Kevin Monserrat is the CEO of Consilience Ventures, a disruptive new collaborative community connecting capital, growth companies and business expertise.
For too long, the traditional Venture Capital model has been portrayed as the darling of our start-up economy.
Lauded as the lifeblood of budding innovators and pioneers, traditional VC unlocks an abundance of growth and opportunity for enterprising tech companies heralding in ground-breaking change. Or so the conventional narrative goes.
In reality, 95% of Venture Capital-backed start-ups are not profitable, and 75% will fail – never to return any cash to investors. They are startling statistics, and a telling insight that the big VC firms hope will never see the light of day.
Beneath the polished surface lie three key faults at the heart of the traditional VC offering.
Firstly, start-ups, investors and experts’ interests and agendas are not aligned. Start-ups desire a high valuation and have little incentive to share their most profound worries or pain points with their backers. The investors meanwhile naturally seek reduced risk and lower valuations, whilst the experts find working in start-ups a story of long hours, low pay and high risk.
Secondly, the process to raise capital is a massive distraction for founders, who can spend up to 60% of their time on future funding rounds and face unwanted “strings attached” from VC firms. This lengthy and consuming process leads little time for strategic growth.
Thirdly, the current model continues to value returns over the value companies offer society. Investment will find itself into a profitable fintech company before a bio-tech company that can save lives; VC is blindly focussed on finding the next Airbnb or Uber, not sustainably investing.
We must therefore question the very fundamentals of how the start-up investment industry operates.
We must always remember that start-ups require effective ways to raise capital, a robust and trusted network that provides resources to grow a business and most importantly, time.
Investment models of today should therefore set out to design a financial ecosystem that can provides a community for carefully selected start-ups, investors and experts. Much more should also be done to make venture capital a democratic and transparent enterprise, underpinned by technology to improve accessibility and efficiency.
Our model at Consilience Ventures for examples is based around a blockchain token – a tool to keep track of ownership between the community. These tokens are exchanged like shares in a company, either for cash or to pay consultants, creating the opportunity for liquidity for the hundreds of investors and start-ups.
Near-instant liquidity means that investors bear much less risk because they have greater control over their ability to realize returns, while companies themselves are able to raise more in the absence of illiquidity. And with the risk pooled into every start-up in the ecosystem the, investment is more democratic and less risky than just putting all the money in a single company.
Greater use of AI technology also improves the investment decision process – firstly by making it more transparent, and secondly by making it more democratic through the reduction of human bias and favouritism.
All too often, those investing the greatest amount into a start-up will have the strongest influence. An alternative approach is to democratically vote for those start-ups to be invested in, with a community – comprising not just of investors but also of industry experts – underpinning the relationship between fund and start-up. In this sense, every stakeholder shares in the success of the fund, whether through their investment or expertise.
Finally, rather than looking for a quick buck and a simple exit, the VC community can work to place a greater focus on both sustainable and more patient investing. The ‘instant return seekers’ as I like to call them have the potential to cripple start-ups from the inside. They import toxicity into the company by failing to understand the nature of the setback, which inevitably occur, and are simply profit driven. Consequentially, such investors begin to fight with the founders and instead of working together constructively to solve a problem they argue over it. This toxic environment can kill a start-up.
By offering a community and network-based structure – in which capital and returns can be democratically raised and paid, in which expertise can be duly rewarded, and in which the societal value of a company is patiently given as much consideration as the prospect of a quick profit – venture capital can transform itself into a more level playing field, for start-ups and investors alike.
THE EMOTIONAL AND FINANCIAL COST OF WORKING WITH OUTDATED TECHNOLOGY
Slow Tech Could Waste 24 Hours of Worktime a Year
In this digital age, businesses are hugely reliant on technology to get work done. And this is especially the case for one-man-bands and small home-based businesses who may count on a single computer to keep things running smoothly from their home office space.
This said, if the technology at hand is slow or outdated, it could become more of a hinderance than a help. Investing in upgraded tech may seem like a steep expense, however, delays cost time and time is money. In fact, recent research looking at the impact of tech troubles in the workplace found that delays caused by slow technology could add up to a hefty 24 days’ worth of worktime a year per person.
Here’s why keeping hold of outdated tech when its past its best could cost your business in the long run.
The biggest tech hold-ups
Delving deeper into the research, it’s evident that the most time can be lost on some of the smallest of tasks. Simply waiting for your computer to boot up, for example, can add up to 8.8 days of lost time over the space of a year (17 minutes a day), while 8.5 days can be lost to opening emails (16.5 minutes a day). Slow software has the most to answer for, however, contributing 10.4 days’ worth of wasted worktime (20 minutes a day). When you think about your own day rate or that of an employee’s, this lost time all adds up to some serious money, right? Probably more than it would cost to upgrade your tech.
