Startup Diary: Jo Goodson, Founder, Any Friend Of Ours
Startup Diaries is a new section of our website where founders can post their startup stories in blog form, describing their entrepreneurial journey; the challenges and highlights, eureka moments, lessons learned and laughs had along the way. The idea is to build a collection of first person anecdotes from women building businesses, as a resource for other female founders.
Our favourite Startup Diary blogs will be posted on our home page, like this one from Jo Goodson, Founder, Any Friend of Ours Ltd.
If you would like to write a Startup Diary, email our Editor firstname.lastname@example.org for details.
For this to make any sense, apologies but I do need to tell you a little about Any Friend of Ours. Basically, it’s an online private membership club for homeowners and their trusted friends and family. No more renting to complete strangers….
We went live with our beta at the end of April and things were chugging along slowly but surely and then we hit the jackpot with a feature in the Home section of the Sunday Times.
If we wanted to put the site to the test then we couldn’t have picked a better way. The upside was lots of interest from homeowners who really appreciated the idea of renting to people who were homeowners themselves or in some way connected to other homeowners. The downside was we realised that the site wasn’t answering all the questions it should and wasn’t guiding the user through the journey as we would have liked and the result was I had to spend a large amount of time dealing with questions and technical queries. However, I’m really pleased that it was my mobile number on the site in the first instance, as I’ve talked to the members and really understood their issues/requests etc. and we’ve now implemented a lot of the changes that were needed to minimise the help our members need in listing their properties and inviting in their trusted (non- holiday home owing ) friends.
Working in a consumer facing business is an interesting experience as in my previous business, we only every sold via the retail channel. However, it has been fantastic to get the feedback I have had from my existing members. They have signed up at the beginning of something that many really believe in and I need to keep working hard to ensure we can deliver that.
What it has also helped me do is understand what the business needs and so this week I spent a very interesting day today meeting with a company who provide interns/potential employees. I’ve decided with my limited awareness of the world of social media that I need someone young and savvy to come in as my community manager and help me manage our Facebook/Twitter/LinkedIn presence; someone who can help me write the newsletters which keep our members informed of what we’re up to but also of new properties we’ve added which they may be interested in renting.
Growing the membership base is probably my biggest challenge so I really need my homeowner members to engage with the site and begin to invite in all their trusted close friends and family. Whilst I know that keeping a ‘closed’ element of the site is at its core and crucial to differentiate us from the competition, sometimes when I look at the hill I have to climb to build out this community, it does feel as if it would be so much easier to open it up and let anyone list and anyone rent. That said, if I had done that, we would never have got the amazing Sunday Time coverage which really helped kickstart the business.
As an entrepreneur, I think it’s normal to doubt yourself and question the business but at this early stage it’s also key that we adapt where necessary but to continue down the path and stick to the strategy. This has been borne subsequently in meetings with a home insurance company and a private membership club who could clearly see the uniqueness of our proposition and the potential for partnership.
Sometimes you really need that validation of your idea and the encouragement to keep going when the self-doubt kicks in. All part of the rollercoaster.
I have made a significant financial investment in the site and now it’s time to look for financing. There are, of course, a number of options – I spent a morning this week at Smith & Williamson listening to a very interesting panel talking about new alternative revenue sources which I need to explore further. One in particular which appealed was Crowd Cube who provide a platform for crowdfunding*. However, my first inclination is to talk to Angel Investors as we are confident that we fall under SEIS tax relief rulings which mean any investors can claim as much as 78% in tax relief on any investment up to £150,000.** (See detailed information below).
We have one year from when we started trading to raise this so that gives us a good 10 months. I am also talking to a group who place investing Non-Execs and Chairmen and it would be good to find someone who can bring more than just money to the table. One of the key things I learnt during my stint at the Astia bootcamp is that ‘All money is not equal’. It would also be good to raise the money from a single investor or small syndicate. I have been a Non-executive of a number of start-ups and bringing in small amounts of money from multiple investors can lead to its own problems as you try to manage all their expectations. It can be incredibly time consuming and distracts the entrepreneur from the main job of building the business.
So the challenge for the Summer is to keep the business moving in the right direction and identify the investors who may be interested in joining us. I will update you in the next edition :-)
*Crowdfunding - a new way to raise investment
Crowdfunding gives the UK's entrepreneurs and business pioneers a new way to raise business finance by tapping into a 'crowd' of like-minded individuals willing to invest smaller amounts of cash in exchange for rewards and a stake in their business.
SEIS Tax Relief
**Tax relief of up to 78% will be available for investments in new small companies under the Seed Enterprise Investment Scheme (SEIS).
This was one of several proposals in the Chancellor's Autumn Statement on 29 November 2011 aimed at stimulating growth. However, SEIS will carry high investment risks and will not suit all investors.
The scheme will be similar to the existing Enterprise Investment Scheme (EIS), but it will be targeted at companies that are not more than two years old and are carrying on, or preparing to carry on, a new qualifying trade. Investors will benefit from income tax relief at 50%, regardless of the rates at which they actually pay tax on their income.
The potential for further 28% tax relief comes from an exemption from capital gains tax (CGT) on gains realised from disposals of any assets from 6 April 2012 to 5 April 2013, provided the gains are reinvested through the SEIS in the same period. This is a full exemption rather than the deferral of CGT that is available under the EIS.
However, the relief will be withdrawn if the investor disposes of the shares or the shares cease to qualify in the three years after the shares are issued. The investor would also lose the income tax relief.
The company's gross assets before issue of the SEIS shares must be not more than £200,000 and the number of its full-time equivalent employees must be less than 26. The company must have a permanent establishment in the UK and not have benefited previously from EIS or venture capital trust (VCT) investment. Directors, but not employees, will be able to invest in their own companies provided they own less than 30% of the company's shares.
To comply with the European Commission's state aid rules, the company must meet a 'financial health requirement' at the time the shares are issued; so a SEIS investment cannot be used to rescue a company in difficulty. A company will be able to raise up to £150,000 in total and the maximum investment for an individual will be £100,000 a year. There must be no prearranged exit for investors and the company's trade must be a genuinely new venture. The SEIS will last five years.
This document has been produced with the support of our accountants Hillier Hopkins LLP, a firm of registered auditors and specialist tax advisers with offices in London and the Home Counties.
For more information go to http://www.hmrc.gov.uk/seedeis/index.htm
Jo Goodson started her career in and around the software industry in 1999 when she joined Broderbund as their second European employee and grew revenues from £0 to £12m in three years. She then went on to co-found MediaGold, which, with further offices and bases in France, Italy, Spain and Germany, created an entity that gave US software publishers access to the European market place. She sold that business to Avanquest in 2003 following years of solid growth and profitability.
During 2005 and 2006, Jo acted as interim COO for Julie Meyer at investment and advisory firm Ariadne Capital.
Since then Jo has advised and invested in a wide range of companies in and around software space including Ariadne Capital, an investment and advisory firm; Indigo Pearl, a games industry PR company; Mediatonic and Playmob. She is also a Non-Executive Director of Six to Start who recently released the highly successful iphone app. Zombies, Run!
Jo has recently launched Any Friend of Ours: an online private membership community for second home owners looking to rent their properties within a closed, trusted network.
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