“Funding business plans from first time entrepreneurs just won’t happen anymore!”
So says Robin Klein of The Accelerator Group, the investment vehicle he heads which has invested in (deep breath) Astley Clarke, Buildersite, Daylife, DH Gate, Digivate, Dopplr, Extate, Fizzback, Glasses Direct, Imagini, Kindo, Koodos, Kublax, Lookery, LoveFilm, Mashery, Mind Candy, Moo, MoveMe, Netlog, Openads, Seedcamp, Songkick, Spot Runner, Spotplex, Stardoll, Wonga, Zemanta and Zoopla (among others).
What’s his reasoning behind this? It’s not the suddenly uncertain economic climate as “we have seen no diminution in the flood of interesting new ventures being launched” and he gets pitched “at least 2 or 3 propositions per week.”
No, the real reason says Klein is that the quality bar is now so high amongst startups that you really do have to be pretty good now to win funding.
Here is Klein’s new criteria for startups he’ll consider investing in:
1. Founded by 2nd and 3rd time tech entrepreneurs
2. Aspiring to build global businesses with scale
3. With genuinely original ideas which are game changing or a significant advance on current state of play
4. Where the founder(s) have built prototypes or are already demonstrating momentum in customer/consumer adoption
5. Where founders have shown an ability to considerably ‘bootstrap’ the business with very little or no external cash (outside of friends and family).
You just need to have some or all of these attributes, and there’s plenty of funding to be had, he says.
But first time entrepreneurs? They can take a hike.
Whether you think this new reasoning is down to the coming global recession or because there are just lots of tech companies now is up to you. Personally I think it’s a combination of both. Who will now pick up the challenge? Angel investors? It’s hard to say.
Update: Responding to comments on his blog, Klein clarifies by saying that “just funding a ‘business plan’ ie a powerpoint plan with a 3year blue-sky financial model won’t happen” but “first time entrepreneurs who bootstrap and build something, demonstrate consumer or trade engagement are always going to be of great interest.” Note, he stops short of sounding more enthusiastic than that.