Sean Park Portrait
Quote of The Day Title
In the beginner's mind there are many possibilities. In the expert's mind there are few.
- Shunryu Suzuki

The other side.

Image representing Seedcamp as depicted in Cru...
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Today I had the opportunity to be on the other side. Presenting our CiRX idea at mini-seedcamp London; attending as a ‘founder’ and not an ‘investor’ or ‘mentor’ for the very first time. And it was totally worth it. Not only was it valuable in the normal / traditional ways that seedcamp can help a founder but interestingly – although not altogether surprisingly – as an investor, it was very enlightening to sit on the other side of the table for once. I learned a lot. About CiRX of course but also about how a founder perceives the world (as opposed to an investor.) The only regret I have is that I don’t think I did a very good job of being mentored, especially with some groups and wish I could have another go. (Basically I talked too much. I know. Shocking.) Partly because well, I unfortunately do that sometimes, sorry. Partly because at almost a subconscious level, while I was supposed to be the mentee, my default tuning in this context is to be the mentor so sometimes I perhaps did both! And partly because I haven’t yet nailed the best way to succinctly articulate the value we see in the CiRX proposition.)

This last bit was a great takeaway because even though I probably knew that before, I definitely know it now and having muddled through a half-dozen live sessions has already now given me some ideas of how to better describe and deliver the value proposition of CiRX. Indeed it was funny to fall into the exact same trap I’ve (patronizingly? hope not!) warned so many founders about myself: ie to remember that 99% of the people you will speak to about your vision haven’t spent the last 6 months bathed in it and so the threshold of obviousness is much much higher than you think it is. What you take as given, is anything but to most people you will meet. In any event, I would highly recommend that anyone investing in early stage companies walk a mile in those shoes. A bit humbling, but more importantly very enlightening.

I’d like to thank all the mentors whom we met and really underline how much we appreciated their forthright opinions and incisive analysis. Farhad and I got a lot out of it and I suspect that we will tweak our plans based on some great insights and suggestions we received throughout the day. Also at the risk of sounding a bit soppy, I’d really like to publicly thank Reshma and Saul for the incredible job they have done building the seedcamp community and ecosystem. I am reminded of the summer of 2007 when I made a rash decision to invest in this new thing a guy I barely knew named Saul (who admittedly had come highly recommended) was organizing and thinking now what a terrific investment that has been. And that’s before getting any of my capital back!

Finally, I just have to say how impressed I was by the quality of the other teams that were invited. Really really impressive. Not so many in our investment space (although Subsify is a company that caught our eye and we’ll be interested to learn more about) but the two that really stood out for me were Editd and Memrise. Would be very surprised not to see these two make it through to seedcamp week in September. Eyequant too.

As for us, well we certainly have a lot to digest and a lot to work on…but that’s exactly what we hoped for.

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Permalink||Comments|Filed under 'Private Equity & Venture Capital'
  • Andraz
    Hi there

    I was in the seedcamp audience as well, hearing pitches and spying on best idea delivering techniques. I enjoyed your pitch, probably even more because I am a true follower of your blog, but also due to idea. Communication collaboration platforms are needed, even though one could say that everything has already been developed for all potential purposes.
  • Heuro
    I can only admire the transparency and openness of this blog

    It’s not surprising that the CIRx team might have struggled a bit trying to come across with a clear business message and ended up over-talking the pitch. Pitching a purpose-built corporate governance application to investors and clients is one of the most difficult pitches I’ve ever done.
    But why?

    First of all there is the issue concerning the understanding of the application domain. Imoh 99% of angel/VC investors dealing with start-ups don’t truly understand what corporate governance really means and entails. Primarily, because unless they have a background of a heavily regulated industry, most of the times they’d have never come across something similar. What is it? They ask puzzled.

    To explain it is not as easy as it looks. Corporate governance is a vastly overarching domain. It’s also a complex and fuzzy subject meaning that it touches many stakeholders with strong POVs and many different business domains (eg auditing, reporting, compliance, accounting, assurance, IT data management, IT integration, communication, workflow, security, regulation…)
    Then there whole issue of semantics involved which need to be clearly addressed and explained. What do we mean by framework? What do we mean by platform? What do we mean by corporate? And Who is the customer?… The semantics and ontology needs to be clearly understood for each domain and stakeholder group … CIO (TOGAF,COBIT, ITIL) CFO (COSO, GAAP, IFRS, BASEL, SOX) CRO (BSD, ICAAP, BASEL II, ORM) …. All of them??

    To solve the whole corporate governance business issue banks really need a collaborative, workflow-based, role-oriented, composite application that governs end-to-end all business processes involved. Alas most banks are organised around front-desk/backoffice and product lines supported by a myriad of siloed custom dev applications, proprietary interfaces, and non-standard IT processes; they are not organised around end-to-end business processes supported by standard IT processes. That is more complexity added.

    Such complexity and fuzziness –which is the core of the business issue- is very difficult to explain in a one-liner as investors would like; there is the risk of over-talking and investors don’t like that.

    Secondly as a result of all the above, and equally important, is the fact that most angel/VC investors won’t understand the business problem either. Is this a real business problem? meaning Isn’t this XYZ platform that you intend to sell another more of the same way to do the same thing? What’s the actual value prop? How do we make money with this? What are the hard dollar benefits for the customers? Precisely…

    ... Putting a hard-dollars label tag to the corporate governance problem and articulating the business case is a challenge in itself. First of all, because of the complexity, fuzziness, and number of stakeholders involved, obtaining relevant and accurate business data to support the business case is a big issue; the data –most of the times sensitive- is hidden in xls silos or not available. Justifying the ROI is very difficult without relevant data. Equally the hard savings are difficult to justify. And although there are a multitude of soft benefits that are easy to explain and understand, they are irrelevant in terms of ROI and TCO, TBO. And the ‘fear-of-regulatory fines pitch’ never works and never will.

    So what could possibly be a good approach for a start-up to pitch a corporate governance killer app? Certainly I’m not sure but based on the hard lessons I learned, a good way would be to show investors the benefits and savings for the customer first, two suggestions

    1) Reduce and limit the scope of the application domain to the maximum extent possible. Corporate governance is a vast domain. Find a sub-domain where there is clearly recognised pain that can be computed in hard dollars. Find a niche and provide a complete solution for that niche. A possible niche could be e.g. issues around Basel II Pillar 3 governance structure for disclosures, Basel II Pillar 3 Data governance/data quality/data gaps, Basel II Pillar 2/3 governance of internal controls, SoD, communication structure

    2) Show that the value proposition is structured around a big pain involving big numbers. If no big number nobody will listen.

    3) Base the business case, value prop and ROI model on FTE reductions and cost savings compared between current system and proposed new system. Use 5 characteristics to build the case:

    1. Total cost of processing governance reports/documents over a period of 5-10 years. This should be several tens of millions
    2. Total cost of consulting fees over a period of 5-10 years to continue implementing current system
    3. Total processing reporting cycle time in days per report/ document. Aggregate into total man days and total FTEs. Calculate FTE cost over a 5-10 years period.
    4. Total number of data errors involved per report. Estimate average time involved to solve error. Extrapolate total data errors and total time to solve errors for 5-10 years period. Translate into cost.
    5. Total FTE and cost license and maintenance costs of the core applications used in supporting current corporate governance over 5-10 years period.

    Then demonstrate the savings,ROI that the new app will deliver using the same characteristics as compared to old sys/app. Show the value of your app by selling 1 dollar of benefits for .50 cents of cost. Estimate number of sales 5 year period.

    Good luck preparing a succint and concise value proposition.

    Heuristic Guy
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