Warning – This Blog Post May Radically Alter Your Business
7
on July 24, 2009
We’ve got some huge positive changes happening here at KashFlow – and it’s all because I was asked one question.
We’ve had lots of interest from Venture Capitalists over the past year or so, and a few months ago I thought it might be fun to have a chat with some of them to see what was possibly on offer.
One particular expression of interest caught my attention – essentially I’d have taken a 7 figure sum personally and the business would have a few million to help it grow more quickly and I’d still have a reasonable amount of equity. Nice!
Being relatively new to this kind of thing, I spoke to a few of the elders (they’ll kill me for calling them that!) on the tech scene for some advice. Mainly William Reeve and Alex van Someren.
William asked me what I’d actually do with the money which really got me thinking. I told him we’d relocate the business to London, hire a CTO I’ve had my eye on for ages plus lots of other great stuff that I’m not going to disclose publicly – but the move to London is the pivotal part of it all.
He then asked “If moving to London is such a good idea, why not do it anyway?”
A little time spent with a spreadsheet showed we could move to London, hire the CTO and implement a lot of the plans for far less than I thought. In fact, we can actually fund it out of existing cashflow.
So I’ve said “thanks, but no thanks” to the VCs, hired the CTO I wanted and negotiated a lease on a new office in London (SE1).
It still leaves me without the big chunk of capital that would have kept the family happy and enabled us to move down to Brighton as we’ve been planning for a while. But we’re moving to Brighton anyway now - just more modestly than originally planned. Once we’ve grown some more I’ll consider selling some of my shares to get some capital together.
So the question to ask yourself is “What would you do with your business if you received a few million in investment?”. Then look at those plans, pick out the important parts and find out what it’d really cost to do it.
You might be pleasantly surprised.
7 Responses to Warning – This Blog Post May Radically Alter Your Business
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Hi Mark,
It wasn’t so much that the money being offered wasn’t ‘enough’. It was more that a) we didn’t fancy changing the dynamics we currently have by introducing a VC to the board and b) I’m enjoying what we’re doing here at KashFlow so I’m not looking to exit personally at the moment.
We certainly do have a plan that we’re implementing that will (hopefully!) see the business grow beyond any of the current valuations.
As I just said to someone else about the situation, it means we (the existing shareholders) take all the risk – but we also get to reap all of the rewards.
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It seems kind of obvious but expanding for expansions sake it always a bad idea so it’s nice to see you didn’t get carried away by the pounds signs as they lit up your eyes and took stock instead.
I have to ask what’s so special about London though unless it gives you access to resources you couldn’t otherwise have tapped into (like your CTO or server/technical resources)… It’d be interesting to know, assuming you can share..
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Hi Martin,
A number of reasons for choosing London – including strategic hires (the new CTO) and proximity to existing and potential commercial partners
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Well done Duane.
I cam across the same advice a few weeks back. Essentially it was to answer the question:
If money was no object what would you do as regards the business?
That can help drive priorities and activity as it evidently has done with you.
The related question is how much more than the 7 figures you would have receive will be ‘enough’? Do you have a game plan to make the business worth so much more that the offers would be that much higher and would you know what you would do with the extra? Or would it simply be a nice ‘problem’ to have?