Roxy Bramley from Northern Film and Media was first to the podium to tell us about the Digital Dockyard (www.digitaldockyard.com). The dockyard is a new social network for the North East’s new media and gaming sectors. Created in partnership with Northern Film and Media and 4iP the dockyard hopes get developers working together and perhaps pitch on some exciting projects that can be funded in part or in full by 4iP and Northern Film and Media.
Sarat Pediredla from Hedgehog Lab was next up and he told us about the journey that he took when he decided to leave his well paid job and start developing a new suite of enterprise products, the first of which (fixx) was released a few months ago. Sarat described his seven pillars to product development (from a business side):
- Market research – get it done! But take the results with a pinch of salt. In Sarats case the research told him that there was no need for another product like Fixx…Sarat felt that this was incorrect and went ahead anyway but he did so with open eyes!
- Funding – developing a product takes several months, usually 6-9 months. To cover the costs of this work you will need some sort of funding, this can come in a few ways, including:
- Debt funding (loans from banks etc)
- Equity funding (business angel or the POC from NStar)
- Bootstrapping (money generated from other activities such as consulting work
- Patent – Many companies waste time and money on this area…Sarat feels that you should have a look at this area but get on with your product development rather than spending too much time and money on this area.
- People – They are the hub of your business, choose them wisely!
- Execution – Many product development projects fail to reach their true potential because of a lack of direction towards the end…often due to the boredom of working on the same project for such a long time. To truly succeed you need to drive through this boredom and deliver the project with enthusiasm!
- Quality – Every aspect of the product development cycle must be developed with the highest levels of quality. Everything from the product literature, the installation process, the user interface and the reliability of the product must be perfect!
- Customer support – this is often overlooked, but at your peril! Fanatical customer support is an extension of product quality control. If performed properly it will make your customers feel ‘warm and fuzzy’ and this will lead to more business through referral.
Rob Mathieson from Tipstar then brought us through the steps he followed to raise the £150,000 that he needed to get Tipstar off the ground. The process started fifteen months ago when Rob came up with the idea. After some market research he found that the project needed significant development work and had some particularly expensive licensing costs. Raising cash was the only way to get his product to market.
If you need to raise money you MUST develop a business plan. No investor will even look at your project if you don’t have a very comprehensive and well researched plan. Things to consider are:
- Market research is of paramount importance. You must understand your market and your competitors. You must find out who your customers are, how much they spend, what services they currently use and who their suppliers are. You must then use this information to locate your competitors (real or preseved) and find out everything about them. Rob recommends that you get a copy of their accounts from Companies House to look at their finances. All of this information is needed so that you can market your product and get your potential customers to move to your services.
- Project Plan, how are you going to deliver this? What are your milestones? These should be for development and finance.
- Money, how much and when? Can you do this on a shoe string? If not then you need to understand how much money you need and how you are going to raise it (loan, debt or bootstrap).
- Staff, who will you invite along your journey? True success comes to people who build a team around them. Rob recommends the “Beermat Entrerpreneur” by Mike Southon, which suggests that a business needs four people, and entrepreneur, a techie, a sales person and an accountant. Choose these wisely as you will be spending quite a bit of time with these people over the next few years! In order to get the best people it is often a good idea to give them shares in your business…this will give them the enthusiasm to deliver beyond the call of duty! Rob also recommends that you get a good accountant and pay them well for their services!
Many inventors take months developing their products and they don’t release them until they are finished. Rob believes that you should get a proof of concept up and going immediately so that you can show potential investors and business partners what you are talking about…rather than spending your time talking about vapour.
Product Architecture is key…but remember that your trade partners and investors only care about system stability and scalability…they will look at you with glass eyes if you tell them what operating system you are using or what development methodology you use. Keep it short and simple, all you need to do is convince them of your abilities without boring them with jargon.
To raise money in this market you need to be approachable, sociable, reliable and above all you must deliver upon expectations. Newcastle is a small place and the community of investors and professional advisors is very small…be careful out there!