With this is mind, it’s interesting to see what Nova is doing from its base in Liverpool. As Olivia Greenberg, the company’s Chief Innovation Officer, explained to me when I visited recently, the company builds ‘cofounderies.’
What is a cofoundery?
Nova works with entrepreneurs who have knowledge and experience in a field, but not necessarily the resources to build a tech startup on their own. For example, imagine if you worked in financial advice and had a great idea for a tech business in that field. Nova would work with you in partnership to develop your startup in a multi-stage process.
After successfully pitching to Nova, an entrepreneur will work with the company for up to a year to achieve problem-solution fit, and product-market fit. During this time, the entrepreneur can stay in their day job, as long as they commit to work a day a week on the startup. Nova takes on the work of developing the product, investing up to £300,000 of its work and time into the project in return for equity.
You could think of Nova as a technical cofounder with seasoned business-building experience.
“We take some of uncertainty from entrepreneurship,” says Nova’s Paul Millward. “Often people don’t want to quit their jobs; it’s too risky for them.”
Provided the business shows promise, Nova can put an extra £400,000 worth of time and services into refining the business model in year two. The aim is to get the business ready for external investment of more than £1 million by year three.
Traditional investors, and some seasoned tech entrepreneurs, may shiver at all this talk of investing services and expertise in return for equity, but Nova sees it a filling a gap in the market.
As Greenberg and Millward explain, it’s about ‘de-risking’ the process of trying out a startup idea. Nova focuses on quickly failing or pivoting if needed, all without having to hire staff too early. Some founders who lack technical expertise call in contractors to build their product, but this can be a bad idea. The last thing you want is to give a load of your money to someone for whom your dream is just another job.
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“Everyone on our team is focused on (a startup’s) success because we’re cofounders,” says Millward. Nova takes a 50/50 equity split with the founder, and dilutes its stake like a cofounder if more names join the cap table after external investment rounds.
Who has Nova worked with?
This model only makes sense if Nova has a track record founders can rely on. Greenberg says that while the failure rate of startups is typically 90 percent, only 50 percent of the 27 startups Nova has worked with have failed to date.
Given that a proportion of any group of startups will fail, the company’s proposition is that having an experienced partner on board imporves the odds of success.
Companies Nova works with include Pinpoint, a fintech product that is currently in beta. It offers a ‘financial wellness’ product for individuals that is being sold as an offering to HR departments, so companies can help staff make the most of their salaries. Meanwhile, Clik is a fun, accessible app for testing children’s hearing. Other companies on Nova’s books include Orcha Health and Thirsty Horses.
They team behind Nova have worked with numerous successful companies in the past too, including Sentric Music and Lucid Games. And the company also has an innovation partnership with Alder Hey Hospital, which has spawned products like fluid balance monitoring for patients. These can then be commercialised around the world to the benefit of both Nova and the hospital.
Nova has some notable investors on board to back its model. These include former Tesco CEO Sir Terry Leahy, Bill Currie (of The Hut Group), Deepbridge Capital, CoAngel Investment Manchester, and a consortium from the Isle of Man.
Essentially, Nova is a hybrid investor and tech development agency. Its specific approach to cofounding startups with entrepreneurs is unusual but not entirely without similarity to others’.
Apadmi is taking a similar route in Manchester, both spinning out internally developed companies and investing in and supporting external startups. And the Leighton Group in Sunderland has built successful businesses internally before spinning them out for many years. Neither of them has ‘productised’ their approach as an offering for external entrepreneurs as clearly as Nova, though. London’s Entrepreneur First has a similar ethos but a very different approach.
As the agency market evolves alongside an increase in people considering life as a startup entrepreneur, it’s easy to imagine others following Nova’s approach. It’s not something you can come into lightly, though. Nova employs a team of 170 people, and will be opening an office in Manchester soon. For now, the company has a USP and model that stands out from the crowd.
To help spread the word about its model, Nova will be holding ‘How to Start Your Startup’ events soon in Liverpool and Manchester:
- Launch 22, Liverpool (27th September)
- SpaceportX, Manchester (date in October TBC – to register interest please email email@example.com)