This article was originally posted on the Tech North website.
LivingLens is based in Liverpool’s Baltic Triangle, where it has grown from a team of 5 to 17 across Liverpool, London, New York and Toronto in a few years as a result of equity financing. They’ve gone through four rounds of investment to date and raised £2.5 million.
Who are LivingLens?
Carl Wong is the Co-founder and CEO of LivingLens. He has specialised in consumer insight and market research for 20 years, on both client and agency side. LivingLens was born from his experience of the problems and pains of that industry.
“In 2012 to 2013 we built a prototype of LivingLens,” says Carl. “It enabled people to search and pinpoint specific meaningful content within mountains of video content, and then analyse those recordings for consumer insights. When you’ve got 10, 20 or 100s of hours worth of content, to get to that killer content is really difficult and time consuming.”
“Though we had a great idea, we realised we would need a lot of money to build this technology. My Co-founder David and I started looking into the world of equity finance.”
Seeking equity finance
Carl and his Co-founder David wanted to sell shares in their business in exchange for financial backing. But they had no idea where to start.
“We took a government-funded course called Growth Accelerator in 2013, based in London. London is the center of the universe for equity finance. A specific module called Access to Finance educated us about what equity finance was, and where we could get it.”
This was the beginning of their investment journey, which would ultimately take them through four funding rounds. They would go on to receive investment from British Business Bank – which provides funding for UK small businesses – through their Angel Co Fund.
“Through our course, we were introduced to a new networks and our own mentor. We then got a place in an accelerator called Collider, starting in January 2014. Each business in the cohort got around £100,000 worth of seed funding for their business.”
Accepted into an accelerator
Collider is a ‘madtech’ accelerator that invests in and scales disruptive marketing, advertising and commerce startups. It’s backed by a dozen individual ex-marketeers, each with their own funding to invest in participating businesses.
“It was the making of our business. It taught us so much that we didn’t know and gave us great access to advisors. In the summer that year we raised a further £200,000 from some of the Collider backers. Collider continues to give us informal support today.”
The Collider accelerator was exactly what LivingLens needed to grow. They were starting to crack into the world of equity finance.
“This money, at that stage, was to build our technology. It was about turning this thing into a viable product that could scale, allowing us to build relationships, to get proof of concept, and understand product market fit with brands and agencies.”
“We started to get small amounts of business here and there – little projects, little proof of concepts. That proved we were getting traction, since it wasn’t just us who thought LivingLens was a good idea. Other people were willing to pay for the privilege of using our technology.”
Growing LivingLens into a commercial enterprise
Once they had developed their product, it was time to grow LivingLens from a small business into a commercial enterprise. That would require even more funding.
“We completed another fundraising round in 2015 for nearly £1 million. It came from a range of angel investors, including both new angels and those who had previously backed us. We also received funding from Creative England. Now, we could really start to scale.
“Before this funding round, there were around 5 of us on the team. We were all doing a bit of everything. I was doing selling and marketing, building up strategy and testing the product. Everybody was doing the same.
“That funding allowed us to bring in people with domain expertise in different areas like sales.”
This would prove especially pivotal for their fledgling engineering team.
Defining themselves as a technology business
Despite not coming from technology backgrounds themselves, Carl and David saw LivingLens as a technology business. Their engineering team was a key part of how their business was to deliver value.
“Through our funding, we’ve been able to start to build out our own team of engineers. Before that, we had one engineer on staff, and for the rest we were paying freelancers, or buying in the build of our technologies from third parties.”
“As a technology business, we needed to develop technology and engineering as one of our core competencies.”
The wider market
Building their in-house talent was starting to pay off for Carl and David, but it was still a battle to convince wary clients why they would even need LivingLens’s technology. The market was not mature.
“It was embryonic. We were building the market of video intelligence and analytics in the insight world. Every conversation started with, this is why video should be important to you.”
Although it’s exciting to be one of the first products to market, this also means that relatively few customers may yet be interested in your product. They need to feel part of the crowd in order to take the risk.
