Having experienced almost the whole spectrum of business funding (early-stage VC, later-stage VC, public listing, all manner of bank relationships, and now as a properly qualified private investor and harvester of founder funding), Brent Hoberman has seen examples en masse of “the wrong kind of money”: when businesses look for, indeed raise, finance that is not best suited to the best development of the business. There is still insufficient education for entrepreneurs about which funding, at which stage, is most appropriate for particular businesses or sectors. Brent Hoberman teaches us lesson number one…
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Brent Hoberman on what convinced him to invest in Viagogo: the co-founder showed an impressive level of aggressiveness. “He said, ‘here are the terms and absolutely nothing is negotiable.'” A good approach?
Hoberman on his own funding journey for lastminute.com: “Very early on, when I hadn’t raised any money, I told a few people about the lastminute.com idea, and I got a call from this guy who said he had just raised money for a business that’s doing last minute deals on the internet. I thought, god, is this a bullshitter? And he was, it was absolute rubbish. That would have been the wrong kind of money.”
They were looking for £500,000 of funding on the back of a business plan. “A deal like this was very rare at that time.”
The theme of his talk is the importance of reputation: “Credibility is the best kind of investor. The brand signalling someone gives is very important.”
Existing investors still backed lastminunte.com when it was starting to run out of money. The term “Bridge Loan” fell in negotiations: “It was too hard to value the company at that time. Bridge loans are loans at a discount – that bridge loan got us into 1999, the momentum, and soon we were able to raise the next round.
“The backing gave us more credibility. [Former airline boss] Peter Bow joined our board as chairman; another indication of credibility, that was a very valuable part of the story.”
He calls it a “constant stream of credible blue chip partners”; part of a positive momentum that helped to establish the brand.
Lastminute.com went public the day the market peaked.
On a question about convincing investors: you need to ask yourself the question, ‘would I use this product?’ “So many people who pitch us can’t make us understand after half an hour what their product is about.”
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