EC1 Capital is based in London because that is where the majority of web startups operate. Because we like to be involved in our investments we need to be mindful of the practicalities of travelling to portfolio companies. Our investment geographic triangle is between London, Dublin and Edinburgh.
Would you consider European investments?
Not on this current fund unless you are looking to relocate to the UK and incorporate here. We have finite resources and building successful companies is hard enough without placing additional layers of geography, culture, language and commercial law.
How much do you invest?
For seed and bridging up to £400k. We have led syndicated rounds of up to £1m at seed.
For Series A partcipation rounds; between £200k and £1m.
Do you follow on?
If the company is performing and has interest from another investor on the next, larger round we will usually follow on to maintain at least our pro-rata equity allocation.
I didn’t hear back from you?
EC1 Capital is only a small firm with limited resources to engage on every application and provide feedback, last year we had over 1,500 applications for funding so we cannot get back to everyone. It clearly states when making an application that we will only contact you if we are interested.
The most interesting deals come to us via our network so often that is the best way to apply or if invited, come along to an office hours session.
Why do you work in co-working spaces? Don’t you have any money?!
We deliberately chose to work like this. We are fully mobile. We don’t believe we can be connected to entrepreneurs by locating ourselves in Mayfair, Chelsea or The City.
We want to immerse ourselves at every level where entrepreneurs meet, work and play and we want to put as much of our capital to work as possible without being absorbed into unnecessarily high overheads.
How much do you invest?
Depending on various factors such as team, sector and the degree of traction that has been attained we will consider an investment range of £50,000 to £1m. We will syndicate with other VC’s or Angels especially of they can bring domain experience or connections to the deal.
How can you help us apart from financially?
EC1 Capital is committed to helping all its portfolio companies in any way possible either through our network of contacts or through a mentoring process using our own personnel as well as philanthropic advisors associated with EC1 Capital who have an interest in helping out entrepreneurs where they can.
During 2014/15 we are building out a team of advisors in specific verticals and disciplines.
Do you accept single founder teams?
As a general rule no, however there can be exceptions and we have backed exceptional solo founders. We would encourage a solo founder to team with another suitable person at some point, it is difficult enough to run a growing startup let alone trying to handle it all by yourself.
Will you sign an NDA?
A common trend with investors in the tech space is not to sign NDA’s. EC1 Capital does not sign NDA’s.
What specific areas do you invest in?
Our fund has just started and we want the initial remit to be as wide as possible, if it is a web related or mobile product or service then we are interested to know about it.
We tend to shy away from hardware related investments.
We look for:
Existing markets that are ripe for disruption.
Newly emerging markets
As time progresses, we may well narrow our focus to specific verticals.
Do you charge any fees?
There are no application fees.
There are no non-executive fees for board positions or for our time.
We may pass on legal fees when completing investments.
Apart from money how can you help our business achieve its objectives?
We like to help out in any way possible; our founders come from an operating background. If there is an area of expertise in your vertical that we are lacking we will find people who can help.
EC1 Capital is generally not a passive investor, we like to take meaningful positions on a board and actively contribute to company decisions but we don’t want to run the company.
Depending on the amount invested we usually take board observer positions on the board or a non-executive directorship.
Although we have a large network of expertise, you are the founder and domain expert. Our main contribution is around guidance, helping with further fund raising and recruitment.
How long does it take to close funding?
In an ideal world we like to get to know entrepreneurs over time, to build a relationship and trust as well as faith in execution.
However, this is usually a luxury.
So, after several successful meetings and agreement at partner level a term sheet would be issued. It is then a matter of bringing in existing interested angel investors or to reach out through our network and bring in the most suitably qualified angels with domain expertise or other VC firms to complete the full round amount.
Once all parties agree to the term sheet, lawyers draw up the shareholder subscription agreement and articles of association.
The paperwork process can take up to 3-4 weeks but the whole process including bringing in other investors may take between 4-8 weeks.
What makes EC1 Capital different?
Focused on early stage from seed to bridging to Series A participation.
Large network of co-investors
Large network of expertise
UK and Ireland focus
Lean and agile processes
Why did EC1 Capital start?
We believe we are living through an amazing pivotal time and feel there is a huge opportunity to invest in high risk but high growth technology companies.
We feel that the following milestones in technology have created an opportunity for EC1 Capital to exist:
The falling cost of launching a startup
Less capital required for a startup to reach escape velocity
Open source software
New ways of execution such as lean canvas model
Democratisation and shared information about how to raise capital and build successful outcomes.
Free viral channels such as Twitter, LinkedIn, Facebook etc.
Rise of accelerators
Broadband adoption as well as a 120x increase in speed
Mass adoption of smartphones putting a computer into everyone’s pocket.
SaaS business models
London as the most popular capital in Europe to launch a startup
Favourable UK tax incentives for angel investors
Crowd funding and other alternative means of raising capital