I recently had the pleasure to interview, Andy Davidson, Founder and CEO of Nova, which is currently crowdfunding on CrowdCube.
What was the idea behind Nova when it was founded in 2014?
The concept of Nova was borne from my personal frustration as a tech entrepreneur and probably even earlier than that when I was developing software products for other businesses. My experience was that the whole process, on both sides, was incredibly wasteful.
I kept witnessing the huge amount of waste involved in building the wrong thing, and not just quick throwaway wrong things, really high-quality wrong things that had years and hundreds of thousands of pounds worth of people’s time and effort invested in them – what we’d call ‘highly polished golden turds’. There’s also waste in raising money, the number of time founders have to spend looking for investment instead of focusing on building their business is incredible.
Probably the most wasteful thing of all is that when a startup fails the shared learnings of the team are all lost, people move on and get new jobs and all of the great experience and learnings they’ve made together go with them. I learnt that if you can keep the people and learnings together and go again with something you have a much greater chance of success. And what we’ve built at Nova now allows us to do that.
The founder journey for me was broken, and I believed I could do something to improve that. Spending one’s life building products and businesses that no one wants or uses is no way to live. I knew that from my experience and what I’d learnt that there had to be a better way of doing things, and that’s what we wanted to achieve when we set up Nova, and I hope that’s what Nova’s become. The better way for founders to found a startup.
What strategic changes did you have to make to become what Nova is today?
Whilst the fundamental strategy of what we’re trying to do and who we’re trying to do it for have remained largely the same, on the ground and operationally we are constantly changing tactics and strategy to implement all of the new things that we are learning. I will always advise new employees “if you don’t like change you’re in the wrong place,” as in our business and our portfolio businesses change is essential. We move quickly on things and have to keep evolving our products and businesses to improve.
Perhaps the biggest ‘strategy’ change of late has been how we work with investors and raise money for our portfolio businesses. Launching our own SEIS and EIS fund has meant that now we’re able to raise and deploy funds exactly to our own requirements. We still always seek to co-invest alongside other investors, but now we also have the freedom and flexibility to deploy bespoke amounts, in the businesses that need it, exactly when they need it. Again for us this allows us to make decisions and deploy funds quicker, which is better for us, better for the founders we work with and the business that we start together.
To reflect I guess we’ve treated Nova like a startup, and used exactly the same methodologies that we use on our startups – we constantly test, measure, learn and improve. What’s really interesting and nice about the stage that we’re at now is that the things that we’ve discovered and learnt have been backed up by wider industry studies and data. This gives me further reassurance that the changes that we have made to overcome the challenges we’ve faced are not just anecdotal and specific to us, but also challenges that are being faced across the whole industry. Our ability to overcome these challenges gives me great faith that our learnings about the best way to build a tech startup are on the right track.
What impact have you made?
So I guess that depends on how you’re measuring impact but in my view, the biggest difference or impact that I witness is that we’re uncovering and enabling lots of latent entrepreneurial talent. Startup founders who may not have previously had a chance or the support needed to start a startup are now actually doing it and thriving. Our model has been great for domain experts, people with a deep understanding of a market or profession that they want to disrupt, but perhaps with little technical or even business experience. Being able to support and educate founders in areas that might have otherwise stopped progress and to see them now flourishing has been fantastic.
Also going back to my earlier point about waste, I believe that we’re having a significant impact on waste reduction. Having saved many founders and investors a lot of time and money on projects. Ultimately even in failure if we’ve been able to fail a business in 3 months and with only spending £10,000 instead of 3 years and £1,000,000 that’s a great thing for everyone involved.
The industry average success rate for tech startups is 8% based on 3-year survival, ours is trialling at closer to 50%. What that demonstrates is that we’ve been able to massively reduce the risk involved in starting a startup – for a founder that’s the difference between going alone and having a 12/1 chance of success, to partnering with us and reducing that to a 2/1 shot. And in real terms, it’s actually better than that as we’re allowing founders to do that without even laying any of their own money on the bet.
