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There appear to be only a very small handful of digital and tech companies in Cardiff actively seeking private investment. Mine just happens to be one of them.
The reasons for seeking investment for digital and tech companies is usually very simple: rapid, explosive growth. Most business models in this sector are reliant on being scalable. Many simply don’t work without a very large amount of users. After a recent pitch I got told by a potential investor that my business wouldn’t work because we didn’t earn nearly enough money per user. He used to run a manufacturing firm that had five clients, each of whom gave him half a million a year. That’s how you run a business, he said. But, I countered, what if you have thousands, or millions, of clients? How do you explain Facebook being valued at $50 BILLION when its average revenue per client is under $10 per year, I asked.
He couldn’t answer. His understanding of the only way to build a business was out-dated.
Startups like ours are massively viable, but often only if you have a very large user base. Facebook wouldn’t really make any money with a few thousand users. It needs scale to make serious profit. But it’s not easy to reach hundreds of thousands, or millions, of users then persuade them to regularly use your service. You need rapid prototyping, testing and development to make your service as desirable as possible, and you need marketing to let the world know that you exist. And all this costs money.
The process of seeking that financial boost is mentally and emotionally exhausting. A series of investors pick over every part of your plans in phenomenal detail. It leaves you with sleepless nights as you sweat over the fourteenth version of your business plan, and worry about giving your over-rehearsed pitch for the 12th time. By the end of it you’re sick of the sight of your own financial forecasts. And it almost certainly takes months and months before, if you’re very good, someone invests in you and your idea.
But I would recommend almost any startup serious about growth to begin the process as soon as they can, regardless of whether they feel ready or not. By the time you realise you need the money, you’ll wish you’d started the process six months before. I know I did. And by the end of the process you’ll understand your business more than you could ever have thought possible. It hurts like hell, but it’s a turbo-charged crash-course in understanding what makes your business tick and whether you are ready to take it to the next level.
And if you’re not, you will know exactly what you have to do in order to be ready.
In the latest of our one-minute profiles, Neil speaks to another Cardiff startup making waves.
Hello! Introduce yourself.
Hi, I’m Alex Kavel co-founder of Graduly. I’m a Cardiff boy, graduated from Cardiff University and an ex-recruiter.
So, what does your startup do?
Graduly focuses on helping small and medium businesses across the UK, (instead of large corporates), to connect with Graduates by accessing our own Library of Graduate CVs.
What makes Graduly special?
Unlike conventional CV libraries, we don’t need the graduate to have a ready made CV – the whole point is that we help them to build it in such a way that employers can easily zero in on the candidate they really want. Our secret weapon is the search tool we’ve built around our unique ‘exact match’ algorithm, and that’s all I’m saying!
What was the genesis’? The eureka moment that made you realise you had to build this company?
As a recruiter I found the tools we were using to search for Graduates were in fact antiquated and ineffective. There are, for example, no tools currently for easily searching for graduates with a 2:1 from a red brick university. So I got together with my co-Founder, Neil Smith, who was already building cool social apps, and Graduly was born.
And where are you at right now?
After a busy first year of building our website, apps and tools, we’re now working with Universities and companies across the UK, and focusing on bringing in the graduates to populate the CV library.
What’s the key to your growth? In other words, if someone could wave a magic wand, what would you want them to do for your business?
Working with Universities will be key to fast growth. So far we have had a good response from a number of key institutions, as well as businesses. Once graduates know what Graduly can do for them, we’ll be on our way, so a megaphone message to all students, please!
Where would you like your company to be in 5 years time?
Our vision is to be seen as the natural choice for graduates moving into the world of employment – as UCAS is to those entering Higher Education. Graduating should lead to Graduly! In industry terms we want to be more than just the biggest database of candidates and range of clients, we want our ‘exact match’ algorithm and approach to the graduate recruitment process to raise the bar of the ‘Job Board’ and CV library industry.
Where can we find out more?