15 May, 2011 - 08:47 By News Desk

Day 11 - Accountants and VC/Angels: Show Me the Money!

Money made our day go round with specialists covering finance from all angles.

The morning kicked off with speed accounting meetings, and we were grateful to have Dominic Anthony and Adrian Wilson of Ashcroft Anthony visit to counsel teams. With questions from both UK and overseas companies, discussions included the sexy topics of payroll, VAT, expenses, and bank accounts. Dom and Adrian were a terrific help and very kindly offered to be a lifeline for the teams over the next 3 moths, a generous offer I hope they don’t regret!

Jon mentioned he’d been looking forward to the afternoon ever since it was scheduled, and it soon became clear why. To fire up a debate of angel investment vs. VC money, we put angel investor Sherry Coutu and VC Laurence John of Amadeus in the hot seats. With their brutally honest disagreements, quick-witted banter and unbeatable experience, they were magnificent.

The insight they shared in two hours was invaluable, and when I wasn’t laughing hysterically, I was scribbling gem after gem of great advice. I’ve distilled about 10 pages into a Sherry and Laurence Top 10 Lessons:

1. If a fund has $200 million in total, they they are looking for deals that could exit for $200 million (a company that could exit for the size of the fund). Judge accordingly.2. You want an investor to reserve cash for subsequent rounds, because it looks bad to others if they don’t participate in follow-on. Let an investor know that you’re planning to raise lots of money over the next few years, and ask ahead of time how much cash they are holding onto (average 3-5x for follow-on).3. If a fund has a 10 year investment cycle, it will spend years 0-5 buying all their babies and years 6-10 looking after the babies and trying to sell them on. In order to understand the fund’s priorities and timeline, ask where in the investment cycle it is.4. Have a lead angel who will take the heat and manage all the other angels involved. Have a pack of due diligence questions investors are likely to ask, and arm your lead angel with that so they can share it around and go through it with others.5. Profit is an indication that you are adding value and creating something useful. Why do you invest? ‘To make money… To help companies create high value, high impact products that make the world a better place’ ~ Sherry.6. ‘Companies don’t fail for technology reasons; they fail for people reasons. If you’re a bit of a smart ass, sort it out really early’ ~ Laurence7. You need to be able to motivate people to do things for you, and to voluntarily open doors for you. ‘Entrepreneurs leverage assets they do not own or control’ ~ Sherry8. Do your due diligence on an investor before engaging in a deal. Look at individuals, not companies. Ask mutual contacts for references, and remember that nobody will outright say the person is crap. Consider how they would behave in tough times rather than sunny days.9. Show from the 1st interaction to the 2nd interaction that you’ve listened. And don’t talk endlessly in meetings until you’re interrupted; remember someone else is in the room, and keep them engaged in conversation rather than talking at them.10. ‘Don’t apologise too much… Be proud of what you’ve got!’ ~ Laurence

It would be remiss of me not to mention Sherry likes databases and virgin mojitos, and Laurence can pitch himself very concisely with ‘Hi, I’m Laurence, and I give money away’. I think it’s fair to say this was one session none of us wanted to see end!

Nevertheless, Friday evening was a welcomed milestone marking the survival of week two. The temptation of a pizza delivery kept a few teams working away diligently in the office, while some headed to nearby cities to reconnect with family and friends who have been left in the dark. When partners or parents are antsy for a status update, I’ve been told the standard response is ‘I’m too busy to tell you. Read the blog…’ – if that’s why you’re here, I can vouch, it’s true!

Needing to clear our heads, a handful of us headed out to explore Friday night in Cambridge. We ventured beyond the usual haunt of B-Bar to enjoy drinks at The Maypole followed by a tapas feast at La Tasca. I think that was all we could handle before tiredness kicked in and sensibilities took over…

Jan kicked off a question of things to do around town, and it seems he’s not the only one craving physical activity to break the laptop chains. There’s been talk of rock climbing on Sunday, and potentially squash, badminton, or swimming in the weeks to come. I’m looking forward to seeing everyone’s competitive spirits in team sports, but with 40 new mentors to meet next week, I have a feeling this will not be a restful weekend.

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