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Software Companies Failed By Funding & Support Structures: New Research Findings

Posted by MalcolmEvans on Tuesday 26th of July 2011 | 1 Comment(s)

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Our recent research has shown conclusively that there is a dearth of funding and specific support for early stage software companies in the North West.

We have come to this strongly evidenced conclusion following extensive engagement with promising companies and through an ongoing analysis of the practices of individual funders.

Over the last 8-9 months we have interacted closely with over 20 software operations in the broader region. We have followed numerous "live" funding efforts and analysed both previous deals and instances where attempts to do deals have failed.

We have assessed the evaluative capacities and investment strategies of most of the main funders active in the region (which is not many!) and we have also tracked the assessemnt capacity of the various banks and also the real support input afforded by the universities, the incubators and business parks and by other formalised support agencies.

Overall, the software support environment is poor (we have tried to discount from our impressions and findings projects which we felt were themselves below a reasonable threshold of commercial credibility and viability - one must guard against conflating losers' angst with poor support).

However, by deploying Software as a Service (SaaS), software companies now have much greater potential to go global quickly than most other sectors.

Manufacturing companies take much longer to create distribution networks and many of the major potential markets (particularly BRICs) still have barriers to entry.

There should be no reason why the North West cannot produce some exciting software companies that can grow quickly – the region certainly has no shortage of talent. These are the barriers we are removing:

1. Limited Funding

Unfortunately, the UK and the North West in particular has a very shallow pool of individuals/organisations able and willing to step up to the mark and fund leading edge technologies. See, for specific examples, our recent article on the widespread lack of evaluative capacity within this region’s corporate financemainstream.

We are committed to remedying this situation: join with us if you think you can usefully become involved – we are currently pursuing funding sources locally, regionally, nationally and internationally. We are assembling our own lines of support, we are reaching out to tax experts and Enterprise Investment Scheme promoters to assist us in freeing up investment to help build great NW companies. We invite all professionals who have competence and ambition in these areas to talk with us.

2. Inadequate Support

We are currently working closely with a number of ambitious companies. From these engagements it is also patently obviously that there is a poverty of organisations within this region who can meaningfully contribute to the growth of sophisticated software businesses.

We are prepared to say it is as it is: vacuous innovation and mentoring programmes are grossly insufficient in the pursuit of world class companies. Cod psychology and generic rhetoric about growth and innovation is no substitute for technical and marketplace expertise.

Funding Enterprise has already assembled the core of what is fast emerging as the strongest specialist knowledge bank in the NW: come and talk to us if you feel you can contribute or benefit.

3. Poverty of Ambition

Software in the NW has become lop-sidedly design and locally focused in its cultural and commercial orientations. We are calling for a rebalancing with productisation and global ambition.

Come and talk with us if you share our vision that the NW software community deserves a larger presence on a world stage.

Want to learn Ruby and Rails?

Posted by RicSwirrl on Tuesday 19th of July 2011 | 0 Comment(s)

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Tekin Suleyman and I will be delivering a 3-day, affordable Ruby on Rails bootcamp at the MadLab in Manchester, on 17th-19th of August, as part of the Omniversity programme.

The course is aimed at developers who already know a bit about web development and object oriented programming, but have limited or no experience with Ruby or Rails. The course will provide the skills, knowledge and experience necessary to build and deploy your very own Rails applications from scratch.

Why Learn Rails? Ruby on Rails is a powerful, open-source framework that enables you to quickly build sophisticated web applications. Rails is mature enough now to provide all the benefits of enterprise-level frameworks like .Net or Java, but it's designed for developer happiness. By taking an "opinionated" approach, many common software design decisions are made for you (although there are always ways to change the defaults), allowing you to get on with the important task of actually implementing your business functionality. There's also a massive community of friendly developers and thousands of open source libraries (gems) which you can use in your applications, preventing you from having to "re-invent the wheel".

As well as 3 days of intensive learning, the £360 course fee also includes hot lunch. You can find out more and sign up on the Omniversity website. If you have any questions, you can contact me: I hope to see you there!

Don't Be Afraid To Ask

Posted by MalcolmEvans on Sunday 17th of July 2011 | 0 Comment(s)

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When dealing with potential investors it is vital that you either rapidly establish the outline basis of a deal, or you disengage.

Sad to relate, the North West is full of people who will listen to you all day long - all year long in fact - and still neither commit nor walk away.

Those of us who spend our lives building business know how incredibly energy and time consuming it can be to keep breaking off to perform functions such as chasing investment.

Besides this potential waste of energy, the other risk is that by stumbling into a protracted and ultimately futile process, you can miss the sweet spots of funding requirement within your growing project.

There follow below two sobering real examples of how projects can become stalled, or even runined, if you become ensnared with people who are not properly capable of forming a rounded opinion within a reasonable timescale.

