The highs and lows of building a tech for good startup

As the Bethnal Green Ventures (BGV) accelerator programme gets underway with a new team of ventures, Sinead MacManus, CEO and co-founder of Fluency, reflects on what they’ve learnt since being part of the BGV programme last year.

A year ago my co-founder Ian and I stood nervously in the shiny new offices of Bethnal Green Ventures – we had won a place on their ‘tech for good’ incubator. The 12-week incubation programme would enable us to develop Fluency – our digital education company that helps get young people into work. Along with the founders from the other nine teams, we were about to embark upon a journey into the unknown.

As we celebrate our first company anniversary, I wanted to reflect on the many highs and lows of our first year trying to change the world through technology.

Learning from being on an accelerator

Being accepted onto the BGV incubator was one of the best things that has ever happened to me. Having someone believe in you and your idea enough to put their money where their mouth is very motivating. An accelerator allows you to test your hypothesis about your business cheaply and quickly, get to Minimum Viable Product (MVP), and then validate the market by selling it/getting users.

We were well versed in the lean startup methodology but still ploughed ahead spending months designing and coding a platform from scratch and writing and recording original learning content. All this so we had a ‘product’ to use in our pilot in the summer. In hindsight this was a terrible mistake. All we needed to do was to test some key hypotheses – can young people pick up digital skills online and apply them in a work situation? We could have used an on the shelf LMS and existing learning resources from the web to validate this hypothesis.

Finding our business model the hard way

BGV pic

When we started at BGV we were convinced that our business model would be that small business owners would pay on a subscription basis for access to our learning platform and that we would then use this money to give access for free to young people. By trying stuff out and making a mess of things, and by listening to what our customers and our users want we have finally found what we think will be our product.
Raising investment and running out of cash

When we started at BGV I thought this investment was just to get us to demo day where investors would be clamouring to give us more cash. Nine months later we’ve run out of cash twice, and making payroll for our two staff – let alone paying ourselves – was a real issue.

We’ve just closed our seed investment round (yeah!) but dealing with investors for the past nine months has been one of the most painful processes of my life. Nine long months of pitching and coffees – it’s exhausting and demoralizing. And if you’re in the tech for good space like we are, then it’s tough – a lot of investors don’t get the concept that you can make money and social impact at the same time.

Hiring staff

Some of our most costly mistakes have been to do with staff – thinking we needed to hire when we didn’t. Staff, whether freelance or permanent, are a startups’ biggest asset but also their biggest drain on resources. Our hiring plans have changed. My aim is to stay as lean as possible until our next funding round and rather than throw people into roles that we think we need, we will let the business tell us where we need to put the resource.

Finally, the long road to finding product-market fit

Talking to lots of startups recently has made me realise that, even though the tech press like to champion the seemingly overnight success startups, in reality most companies take a few years to find their way. And I think for “tech for good” startups it can take even longer. If you are trying to solve some of society’s biggest problems, it’s not going to happen overnight.

But no matter what the challenges this year has brought, I’m literally having the time of my life. Getting up every morning and knowing what you are doing can make a real impact on people’s lives is worth the odd sleepless night. I wouldn’t change it for the world.

This blog was originally published on Bethnal Green Ventures.
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Getting started on impact

eibhlin-ni-ogain-webYou’ve come up with a great idea, sorted out your business model, built a strong team, dealt with cash flow and all the other aspects of setting up your own business. And then you discover that you also need to think about whether you are having a positive social impact.

For social start-ups, measuring impact can often be the last thing on a long list of essential to do’s. But it is an important thing to get right. If social start-ups stand a chance at success they need to integrate the social side of what they do with their core business model and prove their impact. Measuring your social impact should be dealt with in the same way your business understands and measures its finances. And the good news is that there are processes and methods you can use to do this.

So where should you start?

Step one: where do you want to get to?

The starting point for any social venture is to understand their final vision for impact and how they are going to get there. A good tool for mapping out this process is a theory of change. This will allow you to connect what you do on a day to day basis with the overall change you’re trying to make.