Productivity can suffer too
Glitchy tech may not only cost your business time and money; productivity can take a serious hit too. According to the study, a third of workers admit losing motivation when they have to wait on tech to respond. And this comes as no surprise. When faced with freezing programmes and buffering browsers every day, frustration can build up. And when someone’s suffering frustration, productivity and motivation can drop. As a result, it may turn out it’s not just the tech that is slowing down tasks, but a reduction in employee efficiency too.
Tech expert and anti-futurist, Theo Priestley, argues that the issues caused by outdated tech at work can even have a negative effect on someone’s work-life balance and wellbeing. He explains, “not being able to complete work or feel productive or have a sense of accomplishment in a task can be a stressful experience. And depending on the nature of the work, more often than not, employees will need to work additional hours to compensate for the wasted time, which has a knock-on impact on personal and family life.”
Outdated tech can put your business at risk
Beyond the costs to your business, outdated tech can also put it at increased risk of cybercrime. The older the technology, the easier it is for hackers to exploit it. What’s more, if you don’t update your security software regularly, it won’t be equipped to address the latest security threats.
Priestley explains “outdated technology and software means easy exploitation from inside and outside the organisation. If you’re not using the latest versions of operating systems, or software that you’ve invested in, then there’s greater chance for someone to exploit known weaknesses in that system and expose or steal data or valuable company information from them.”
What is the solution?
Regularly assess what condition your hardware and software are in and where delays are occurring. If you find yourself waiting on the same problem day in day out, it’s probably time to do something about it. But how often should you be upgrading your IT equipment?
In general, a computer being used for business could do with being upgraded every two to three years for optimal performance. Alternatively, sometimes simply upgrading the memory or hard drive can help applications run more quickly. Any other equipment such as printers, keyboards, etc. only really need to be replaced when they break.
As for software, upgrade it regularly. While it can be a temptation to stick with older versions that you’ve grown accustomed to, the newer versions will offer improved capabilities, efficiency and security.
While computers slowing down over time seems inevitable and something that we’ve accepted will happen, it’s important for businesses to recognise the problem can have a bigger knock-on effect than you may think. By investing in updated, efficient technology, the savings experienced via productivity are likely to vastly outweigh the price of the tech itself. So, next time your computer freezes, perhaps consider whether it’s time for an upgrade.
OFFSHORE COMPANY FORMATION TACTICS FOR SMEs
James Turner, Director at company formation specialists, Turner Little
Starting a business brings with it its own set of challenges, as well as opportunities. But when setting up a business, the where is often as important as the how, and knowing what to expect in terms of company formation regulations and requirements is key, so you can start your entrepreneurial journey on the right foot.
James Turner, Director at company formation specialists, Turner Little, takes us through what we need to consider when it comes to offshore company formation, and the benefits it can offer start-ups and SMEs.
“Despite what the media will have you believe, there are numerous legitimate reasons to use an offshore company. Offshore companies can often provide SMEs with access to better infrastructure and legal frameworks. Regulations in different parts of the world could prove to be restrictive for businesses by preventing foreign entities from launching factories, buying property or investing in local companies. In this instance, setting up an offshore company can help in completing transactions and provide you with the ability to hold any local assets necessary,” says James.
“However, one of the fundamental reasons for setting up an offshore company is often privacy. Moving assets or setting up a business is often done in a country that offers more tightly protected data security, has a robust legal framework and a network of service providers that streamline the setting up process. Switzerland is often the country of choice when it comes to privacy, as it’s synonymous with security and data privacy. Another reason SMEs should consider setting up an offshore company is tax efficiency. Tax advantages are offered by different jurisdictions. For example, Singapore has one of the lowest corporate tax rates, while the Cayman Islands might be more ideal for freelancers who are looking to minimise the effective tax rate on their businesses,” adds James.
“Offshore companies provide SMEs with the ability to mitigate risks that arise from political instability or currency volatility. We have already seen businesses starting to register European entities in order to limit their exposure to the fallout that may result from Brexit. Whatever the reason, spreading your operations across jurisdictions may be the best long-term business strategy SMEs can adopt to secure future growth,” adds James.
Turner Little specialises in creating bespoke solutions for individuals and businesses of all sizes. The knowledge and expertise of their specialists will be able to assist with any enquires, no matter how complex.
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