would argue, that there is such as thing as a well communicated idea.  A business plan is exactly that, an idea that is being communicated well, on paper.  It must not be too long and not too short, yet it must cover the key points with clear explanation.

Our highly experience start-up CEO recommends visiting the ‘Insights’ page of Highland Capital Partners {http://www.hcp.com/insights} for excellent advice, and considers them to be a top class venture capitalist firm, adding “When you make your first approach, start maybe with your least favourite on the short-list. That way you will get good feedback, practice, constructive criticism to hone your pitch/presentation, before you meet the more favoured”

So, what is most important to a venture capitalist firm, you may ask?

Three things…

  1. Quality of the management team and their experience

  2. Quality of the management team and their experience

  3. Quality of the management team and their experience.

“This must come over very quickly and succinctly in the Business Plan and PowerPoint pitch”

If you have caught a Venture Capitalist firm interest and they decide to evaluate a business plan, then they dig deep and focus on what is important to them.  

Peter Bell of Highland Capital Partners explains that he looks at two things, the quality of the team and size of the opportunity.

“On the team, I look for entrepreneurs that are passionate and have hunger and relevancy.  Hunger means that they have the energy-level it takes to build an enduring business.  Relevancy means they have the smarts, the industry expertise and the network to garner an unfair share of resources in a quick period of time.   For the size of the opportunity, I look for bold products with high-sustainable margins and significant value propositions.”

When I asked what where the most common mistakes made during the approach and pitch, I was given, what appeared to me to be three very obvious mistakes, and yet apparently almost every first time start-up enthusiast, falls into one of these mistake categories:

  1. Selling/over-selling – the pitch to a VC firm is not a "sale" - the VC firm is being asked to be a co-shareholder, so it is important to ask them good, intelligent questions.

  2. Unsubstantiated claims. Have good, concise, reputable third party validation of any claim you make, (e.g. Market size, state of competition, etc)

  3. Saying too much about the idea, not enough about the team. It is well known amongst VC firms that many can see an opportunity but very few can actually execute it with a solid team – so a VC firm will be constantly be thinking ‘why does this team stand a good chance?’

Conroy Mulloy of Highland Capital Partners gives this advice to new entrepreneurs:

“A healthy dose of entrepreneurial paranoia is a good thing. Yet, don't be so afraid of competitive threats that you don't openly share your company's story. Telling your story will lead to meeting people who have relevant experience and expertise from which you could benefit. It’s these relationships that will open other doors for you in terms of funding, recruiting and partnerships as well as provide you with the necessary advice and mentorship to help you make the right decisions.”

So if you are thinking of starting your own start-up, my advice would be to begin networking and fostering partnerships with people who have relevant experience and expertise to help you make the right decisions.  The ORS Analytics Network is the perfect place to meet like-minded individuals who could possibly help you start your own Start-Up.

This article was written with input from Alan Hambrook, Zoral Group, co-founder and Chief Executive Office.   Zoral has one the largest Artificial Intelligence/Machine Learning research centres in Europe.  Alan started his first software company in 1981 and since then has founded, built and run a number of successful, multi-national software companies specializing in complex, packaged software products. He co-founded the Dodge Group in 1991 (acquired by Flexi International), followed by the banking systems and analytics company Aleri Inc (acquired by Sybase) in 1998 where he was CEO and Chairman until 2004.

Alan is also the former Chairman of aiHIit Limited (AI/ML based unstructured data categorization); former Chairman of Future Route Limited, (Inductive Logic Programming and behavioural analytics); former non-executive director of Prevx Limited (behavioural malware detection); former Chairman of Packet Exchange Limited (network services provider).

Alan will be presenting at the Analytics Network Conference ‘Developments in Big Data’ on the 30th April 2014 on the subject of advanced behavioural and predictive analytics using unstructured, social and behavioural data.



Saturday, 1 Mar 2014
Sayara Beg

About the Course

Machine learning is the science of getting computers to act without being explicitly programmed. In the past decade, machine learning has given us self-driving cars, practical speech recognition, effective web search, and a vastly improved understanding of the human genome. Machine learning is so pervasive today that you probably use it dozens of times a day without knowing it.

Many researchers also think it is the best way to make progress towards human-level AI. In Andrew Ng's Machine Learning course, he discussest the most effective machine learning techniques, offers practice in implementing them and getting them to work for yourself. More importantly, he will point to not only the theoretical underpinnings of learning, but also the practical know-how needed to quickly and powerfully apply Machine Learning techniques to new problems. He will also touch on some of Silicon Valley's best practices in innovation as it pertains to machine learning and AI.

Andew Ng's Machine Learning is a free online course which provides a broad introduction to machine learning, datamining, and statistical pattern recognition. Topics include: (i) Supervised learning (parametric/non-parametric algorithms, support vector machines, kernels, neural networks). (ii) Unsupervised learning (clustering, dimensionality reduction, recommender systems, deep learning). (iii) Best practices in machine learning (bias/variance theory; innovation process in machine learning and AI). The course will also draw from numerous case studies and applications, so that you'll also learn how to apply learning algorithms to building smart robots (perception, control), text understanding (web search, anti-spam), computer vision, medical informatics, audio, database mining, and other areas

To enrol, simply sign up on  Coursera and enrol. https://www.coursera.org/course/ml

Sayara (Analytics Network Chair)



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