Step two: Decide on the type of evidence you need

The type of evidence you collect through measurement can range from less to more robust. Early stage ventures may not need to collect at the robust end of that range as they will probably refine and develop what they do as they grow and change. At a minimum, you should have a clear articulation of how you deliver social impact. Nesta Impact Investments has developed Standards of Evidence for Impact Investing to help investees think about these different levels of evidence.

Step three: Choose the tools and methods you will use

Once you have developed a theory of change, you need evidence. The best way of doing this is to collect information on whether change is happening. This can be done in lots of different ways. For example, when we talk to people or observe them, we are collecting information about their views and behaviours. This type of qualitative research can be used to get very rich information on whether change has happened. It is not good, however, for getting an idea of whether everyone you worked with saw similar effects or understanding how big this change was. To answer these kinds of questions, quantitative research can be used. Questionnaires, or data on numbers of people qualifying from a course, for example, can all be used to gather information quantitatively. The diagram below shows the different types of tools out there for capturing information. Inspiring Impact also has a great new hub to help with this.



Step four: Think about when you will measure and who you will measure with

Timing is important when it comes to measuring change. Think about when it is reasonable to expect change to happen—this could be immediately, or three, six months or one year down the line. Who you measure with is important as you may not want to gather information from everyone—this may be because it will be too resource-intensive or interferes with your service delivery. So, you may consider gathering information from a smaller sample. Generally a sample of fifty will be necessary to see change but the Survey System website can help you decide.

Step five: Use the results

Finally, as a start-up you will more than likely develop and refine your product—and as you do, your understanding of your impact will change. Just as the lean start-up approach argues continuous refinement of your product based on customer feedback, impact measurement should inform you about what is, and is not, leading to change. You’ll need to adapt your Theory of Change to reflect this and review how you measure your impact.

Remember that impact measurement is about understanding whether you are having a positive impact on the issue you are addressing and improving your product or service as a result. Ultimately, if the data you collect is not helping you do this, you need to go back to the drawing board and develop an approach that will.


This blog was originally published on Pioneers Post 

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You’ve raised that vital investment – what happens next?

As part of our blog series on raising social investment, Matt Mead examines what social entrepreneurs need to think about after they’ve got that all important investment deal.


6 Basic Foundations of Business Success

If you stop and look at recent news around raising investment, you’ll be struck by the number of positive stories about new impact focused funds like ours coming into the market and investing millions of pounds in entrepreneurs with innovations that can make real change happen.


But if you dig deeper and talk to entrepreneurs about raising capital the majority will tell you that it took longer and was more harrowing than they expected. Months of presentations, meetings, knock backs, negotiation, then finally a ‘yes’, followed by a legal completion process which always feels harder than it should.


But what happens after the investment has been raised?  Are there any lessons about how you make that capital really deliver on impact and value?


Every organisation is different, every entrepreneur is different but after 20 years of investing, first in the venture capital field and now in impact investing, there are a few common observations that I can make.


·        Building your product - spend wisely on product development and engage with your target customers as early as you can.  Lean Startup guru, Eric Ries, highlights the importance of the minimum viable product. Essentially don’t waste money building a product or service that users don’t want – test, get feedback, iterate until you have something that delights users and then look to scale


·        Don’t hire in a hurry - a large proportion of invested capital is used to hire and build up a team. Hopefully you will have identified your next hires already and know them well but getting the right team takes time and getting it wrong can be costly. So hire with caution and from networks you trust


·        Think carefully about marketing - don’t waste too much capital building demand if the product isn’t ready. Really think through the marketing mix to make sure that when you are set to go you can reach your market cost effectively


·        Capture data - on business metrics, service user age and impact.  Monitoring and responding to trends as well as ensuring you record what investors, customers and your own team need to run the organisation is really important


·        Be honest and open with your shareholders. They have backed you, your team and your idea – share challenges and successes with them – the worst thing you can do is surprise them with bad news.  The sooner an issue is shared, the sooner you can work together to make changes



Finally track the money carefully, be on top of every pound, who owes you money, what your commitments are and plan with rigor. It may seem obvious but I have seen many early stage organisations with small but growing revenues, suddenly finding that the cash is flowing out pretty quickly. If you can’t do the accounting and planning then find, and use, someone who can.