Time will tell on the greater impact that Nova has, we’ve got some fantastic portfolio business that is in the Health and Medical tech world’s whose missions involve saving lives which is fantastic. We’re cofounding businesses that we believe will provide real value to the world – and that’s not just value to the founders or us, but also our employees, our investors, the people who use our products and ultimately the economies of where we set these businesses up.
What does your competitive landscape look like?
I often struggle to pick out complete and direct competitors, and when I meet people and describe what Nova do I’m frequently met with ‘ok so you’re an incubator?’, ‘Accelerator?’ ‘Investment Fund?’ ‘Mentorship programme!?’ – and I guess the answer to all of those is well sort of yes, but not exactly. Probably those closest to us in terms of offering similar support, at the same early stage that was active, are becoming known as ‘pre-accelerators’.
Though whilst all of the previously mentioned are widely used and understood by those in the tech startup space, and a quick google will reveal a host of businesses offering one or more of these services, we believe that individually none negate all of the risks, nor provide the same level of support, for startup founders as our programme does.
So, not wanting to totally align ourselves with any of these things we created the term ‘Cofoundery’. It’s like we’ve combined the best bits of an investment company, an accelerator and a mentorship programme into one and added lots of other good things on to the sides too. I’d urge anyone starting a startup to do their due diligence and spend some time looking at all of the different options available and with a view that all that fall under the same ‘name’ i.e. accelerator, incubator etc are not equal. Look at the details of what you’ll actually be getting with each one, what it’s going to cost you, their track record, get to know the people, ask lots of questions and consider your own skillset and whether the programme you’re considering will compliment them.
What made you choose crowdfunding and why should someone invest in you?
Our business model, the same as many others that chose to crowdfund, means that one of the challenges we face when trying to scale our operations is that there’s an increase in our overheads, and that needs to be invested in upfront before we can grow.
So in terms of raising finance for this, we obviously had several ways in which we could do it. I think crowdfunding appealed most because I believe we’ve got a fantastic offering for investors, we have definitely priced this round to sell and I think it really represents good value for money and will ultimately yield a positive return on investment. I also wanted our round to be open to the people who’ve followed or discovered our journey and believe in our mission and what we’re trying to do, and those willing to invest their own cash to support us.
Crowdfunding’s great because it offers a really low barrier to entry to do that – you can invest from just £10, and in doing so will own a piece of Nova and be supporting our journey to enable a world of successful tech startup founders. If you choose to invest in our crowdcube campaign you’d be joining an exclusive club of investors, alongside the likes of Sir Terry Leahy and Bill Currie, who have equity in Nova.
Ultimately I also like the fact that the ‘crowd’ will determine if it’s a worthwhile opportunity or not. At two weeks in, we’ve just hit 80% funded so things are going well. We hope that people will take up the opportunity to back our crowdfund and join us on this journey.
What are the plans for the next 5 years?
I’m hoping that the coming years will see us expand what we’re doing already in the UK and grow the number of startups that we co-found by 50% year on year. From the data we have, and what we know from the growth we’ve already achieved, is that 50% growth each year is challenging but achievable. It will allow us to grow at a rate that won’t break our organisation, where we can still maintain our processes and ways of working operationally, whilst still keeping the fabric of our business and the culture that’s made us successful.
The next logical step after that is to expand internationally, and we’ve actually already started on that one, we are now just in the process of onboarding and starting mentorship of our first founders in Malaysia. With a view to officially launching a trial of our programme over in Kuala Lumpur in February of next year. If that goes well, and we can prove that we can deliver our programme and services internationally, we’ll then be looking to replicate and implement our model in other, yet to be confirmed, territories around the world.
The other thing that’s on my radar to come over the coming years is that as our own portfolio grows and matures our focus also has to shift from being experts in the very early stages of creating and launching businesses, but then also to scaling those businesses once they’ve achieved product-market fit.
I think we’re doing something that’s very different, but also very sensible – I hate waste, and I think we’re challenging a lot of preconceptions about what the early stages of building a business should be like. I’m personally really excited about what the future holds for Nova and all of our startups.