The key learning is that you, as a business builder, must very early in the process not be afraid to ask key questions:

On what basis will you invest in this?

What will I need to establish with you?

How long is the process and what are the breakpoints at which we both need to walk away?

Remember - it is right and proper that investors make a complete assessemnt for it is a risky game they play. But you must equally not allow yourself to be drawn into a dance of death with people who are never going to join you in a sprint to success.

Here are the latest horror stories that illustrate all of this:

1. Starved to death:

It seems like the miracle of the loaves and the fishes, the amount that has been achieved. I was amazed on visiting the company to see the spread of product – and this is real, boxed, manufactured hardware – and the astonishing wide geographical presence and the real thought leadership in the field. It shouldn’t have got so far on a shoestring – but it has.

A couple of VCs have been looking…….and looking…….and nothing yet.

They don’t buy themselves into superb marketplace positions and take bold, strategic positions, these kind of people. They sit on the sidelines, waiting for absolute proof and absolute certainty and absolute success before they reluctantly roll out their few pence, wanting them back with heavy interest as soon as possible. They don’t venture fund, they play a banking game almost totally removed from catalysing and significant value creation.

And the business owners wait and hope, wait and hope, and provide just a little bit more information, a touch more clarification, a step more progress. It’s been two long years now, the wait and hope game and still…….nothing yet… much time and energy diverted from business building, jumping through hoops.

But the miracle won’t last forever. In my view the international game in this market has already begun to move on. The magic moment will soon be lost, I fear. If it’s going to happen, it needs to be now.

The tyre kicking VCs will be vindicated before too long. “It was never going to scale”. “There was always too much competition”. “Management couldn’t stretch to the big time”.

Of course, when you are standing over a corpse you can say just about whatever you like. It’s not going to suddenly stir and say, “Hang on guys, it was you who starved me to death!”

2. The monsters always kill everyone:

Eight months it has been going on, this marathon of investment evaluation – and now it has gone horribly off. I’ve seen the fatal syndrome many times. Born of crap evaluation abilities it gets rolled out at some time when potential investors are floundering around for reasons to say “no” because they are fundamentally incapable of knowing where to look for reasons which might justify a “yes”.

On this occasion it has come at the final moment from left field, a final curveball because the story of relentless, profitable growth has somehow failed to confirm a deal already sealed with a handshake.

Obviously there is a time and a place for pointing out that majors and incumbents can dictate the landscape of the possible. I wouldn’t be minded to back a start-up chain of new coffee bars right now, given that the marketplace is saturated and consumer spending very fragile. And, however brilliant, I wouldn’t be confident in the plans of a software engineer in Kendal producing a mass market operating system that is going to strike terror into the MS product chiefs in Seattle.

However, these are some examples of rank evaluation I have heard recently – and what are the nonsense propositions they imply:

“What if Facebook does it?” – the future of social media is locked to one, existing platform.

“What if Paypal does it?” – one company will own the future of digital payments.

“What if Tesco does it?” – all other retailers are dead.

“What if Amazon does it?” – there is only space for one online retailer.

“What if someone else does this?” – I’m sorry, I really haven’t a clue and am simply wasting your time and energy talking to you, pretending that I am a competent would-be investor…….

- Malcolm Evans is the founder of Funding Enterprise, the NW's theory, research and practice leader in earlier stage corporate finance.

The Quality of Money

Posted by MalcolmEvans on Saturday 9th of July 2011 | 0 Comment(s)

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Much of the debate around earlier stage investment revolves around the so-called "funding gap".

There is, indeed, a shortage of funds in certain areas, although the issue is much more subtle than any shortage of capital per se.

A related issue, which we feel is almost completely overlooked, is that of the quality of money, whether investment carries with it benefits over and above the raw monetary value of the sum invested.

How can one tranche of £250K investment be different from another tranche of £250K? A friend asked me this a couple of days ago as he considered which of two offered packages to accept into his fast growing business.

I told him about our theory of The Quality of Money and I am sharing it with you, too, as it has grown through many live funding scenarios into a useful and unique tool to assess the optimum possibilities within investments.

As with all our research work, it is designed neither to prioritise the interests of financiers, nor those of investee businesses and projects. As ever, the focus is on value creation itself.

The Quality of Money evaluates seven dimensions to investment packages -


Can your potential funder bring knowledge and expertise to the table? Do they seem to be asking the right questions? Are they challenging you? Don’t for one minute think that a potential funder who knows too little, asks too little and over whose eyes you feel you can pull the wool is any way a good funder.

Businesses need funders who can evaluate propositions thoroughly, helping you spot things you may not have fully explored.

Money which is poor at evaluation may help condemn you to several exhausting and unproductive years chasing a dream which is simply not viable.