This list isn’t exhaustive and with every new investment I still learn lessons. But remember the time it took to raise money, that investment capital is precious and you really only want to raise it again when you have delivered impact, grown value and have investors calling you!

This blog was originally published on Pioneers Post 

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Matt Mead, helped to develop and now runs, Nesta Impact Investments, alongside Joe Ludlow.  This fund is targeting innovative ventures that address major social needs in the UK, such as an ageing population and the education of young people. Matt joined Nesta from 3i where he was a partner in its venture capital business. He is currently on the venture committee of the BVCA and on the Board of the British Business Angels Association.

FutureGov – Why we went for impact investment




FutureGov is a for-profit business, but we work with public sector and social organisations. So, Impact Investment meets our mission as a business, bridging the two worlds of profit and social good. With investment more broadly, we’d used grant funding to prototype and create proof of concepts for our products. But to grow these products and to build continued impact, this type of investment gives us the opportunity to; scale, helps shape business strategy and brings a board of advisors that enables us to grow and invest back into future products.


Dominic CampbellWhat was raising the investment like?

Investment came in three stages. We had initial conversations with Nesta Impact Investments about the possibility of investment and what kind of shape our business needed to be in. We got some really good, early advice from them and this helped us gear up for the next level of conversation with investors.


It’s not a short process and the next stage came about 9 months out, where we had a more serious conversation to make sure our approach was in the right ball park. We asked ourselves: how do we land this investment and is our business capable of being invested in?


Nesta gave us really strong support to help us shape our business strategy, get our business plan right and start looking at our numbers to articulate value to investors. Even if we hadn’t got the investment, this process alone would have added massive business value.


The final stage was all in the detail, where we were trying to get the investment through and signed off. This is generally a straightforward process, once you’re in the orbit of an investor and they’ve told you they’re interested. 


What comes next? What happens after you’ve got the investment?


Unlike most people would imagine, you don’t just land a large investment and get to spend it on green M&Ms and fast cars. You have a very robust business plan in terms of where money is spent and every penny counts.


So, we’ve been getting the board of advisors in place, which we’re lucky enough to have Nesta Impact Investments on. We’ve been ramping up recruitment and getting core operational staff in place, such as a CTO and COO. We’ve also moved offices to a space that chimes well with the company and makes us more professional.


Next, it’s a matter of working meticulously through the business strategy and looking to deliver on the targets within the plan.


So, if you’re looking for impact investment what should you consider?


  • Be clear on your vision and how it relates back to a money making business venture – who are your customers and what does realistic growth look like with or without investment?
  • Meet as many money people as possible and go with those who get your vision but who are also generous with their advice in how to get yourself investment ready (and listen!)


  • Get your admin house in order early – IP agreements, accounts up to date and contracts in place


This blog was originally published on Real Business

Read the original blog here


The Needle in the haystack – what impact investors look for


Raising early stage investment is difficult. Let’s not pretend otherwise. Since we launched Nesta Impact Investments over a year ago, we have seen close to 500 applications for investment, but only about 10% of these have resulted in a meeting and only 1% ended up receiving an investment from us. To some these percentages may seem low, but they are broadly representative of the sector.

So what do investors look for that is missing in 99% of opportunities? Or, to put it another way, how do businesses make it into that 1%?

Each investor will have their own criteria and sweet spots in terms of interest and may look at; stage of development, funding requirements, exit horizons and types of funding available.

So what will spark our interest?

-          Understand the investors you are approaching and do your research. For example, at Nesta we are specifically looking for investment opportunities that will have an impact in one of three areas: ageing, the education and well-being of children and communities

-          Be readily scalable (as well as accessible and affordable) to as many of the potential beneficiaries as possible

-          Be financially self-sufficient within a reasonable period

-          Show a strong alignment between commercial objectives and social outcomes

To be honest, any entrepreneur worth their salt should be able to show all these things so what are the added extras that will get you that all important deal?

