With 17 year old Nick D’Aloisio recently selling Summly to Amazon for £17M after having received initial funding of over $300,000 it is hard to argue that there is not decent levels of funding availably for tech startups based in, and around, Tech City and ‘Silicon Roundabout’.
However with these increased levels of funding it appears that a basic bootstrapping business mentality has left many of these startups and also many are being targeted by consultants who say they can add value to a new start by making introductions on their behalf or by event sales teams offering to place their company logo on an event’s website for a fairly large fee.
There is no doubting that many businesses, if not all, can benefit for an additional board member who has proven history and contacts in the sector to advise on past mistakes, show where new avenues lay and by making general introductions.
Also many, if not all, founders of startups could do with having a mentor or support framework around them for those first few weeks, months and years.
Many large companies are offering just this kind of framework – Telefonica, owners of O2 have created the Wayra academies, Google has its London Campus and Canary Wharf has just opened Level 39. All offer healthy incubator led environments with peer-to-peer mentoring, networking and access to advisors essentially for little or no cost.
There is also TechHub offering shared space and a community feel along with an events programme at a price point appropriate to bootstrapped startups.
However we are also aware of new events being launched like the Innotech Summit being held on April 26th who in addition to charging a fairly hefty, but possibly acceptable £150 entrance fee to the day long event have also been approaching startups with an opportunity to meet head speaker of the event, London Mayor, Boris Johnson and have their company logo featured on the event website for £2,500.
Established tech entrepreneur Duane Jackson, CEO and founder of Kashflow accountancy software said: “£2.5k is a lot of money to a startup. I hope there is no way anyone would part with that kind of cash just to be seen with the mayor and have their logo online, I am sure that Boris would be appalled if he knew how the team behind InnoTech were marketing this summit”
Whilst this event is not alone in potentially cashing in on the lucrative market, and the organisers could argue that an event which features Boris Johnson, Rohan Silva – Senior Policy Adviser to the Prime Minister, Rob Wells, Google UK and investors and legal advisors will generate a healthy ROI.
There are also advisors and mentors looking to work with these startups to help them grow market share and plan for exit, many like Ariande Capital led by Julie Meyer offer these services either on a clear and open fee base or as part of an investment package.
However we have been made aware that there are some firms offering service packages of around £3,000 – £8,000 a month with founders trying to reverse themselves out of such deals after seeing very little by way of value.
As with everything due diligence and research are essential, but in this fast-paced space it appears that Caveat emptor or “Let the buyer beware” is really the motto to live by.