Alexander Flint Mitchell, MSc Business Innovation with Entrepreneurship alumnus and founder of Blind Cupid shares his experience of raising capital for his business venture.
Like most first-time entrepreneurs, Alexander was a total novice when it came to funding startups before setting up his own business.
Having now secured £175,000 to launch, with the prospect of completing fundraising over the next six weeks, he shares his experience of raising capital for a startup.
Angels and venture capital
When Alexander began fundraising for Blind Cupid, a matchmaking app that uses systematic philosophy and artificial intelligence to match users based on their fundamental values, he took a traditional route of approaching angels (high net worth individuals who provide financial backing for startups) and venture capital firms.
“We contacted many venture capital companies and had some very successful conversations with them,” explains Alexander. “These companies are usually specialists in a certain field and it’s common to be asked to deliver as many as five or six presentations to secure funding. While we would obviously spend some of this time talking about the business idea, the key thing to get right was the financial information.”
The downside of this method of fundraising? Time.
“Venture capital funders are demanding and even getting a response from them, never mind retaining their interest, requires a lot of time and effort,” explains Alexander. “There’s a lot of back and forth, often with your whole team needing to attend calls or presentations, which can feel never-ending when you’re in it.
“We also faced difficulties with our product not fitting neatly into a specialist area. The app we’re developing combines matchmaking with brand new artificial intelligence that has never been built before, and so there are no investors currently specialising in it. Given the amount of money that venture capital funds invest, it’s understandable that they would prefer to go with something tried and tested. We raised around half the funds we needed through this method, but I began to look for alternatives to speed things up.”
Gaining crowd appeal
Many different methods of fundraising are covered in the Entrepreneurial Venture Creation module taught at Birkbeck, among them crowdfunding.
Alexander admits to being sceptical to this approach: “I had the impression when I started that crowdfunding was on a smaller scale and more about conventional ideas than disruptive new businesses – I had no idea that companies do their series A and series B rounds on crowdfunding.”
While individual investment amounts can be much smaller, as little as £10, on crowdfunding sites, Alexander now sees this as an opportunity:
“Compared to venture capital, crowdfunding is a really quick and innovative way to finance startups,” he says. “The main difference is that our investors through crowdfunding are likely to also be our users, which is really exciting. Even if they only invest a tiny amount, they will benefit from a future IPO – it’s similar to holding shares in the stock market.”
The personal touch is also something that appeals to Alexander and the ethos of Blind Cupid:
“We aren’t just trying to match people together; we really want to make sure that these matches are accurate and that once you meet someone you will stay together. We’ve done it for 80% of our beta test users, and now we want to do it throughout the rest of the UK and world. It’s an unusual business concept in a way, because we don’t want people to come back – we want people to find the person that’s right for them.
“Our business model is very different from other players in this market because of this — and other reasons. We offer a premium service which gives our users access to podcasts, blogs and more written by experts that advise them on every aspect of their lives. Topics include how to discover who you really are, what self esteem is and how to build it, how to nurture a healthy relationship and more.”
Blind Cupid have now launched their crowdfunding campaign on Crowdcube. For Alexander, it will be a relief to move to the next stage:
“When you’re looking for funding, it feels like it’s never-ending, but I know that when it’s complete I‘ll forget the months that it took. Many things in life are a learning curve and you find what suits you best. It’s great to finally see it all come to life.”