Determination is a vital ingredient for start-up entrepreneurs and teams, as there will typically be many obstacles in the path of turning a concept into a fully-fledged product or service. Managing and overcoming these setbacks is a critical success factor, as rarely is the road to success lined with green lights. Understanding how the teams we sit in front of have coped with the setbacks to-date and how good they are at anticipating potential problems is key.

Preparedness is important because while it’s easy to make sweeping and oversimplifying statements you need to be able to back them up with well researched facts. Researching, understanding and preparing for interactions with key customers, users, suppliers or even investors is an important discipline for any management team, whether they are a listed company or a 2 month old start-up. We look for teams that can demonstrate why they have taken a particular approach to a specific situation. For example, have they researched why one potential customer is more appropriate than another within a given market opportunity? Now, we recognise that this is no guarantee of success, but it definitely increases chances of a positive reception to the pitch or business proposal.

Communication is another factor. It may seem obvious but a good entrepreneur or team needs to be able to communicate effectively to the various audiences/stakeholders that are important to the business. It’s amazing how many we’ve seen that fall at this hurdle.

Finally, entrepreneurs should be encouraged by the recent moves that make raising early stage funding, a bit easier. From the tax breaks for private (angel) investors announced in the recent budget, to the host of ‘business accelerator’ programmes established over the last 12-18 months, to the changing regulations around crowdfunding and the growth of impact investment funds. There is more support out there for start-ups and if you do have a great business or idea then make sure that when you do go for investment it’s with a partner that works for you and will add value.

Alex Hook – June 2014

This blog was originally published on Real Business

Read the original blog here

Investing for measurable impact

10805431446_431cf46f65_oIt certainly is an exciting and interesting year for impact investing. The government is working to make the UK a global hub for social investment, a new tax relief has been announced and investment banks like Goldman Sachs and Morgan Stanley are entering the market. The most recent Impact Investor survey published by GIIN and JP Morgan also shows positive progress with market growth, investor collaboration, impact measurement practices, and pipeline quality.

But how do we know if investments are really creating a positive social impact? While the GIIN and JP Morgan report highlights promising progress I can’t help but wonder if impact investing is living up to expectations?

When it comes to measuring impact, the recent survey revealed that a quarter of all impact investors are indifferent to or prefer to avoid impact measurement post-investment. Great progress has been made in the last few years with many using impact standards and metrics like the Global Impact Investing Network standards or the BSC matrix. However, it seems that in practice fewer investors than we might expect measure these outcomes in a robust and systematic way. For many, merely stating that an organisation works to achieve outcome x or y is enough to show that impact is being achieved. Indeed, Clearly So and NPC’s investment readiness report found that most investors focus first and foremost on understanding the financial return of investments and social return comes as an afterthought. A 2013 LSE report concluded that the state of measurement was far from satisfactory. They found a lack of consensus over definitions and methodologies and, as a result, major differences between funds.

So, where does this leave us? Are we making well-meaning investments that look good but may not be changing anything for anyone? Research has shown us time and time again that great sounding things do not necessarily lead to positive impact or worse can do more harm than good. There is a growing realisation of the importance of measurement among investors but this needs to be backed up by impact measurement in practice.

Of course, this is easier said than done. Many investors (such as ourselves) back early stage ventures that are trying out new and innovative ways to tackle social problems. For these ventures, evidence will be hard to come by and the organisations are unlikely to have run a high quality impact evaluation. That is why it is essential to have a staged approach to impact measurement.

The NESTA Standards of Evidence for Impact Investing does exactly that. The standards on a 1-5 scale begin with organisations having a clear articulation of how their product or service leads to positive social change. As organisations grow and develop, we expect them to start gathering evidence to back up their initial understanding of their impact. Over time, we will work with organisations to understand whether that change was truly down to their activity, and finally, we hope to use this information to begin replicating the product in a number of different locations and contexts.