Is your potential funder bringing new connections? Are they capable of extending your horizons over new marketplaces, new potential partners and new sources of complementary competence?


Can your potential funder quickly establish a constructive relationship with you (and your key people) which brings significant motivational and management support? Are these people who you would talk to about your fears and your dreams anyway? Do they bring not only general business acumen but also expertise specific to your own domain of operations?


Does the figure which your potential funder is prepared to invest seem about right? Too little and you might be left nowhere, having not achieved anything particularly significant and thus placed in a very poor position with regards to any possible further funding. Too much and you might be both taking unnecessarily high dilution and also possibly storing up future problems concerning future funding once the initial hype around your company subsides and you have to settle in for the hard grind and hard-won growth that is the normal.

Have you worked closely together to come up with a figure which gives strong prospects for growth but which also recognises the ongoing realities of funding and sustainable value creation?


Is your potential funder offering you an investment package which fits in with what you have discussed together is in the best interests of sustained value creation? Or should there be a much greater degree of equity than there is debt, given that the company is going to be engaged in R&D for quite some time and will struggle to meet repayments on top of its business building activities? Or is the company growing very quickly through sales and, with the short term requirement of some of the funding, is there too high an equity component and would it be better to have more debt?


Is your potential funder taking reasonable steps to protect their investment, or are you being tied in knots, with every possibility of losing all autonomy over your affairs?

Funders are absolutely entitled to seek to strike a good deal. So long as the valuation at which an investment is made is within a bandwidth which does not limit the ongoing potential for good value creation, we are not overly concerned about valuation alone.

However, overly intrusive or limiting conditions can create damaging friction, or in worse case scenarios, can lead to relationship breakdown and total project collapse.

There is little point in tying a project in such knots that the life is strangled out of it. A consideration of conditions leads on naturally into:


What happens, if you expect that you will need to raise more money in the short to medium term, once the potential funder’s money runs out? It is amazing how little thought is given to this vital issue.

Follow-on needs to be addressed up front. Where might it come from? How will this work in relation to control of the process and agreements between the promoters and this first funder?

Bad funders will either not consider it, or, worse, exploit follow-on requirements to gain total control over a project.

Bad promoters may be hopelessly over-optimistic in what they purport to achieve through a funding round, or may simply forget to think ahead in their over-excitement at landing some much-needed monetary support.

In summary:

Funders – your prospective investee should be thoroughly assessing what you can bring to the party as well as the money. If they are not, then maybe they are not the best candidates for you money. And if you have little to offer beyond your money, then perhaps you shouldn’t be in the direct investment business.

Funding seekers – if you are not exploring the seven dimensions of The Quality of Money as you seek investment, then you are dramatically limiting your chances of future success. In fact, if all you doing is looking for money, then the best thing a competent funder could do is to tell you either to reconsider, or even just to stop doing what you are doing.

Malcolm Evans is the founder of Funding Enterprise, the North West's leading authority on earlier stage corporate finance.

Business Model Innovation Masterclass, 12th July 9:00am-1:00pm

Posted by corridorconnections on Wednesday 6th of July 2011 | 0 Comment(s)

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Enhance the value of your business proposition by introducing new and innovative business models.

Innovation is still identified with breakthrough developments, such as the discovery of penicillin or the structure of DNA, but research shows that most innovation activity has been in incremental improvements to business models.

Many businesses fail to understand that product-based innovations are easily copied by competitors and made obsolete in a short period of time. Novel business models are much harder to replicate by competitors as they involve fundamental change to the way you do business.

Join us for this half day event and learn:

· why a business proposition based only on a novel product is unlikely to succeed for your company;

· the concept of business model innovation as a compelling aspect of your business proposition;

· the various aspects of the business model (e.g. revenue model) that can provide a true and lasting source of innovation.

Speakers are John Scott, New Media Partners, and Dave Crowther, Innovate with Confidence.

To Book: . Contact or 0161 2324594. LIMITED PLACES LEFT.

Business Transformation Masterclass - Friday 8th July, central Manchester.

Posted by James-Crawford on Friday 1st of July 2011 | 0 Comment(s)

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Whether you are in a startup, an established TechCo or a more traditional organisation you need to continually transform your business to survive.

So what is transformation?

By definition it involves more than doing the basics well – every part of the organisation must work together in a new way to meet new client needs and embed a culture of systematic continuous improvement. Involving strategy, people development, process improvement and change management, you should see its impact clearly in your business results.

Come and explore more with us.

When: Friday 8th July 2011, 0915 to 1315
Where: Central Manchester
Who: James Crawford and Val McKie of Touchpoint Change (a Techcelerate member) lead this event.

To book:

See Complete the booking form and email back to us at or call us on 0845 130 1357.


This is an interactive workshop that explores what it takes to transform an organisation. Transformation is considered in its widest sense - making a sustained positive impact on customer satisfaction, quality, productivity, staff engagement, financial efficiency and contribution to society.