According to the Rogers Adoption Curve, you’re trying to appeal to the Early Adopters – those willing to take a risk on an unproven product. There are comparatively few Early Adopters.
But the market is slowly maturing, and LivingLens’s customer base is growing. Many of their clients are based in the US.
“The penny has begun to drop in the last 18 months. The conversation is shifting away from ‘this is why video is important’, to ‘why we are the best partner to operationalise your video strategy for you’. We’re able to talk with our clients about how they can get loads of insight out of video and drive revenue.”
British Business Bank
Riding this wave of growth, LivingLens closed their fourth funding round in January 2017. They raised just over £1 million.
British Business Bank, through their Angel Co Fund, was a key part of this funding round.
“Since they’re a more commercial organisation than some angel investors, they ask the tougher questions. Although that might seem scary, it actually makes you look at your business harder. It focused our attention on how we run our business, and added so much value.”
The Angel Co Fund invests in businesses that specifically grow the UK angel investment market. It can only be accessed through networks such as British Business Bank.
“We’ve grown by 300%, and now nearly 40% of our business comes from the US. The team has grown to 17 people, and we have open vacancies for more than half a dozen positions. That would have been impossible without these people and institutions believing in our product, the team and the market.”
How to raise funding
With such abundant returns, many startups are after angel investment and Venture Capital. It’s a notoriously difficult industry to crack.
“Raising funding is agony,” Carl says. “It’s very energy-consuming and there’s no one to take over your day job. I’m in the thick of that pain now. It takes 70-80% of your time for 6-9 months during each round. The more money you ask for, the longer it takes.”
“As one of my investors often says, ‘Why should I give you my child’s inheritance?’”
The game changes as your business develops. What you learn during one round isn’t necessarily directly applicable during the next.
“It should be harder in the early days because you’re asking people to invest in an idea, compared to having an actual running business. But since the size of the funding round is higher, you need to get institutions involved – there’s a point you reach where angels aren’t really the right audience for you.”
“Institutions are different to angels. They often drive a harder bargain on the promise of being able to add greater value to your business, and are much more ‘returns’ focused. They can be more hands-on, and can provide introductions to distribution partners and clients.”
Raising funding means upping the stakes in your business. It’s not to be entered into lightly.
On being located in Liverpool
While popular opinion might say being in London makes it easier to raise funding, Carl strongly disagrees.
“I often have conversations in Liverpool about how it’s hard to raise funding, but it’s the polar opposite. Liverpool is the second fastest growing technology cluster in the UK. And Liverpool is cheaper than London!”
“It’s easy to think that being up north is tough, but that’s absolute bullsh*t. It’s all about looking at it in the right way. Being in Liverpool has never disadvantaged us, as long as you spend time in your target market too, such as London or New York. You’ve just got to get out there, because people buy people.”
“We used to be part of something called Liverpool in London. It brought support for businesses trying to get a foothold in the capital and I could use the facilities there. So being from Liverpool brings opportunities.”
The talent pool
While LivingLens has been able to successfully grow it’s in house talent, some worry about that the tech talent pool in the North is drying up.
“Sony used to be based in Liverpool and they successfully grew their business. After they pulled out a number of years ago they left a hugely talented pool of engineers here. The university also graduates lots of talented students who remain in our great city. So we have access to great talent here in Liverpool.
“Admittedly, the pipeline of future labour is a challenge here, as it is across the North.”
Wherever you go, engineers are hard to find.
First Liverpool, then the world
Funding can help a startup up to scale, but only if there is a solid foundation to begin with. Investors want proof that your business is worth their time and money. Many startups struggle to deliver this proof.
LivingLens has had an amazing investment journey so far. They’ve managed to keep their investors happy with their continued growth, and kept on levelling up to the next funding round.
Carl and David have been able to make every aspect of their business work in their favour. They’ve convinced clients to take a risk on their product. They’ve brought equity funding to Liverpool, while attracting local talent to their company.
They’ve used their investment to scale and open the doors to international expansion. More companies will want to follow in their footsteps.
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