The five levels of NESTA’s Standards of Evidence for Impact Investing

For example, one of our investees, Oomph! delivers specially designed group exercise classes for older people in care homes to improve quality of life and physical health. Their impact story argues that interactive classes, specially designed for older people, are more successful in engaging residents. As a result, older people not only increase their level of enjoyment but over time improve their physical health and range of movement. Oomph! has used academic research to show that regular physical activity leads to improved life satisfaction, reduced cognitive decline and a reduction in falls. We are now working with them to gather evidence to see if this impact story rings true. So Oomph! is gathering data on the well-being and physical health of older people before and after exercise classes. This kind of data will allow them to reach level 2 on our standards of evidence. Over time, we will work with Oomph! to measure any difference between their participants and older people who did not attend the exercise classes. This way we will know if any change is purely down to the Oomph! classes.

Supporting our investees to start simple and increase the rigour of their evidence over time is crucial to our mission as an impact investor. Indeed, we will be judging our own impact as a fund on how well our investees do at delivering and evidencing impact as well as their financial success.

So, I would argue that as impact investors we need to worry most about what happens on the customer side of our investments. How many people is a venture working with? Who are they? And what kind of change are they seeing? Without asking these questions, we risk creating an elaborate house of cards—one that will begin to crumble if these fundamental questions remain unanswered and unmeasured.

This blog was originally published on Philanthropy News – Alliance Magazine

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Eibhlín Ní Ógáin – May 2014


Fuel poverty – time for a new approach?

From guest blogger: Dr Steven Fawkes


Fuel poverty continues to grow as energy prices increase and it brings with it massive economic and social costs.  Age UK estimate that fuel poverty costs the NHS more than £1.3 billion a year and around 30% of the 30,000 excess winter deaths can be ascribed to fuel poverty.  This is a massive social and economic problem that we need to address for economic as well as social and moral reasons.

Read more

Speed dating brings edtech ventures together with investors

Speed dating is not for the faint hearted but at our first ever edtech speed dating evening we helped to make over 430 introductions in under 3 hours! The event was in partnership with Edmix and Emerge Venture Labs, and 36 edtech ventures from across the UK gathered to ‘date’ our panel of twelve investors at Google Campus. With only 3 minutes to make their pitch, the pressure was on the entrepreneurs to really hone their message and get to the heart of what their product could do.Edtech speed date


Kieron Kirkland, from investor the Nominet Trust welcomed this novel approach:

“It was a great opportunity to meet so many new ventures, and see how active the edtech sector is with great entrepreneurs and inspirational ideas that have the potential to make a real impact.”



So, what can we learn from this style of event?

-          From the investor perspective, speed dating is a great way of meeting a large number of ventures in a concentrated amount of time, after which you can follow up with those you have a connection with

-          We had more productive ‘dates’ with ventures that did their research on investors as they had background knowledge and an idea of the context to start off with

-          A product demonstration and a specific call to action really helped ventures stand out from the crowd

-          The edtech sector is a flourishing community that clearly thrives off the opportunity to get together, make connections and share experiences with each other. So, events like these can really work but make sure you plan and get the right ventures and investors in the room

What is a self-sustaining community?

A question I often get asked when meeting people in relation our impact investment fund, is what do we mean by ‘self sustaining communities’?  Is there even such a thing as a self-sustaining community, as we now live in an increasingly interconnected world where any given community relies on the inflow and outflow of goods and services to deliver its daily existence? Are we chasing some utopian vision of the future where we will all be expected to grow our own food, generate our own energy, set-up community banks, lend and borrow our underutilised household assets, maybe even spending one day per week helping to care for our frail neighbours? The simple answer is ‘no’. But the more nuanced answer is ‘maybe’.


Through the work we do at Nesta, we are fortunate to meet some amazing people who are pioneering different ways of doing things to the benefit of a broader constituency than themselves and their own bank accounts. People motivated by creating greater equality of access to the goods and services we need to lead our lives. People experimenting and delivering new business models that often turn old value chains on their head. We strongly believe that there are more involving and rewarding models of delivering our daily needs, and that technology can be a great enabler of change if harnessed correctly.


