Do you invest in other parts of the UK?
EC1 Capital is based in London because that is where the majority of web startups operate. Because we like to be involved in our investments we need to be mindful of the practicalities of travelling to portfolio companies. Our investment geographic triangle is between London, Dublin and Edinburgh.
Would you consider European investments?
Not on this current fund unless you are looking to relocate to the UK and incorporate here. We have finite resources and building successful companies is hard enough without placing additional layers of geography, culture, language and commercial law.
How much do you invest?
For seed and bridging up to £400k. We have led syndicated rounds of up to £1m at seed.
For Series A partcipation rounds; between £200k and £1m.
Do you follow on?
If the company is performing and has interest from another investor on the next, larger round we will usually follow on to maintain at least our pro-rata equity allocation.
I didn't hear back from you?
EC1 Capital is only a small firm with limited resources to engage on every application and provide feedback, last year we had over 1,500 applications for funding so we cannot get back to everyone. It clearly states when making an application that we will only contact you if we are interested.
Why do you work in co-working spaces? Don't you have any money?!
We deliberately chose to work like this. We are fully mobile. We don't believe we can be connected to entrepreneurs by locating ourselves in Mayfair, Chelsea or The City.
We want to immerse ourselves at every level where entrepreneurs meet, work and play and we want to put as much of our capital to work as possible without being absorbed into unnecessarily high overheads.
How much do you invest?
Depending on various factors such as team, sector and the degree of traction that has been attained we will consider an investment range of £50,000 to £1m. We will syndicate with other VC's or Angels especially of they can bring domain experience or connections to the deal.
How can you help us apart from financially?
EC1 Capital is committed to helping all its portfolio companies in any way possible either through our network of contacts or through a mentoring process using our own personnel as well as philanthropic advisors associated with EC1 Capital who have an interest in helping out entrepreneurs where they can.
During 2014/15 we are building out a team of advisors in specific verticals and disciplines.
Do you accept single founder teams?
As a general rule no, however there can be exceptions and we have backed exceptional solo founders. We would encourage a solo founder to team with another suitable person at some point, it is difficult enough to run a growing startup let alone trying to handle it all by yourself.
Will you sign an NDA?
A common trend with investors in the tech space is not to sign NDA's. EC1 Capital does not sign NDA's.
What specific areas do you invest in?
Our fund has just started and we want the initial remit to be as wide as possible, if it is a web related or mobile product or service then we are interested to know about it.
We tend to shy away from hardware related investments.
We look for:
- Existing markets that are ripe for disruption.
- Re-segmented markets
- Newly emerging markets
- Clone market
As time progresses, we may well narrow our focus to specific verticals.
Do you charge any fees?
There are no application fees.
There are no non-executive fees for board positions or for our time.
We may pass on legal fees when completing investments.
Apart from money how can you help our business achieve its objectives?
We like to help out in any way possible; our founders come from an operating background. If there is an area of expertise in your vertical that we are lacking we will find people who can help.
EC1 Capital is generally not a passive investor, we like to take meaningful positions on a board and actively contribute to company decisions but we don't want to run the company.
Depending on the amount invested we usually take board observer positions on the board or a non-executive directorship.
Although we have a large network of expertise, you are the founder and domain expert. Our main contribution is around guidance, helping with further fund raising and recruitment.
How long does it take to close funding?
In an ideal world we like to get to know entrepreneurs over time, to build a relationship and trust as well as faith in execution.
However, this is usually a luxury.
So, after several successful meetings and agreement at partner level a term sheet would be issued. It is then a matter of bringing in existing interested angel investors or to reach out through our network and bring in the most suitably qualified angels with domain expertise or other VC firms to complete the full round amount.
Once all parties agree to the term sheet, lawyers draw up the shareholder subscription agreement and articles of association.
The paperwork process can take up to 3-4 weeks but the whole process including bringing in other investors may take between 4-8 weeks.
What makes EC1 Capital different?
- Focused on early stage from seed to bridging to Series A participation.
- Large network of co-investors
- Large network of expertise
- UK and Ireland focus
- Operator led
- Lean and agile processes
Why did EC1 Capital start?
We believe we are living through an amazing pivotal time and feel there is a huge opportunity to invest in high risk but high growth technology companies.
We feel that the following milestones in technology have created an opportunity for EC1 Capital to exist:
- The falling cost of launching a startup
- Less capital required for a startup to reach escape velocity
- Open source software
- Open Data
- New ways of execution such as lean canvas model
- Democratisation and shared information about how to raise capital and build successful outcomes.
- Free viral channels such as Twitter, LinkedIn, Facebook etc.
- Rise of accelerators
- Broadband adoption as well as a 120x increase in speed
- Mass adoption of smartphones putting a computer into everyone's pocket.
- Cloud computing
- SaaS business models
- London as the most popular capital in Europe to launch a startup
- Favourable UK tax incentives for angel investors
- Crowd funding and other alternative means of raising capital
"We believe this is an incredibly exciting time to be a technology investor. The ultimate market size that this current generation of tech companies can go after dwarfs that of previous ones.
The obvious reason for this is mobile internet penetration: We’ve gone from an internet population of 55 million users to nearly three billion, and smartphone users are expected to grow from 1.5 billion today to five billion in the coming years. The winners in tech today can become massively larger than those of previous decades because the markets they can sell into are enormous, and growing.
Yet as these markets have grown, the technology costs required to support them have fallen dramatically due to developer productivity tools and cloud-based computing."
Scott Kappor. Andreesen Horowitz.
Although not designed to put applicants off, you have to bear in mind these are the typical steps that a 'perfect' investment process might take. Although we do have our written criteria, investing is as much about 'gut instinct' as it is about mitigating risk.
A typical successful investment flow might consist of these steps:
*Even if your business is too early for our criteria we do prefer to invest in lines rather than dots, i.e. we prefer to get to know the entrepreneur/team over a longer period of time to get comfortable with the proposition, the team and the ability to execute on forecasts.
“If you can’t explain it simply, you don’t understand it well enough”
- A. Einstein.
Our Investment Mandate
We believe in a fair deal for entrepreneurs and our priority is to make sure that all stakeholders are aligned in the business to ensure the tenure and motivation of key personnel is retained to a successful outcome.
EC1 Capital partners with ambitious entrepreneurial teams at different stages of company growth, from seed to bridging to Series A participation and likes to become involved in actively helping the business achieve its goals. We like to hold meaningful positions in our portfolio companies.
Technology Sectors We Are Looking For
EC1 Capital invests in emerging web and mobile based technologies. The remit of addressable verticals is wide and we will look at most applications of technology in interesting markets.
People, People, People
We like to work with people we get along with, it’s a long and arduous road otherwise. We need to feel there are distinct synergies in our investments with straight talking, transparent and competent entrepreneurial teams. There are no grey areas in this respect.
FAQ last updated 09 February 2015.