42 - Progress, Problems, Plans - F20
A phenomenal two weeks. We’ve had a fantastic first investor commit to our fundraising. We released the final big item in our pre-Xerocon roadmap - one click posting of intercompany recharges back into Xero. Griff did an incredible job on this. We had a spectacular two days at Xerocon this week. We got great validation of our mission to mend month end. We vastly exceeded our goals for the number of leads who have the need for intercompany recharge automation that we can serve with Mayday Recharger. Here’s the latest progress, problems, plans (PPP) post. It covers progress and problems from building Mayday over the last two weeks. And plans for the coming two.
Goals For the Last Two Weeks
These were the goals set in the previous PPP post:
Prepare a financial model to support our fundraising - met;
Have our first committed investor - met;
Set targets and execute brilliantly to get the most out of Xerocon (20 & 21 July) - met;
Have posting recharges one click back into Xero (the last big thing on our pre-Xerocon roadmap) live - met
Progress
We’ve got our working financial model in place. As an Excel nerd at heart, it was fun to take a morning to put this together. More importantly, it’s been hugely valuable for Griff and I to have this to anchor our plans. It makes explicit our assumptions and what the key drivers of our plan are. Startup financial projections are always wrong. But as Eisenhower said: “planning is everything, the plan itself is nothing”. You learn so much from doing the exercise;
We’ve had a brilliant start to our fundraising. Subject to being able to raise money at a valuation we’re comfortable with (i.e. a level of ownership dilution), we’re raising at least £400k of investment. We’re only targeting angels or family offices. Venture capital isn’t the right type of funding for us at this stage. We’ve had a £25k commitment from a brilliant accounting tech angel who I’ve known for nearly 10 years. I’ve always wanted to work with him. I’m absolutely thrilled he’s committed to invest. He was in London for an event. I always find pitching in person preferable if the opportunity is there. His trains were delayed so we started a bit late. I needed to get home for my children’s bedtime. But the conversation was going really well so I decided not to halt things. I then did the journey from the top of Finsbury Square near Old Street running to Bank and then the trains back to Earlsfield before running to my door - in exactly 30 minutes. Which I was pretty proud of, although it was a pretty warm evening so I doubt the people near me on my trains regarded it quite so positively. The investor confirmed his commitment a couple of days later - Griff and I were absolutely thrilled. I’ve only had two other investor pitches so far, including one StartingUpAgain reader who got in touch to arrange a pitch. Excited to accelerate things now from the great foundation we have;
Xerocon was brilliant. We had a great two days on the stand with Griff, Bailey and I. We set goals before the conference. I anticipated that at least 50% of the value would be brand building for our broader let’s mend month end vision and roadmap. If we got 10 leads for Mayday Recharger then that would be good, 15 would be very good and 20 would be great. We scanned 116 leads over the two days. 67 of them had a need for intercompany recharges and Mayday Recharger. There is much more of an immediately addressable opportunity than I’d anticipated. Our red branding really stood out. Our love month end stressballs were a great hit. We’re feeling great about our decision to go out to Australia for Xerocon Sydney in September. It wasn’t just the volume but the quality and feedback was incredible. Highlight quotes included:
“it’s the best thing I’ve seen today”
“it’s one of those things you didn’t realised you needed until you see it”
“it looks too good to be true”
“it makes it look so easy. This is such a load of manual pain right now”.
We completed our pre-Xerocon roadmap on schedule. It was brilliant to demo the one-click posting back of your automated recharges into Xero. Griff did a beyond incredible job on this. He drew on product paradigms from Xero so that users would find things familiar. The end result is so elegant and intuitive. Demo’ing at Xerocon we repeatedly got feedback about how easy the product was to understand and follow the logic.
Problems
Valuations for pre-seed rounds like ours are inherently tricky. We got feedback from a couple of venture capital funds that, as a very credible founding team with the opportunity we’re pursuing, we could raise £3m at a £12m pre-money valuation. Whilst not the type of capital we want to raise, that was a useful reference point for us. People have very different contexts and reference points. You have to be of a certain disposition to be able to value a presently pre-revenue business at that level. We’d initially thought we’d raise up to £500k at a £9.5m pre-money valuation. We’ll get more data points on that in the coming weeks as we speak to more angels and family offices. As long as we end up somewhere in the £7.5-9.5m corridor then we’ll be satisfied with the level of dilution;
I need to ramp up the volume of fundraising conversations. We’ve had a great start. But I need to fill my diary with pitches. I’m lucky to have a strong network of fellow entrepreneurs in the accounting tech industry. Xerocon was a great opportunity to catch up with them. I’ve already had some great investor intros from them off the back of the conference and more to come over the coming days.
Plans
Goals for the next two weeks are:
Do my best to follow up well with our Xerocon leads and get the maximum number up and running on Recharger. I’m wary of putting a two week number on this as the process can take time, especially with summer holidays now in full flow;
Be at or over £200k committed to our investment round;
Be on track with preparations for our Xerocon Australia trip;
Have set and be on track for our pre-Xerocon Australia product roadmap.
Thanks for reading. See you in a couple of weeks!