In a series of blogs over the coming months I will look at each of the specific social outcomes we are looking to positively address through the investments we make under the self-sustaining community theme and explore what motivates our focus and what type of innovations we are looking to back. The social outcomes under this theme are:

·  increased energy efficiency by individuals and communities;

·  increased resource efficiency by individuals and communities;

·  increased self-reliance of individuals and communities in materials, energy and social capital;

·  increased access to products and services for individuals and communities experiencing exclusion;

·  increased ownership and/or management of assets by communities experiencing exclusion.


We view sustainability from both an environmental as well as social dimension, with a particularly interest in solutions that are affordable/accessible to the least well off. And although not evident from the list above, we are taking a broader interpretation of ‘community’ than one purely defined by its geographic boundaries. 


If you have any comments or suggestions on this subject, or are working on innovations that could scalably address one or more of these outcomes, then I would love to hear from you


Alex Hook


Why social entrepreneurs should be celebrating today

Every year budget day reminds me of my early career in one of the big accounting firms.  Clients were invited, food and drink arranged, it was a major event. We stood around big screens and watched all of the Chancellor’s speech – the tax guys actually got animated! It’s a bit different now, most of the news is trailed in advance and we are rarely surprised.


But this year I am excited again because today’s budget is really important to the world of social investment and the social entrepreneurs it backs. That’s because we’ll find out the rate of the Social Investment Tax Relief – that might not sound exciting but is has the potential to be a major landmark for investment in social impact organisations.


In the last 20 years over £8.7 billion has been invested in more than 20,000 businesses through similar schemes such as the Enterprise Investment Scheme (EIS), with tax incentives catalyzing a flow of private capital. So, imagine if the same capital flowed into charities or social enterprises.


So who exactly will this tax relief benefit?


The specific measures will focus on registered social sector organisations; CICs, community benefit societies and charities and although the schemes are starting small they will grow. It’s been glaringly obvious for some years that we needed to bridge the gap between tax reliefs on charitable donations and small company and venture capital reliefs. If taxation can be used to incentivise socially useful behavior, isn’t starting a social enterprise at least as good as starting a small private company?


It’s vital that early stage investors who want to drive impact can invest in any sort of organisation without their investment allocation or investment decisions being swayed by tax advantages. This new tax relief will start to level the playing field and make investing in charities and social enterprises as attractive as investing in small private companies.


When an entrepreneur builds a business focused on social impact they don’t wake up every day thinking about the corporate form of their organisation or about tax incentives for investors. They think about the difference their product or service can make to people’s lives. When Ben Allen the CEO of Oomph! formed his company to provide exercise classes in care homes, his primary motivation was to improve the lives of elderly residents. He is committed to making a real social impact.


Ben set up his organisation as a limited company and his early investors benefitted from the EIS scheme before we then invested £200,000 from the Nesta Impact Investments fund. If Ben had set up as a CIC two years ago, raising money might have been more difficult. Importantly, the tax changes in this budget should make raising capital for the Bens of the future easier if they decide to take a different route.


Although some may disagree, it really shouldn’t matter what corporate form is used to drive social impact – a private company where management is motivated by social impact, a board that supports that mission and investors that want to maximise impact and grow scale can be a really powerful force for change.


But while we welcome today’s announcement on tax relief, we’d still like to see the government do more.


Initially the new measures only apply to small investments of around £150,000 and the range of types of qualifying investments will be restricted. It will be fascinating to see how these limits affect the early take up of the scheme. Although our impact fund can provide debt and other instruments like revenue share arrangements, most of the early stage impact investments of around £150,000 haven’t been in charities or other registered social sector organisations. We really hope that the new incentives, even with their restrictions, will encourage a flow of capital to help scale some great social innovations and ideas.


Finally, we hope the government follows through on their intention to broaden the scheme as announced in their Social Investment Roadmap. Although this may take 18 months to work through European legislative bodies, this should increase the amounts of relief and scope of investments, which will build on the first steps being taken this week. Further work on indirect investment into funds by individuals, social impact bonds and increasing the qualifying amounts could also make a real difference to the sector.


So, while I think the days of partying to budget announcements are long gone, today the sector should be celebrating what could prove to be a real landmark moment for social impact investing.


Matt Mead