Why: In June we ran a breakfast event which showed how we transform organisations across the private and public sectors. We explored why it is difficult to introduce change consistently and why we struggle to make it stick. Delegates were asked “what do we need to do to change our organisations to be more consistently successful in the long term?” The answers included:

• Change the culture
• Have strong leadership and good communications
• Encourage new ideas from new people
• Remove the short term focus, lack of long term strategy
• Collaborate across the organisation to avoid fragmented targets and teams
• Need to break down self interest and fear and blame

These topics will be addressed during the Masterclass. It is offered to explore the topic in more depth and help you apply the lessons to your own organisation.


- How well do we manage change currently - and are the benefits sustained?
- The Red Bead Experiment - a thought provoking exercise
- Deming's system of management and the 4 key disciplines of change
- If we designed our organisation from scratch ...
- The implications for us as we start from where we are today
- People and behaviours - why we waste many of our good ideas
- Leadership, change, improvement and innovation - how to get it all together
- Plenty of time to network, discuss and apply the thinking

Techcelerate Member rate:

£80 +VAT (normally £100). Bring a second or third person for half price.

Come away with an infectious enthusiasm to make a difference to the way your organisation works. This will be an entertaining and informative session!

Recommended Reading List - July 2011 by Techcelerate

Posted by superuser on Friday 1st of July 2011 | 0 Comment(s)

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Recommended Reading List - July 2011 by Techcelerate

Jason Freedman, co-founder of FlightCaster

You don't find a technical cofounder, you earn one. Having an idea is one piece, but it's a very, very small piece. In fact, it's so small that it's actually better to earn a technical co-founder without the idea in place so that you guys come up with it together. When neither person has an idea prepackaged with some degree of emotional attachment, it becomes far easier to engage in honest customer development, rapid iteration,......

Best of Eric Ries - Lean Startup Methodology

Posted by Techcelerate on Saturday 25th of June 2011 | 0 Comment(s)

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Eric Ries is the author of the popular blog Startup Lessons Learned and the creator of the Lean Startup methodology. He co-founded and served as CTO of IMVU, his third startup, which has today has over 40 million users and 2009 revenue over $22 million. An entrepreneur in residence at Harvard Business School and a frequent speaker at business events, he advises startups on business and product strategy using the Lean Startup approach.

Here is a collection of some of content on what he preaches:

RailsConf 2011: Eric Ries, "Lessons Learned"

Seattle GTUG - The Lean Startup

Entrepreneurial Thought Leader Lecture Series

Testing Your Assumptions

Recommended Reading List - June 2011 by Techcelerate

Posted by superuser on Wednesday 15th of June 2011 | 0 Comment(s)

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Recommended Reading List - June 2011 by Techcelerate

reid-hoffman Insiders Tell The Story Of LinkedIn's Stunning Success. A month after its IPO, LinkedIn has a $7 billion market cap. We spoke to Reid Hoffman, LinkedIn's executive chairman and principal founder, as well as two former long-time executives to learn the story of how a company founded amidst the rubble of the 1990s bust managed that feat. Besides Hoffman, these sources preferred to remain anonymous in order to keep their comments candid.

Round up of Northern Tech Stories - June 2011 by Techcelerate

Posted by superuser on Tuesday 7th of June 2011 | 0 Comment(s)

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Here is a round of Northern tech stories in June 2011. Do let us know if we missed a tech story.

North East

+ Aidan Garnish launches to capture discussions on books.

+ Palringo helps 3M's sales force communicate better.

+ North East tech startup, c launches their service.

North West

ScraperWiki secures £175,000 grant

ScraperWiki was started by Julian Todd and Aidan McGuire. The company has seed funding from 4iP, and the founders, and according The Business Desk North West, jut secured £175,000 grant to expand their business. Well done to Francis Irving and the team.

MEN Business reports on the launch of Intuitive Business Intelligence, the best success story to emerge out of Techcelerate community. For the first time, Tony has revealed the £5 million exit value of Version One.
The Hut Group The Hut Group acquires for £53 million. Here is the coverage of same by The Business Desk.
Mike Fahy reports on the latest results of GB Group
Trinity Computers Chris Barry reports on the acquisition of Trinity Computer Services of Bredbury for £3 million by US-based Calyx Software
Mike Fahy updates the latest on I3 Group. Various members of H2O Networks attended number of Techcelerate events and workshops over the years. Let's hope the remnants of the concept (i.e. fibres in sewers) survives whilst retaining their north west presence. David Casey reports further on the debts left by H2O Networks estimated to be £63 million.
ANS Group plans to pull out of from the PLUS market, due to lack of liquidity. Question on my mind: How do you make your stock attractive, and differentiate from the rest?