Technology start-up Spotted is facing one of the most common problems of establishing a business: raising sufficient funds. Earlier this year, the founders thought they were close to securing funding from a deal proposed by a venture capital company, but it fell through.
Founders Alistair Bruce, with Moritz Hertler, Stefan Reuter and Christian Uhrich, began their venture while studying for their MBA. Having graduated from Mannheim Business School in Germany last year, they have since been dealing with the highs and lows of getting a business off the ground.
Their want to launch of a smartphone app that enables people to network effectively, but funding is becoming an issue.
Their applications for two grants, worth about €94,500 each, from the German government were unsuccessful. A panel evaluating one of their applications gave Spotted a low grade on innovation, stating that there are many competing networking apps.
As a result the Spotted team has decided to specialise and develop their app initially for careers fairs, says Mr Bruce. It is designed to complement such an event’s brochure and help jobseekers and employers to network more effectively.
Using the software, jobseekers and employers at a careers fair can create profiles of themselves and read those of others. Exhibitors or employers can also select attendees they are interested in talking to and set up meetings during the event.
If Spotted is successful in the recruitment fair market, it should keep the team busy since it is a global business all year round, says Mr Bruce. The team can then consider adapting the software to accommodate other types of exhibitions and conferences.
The team had planned to launch the app at the University of Mannheim’s careers fair in April, but it is now back to the drawing board in terms of creating another launch strategy. Spotted does not have enough time to implement the necessary features for the official launch version, Mr Bruce says, because of changing requirements from the careers event organiser.
The app is being built in-house with the help of two part-time programmers. Working with Mr Uhrich, who has an information technology background, the two have been offered an equity stake in the company on reaching certain milestones because Spotted cannot afford to pay them.
After the highs of winning the European Business Plan of the Year 2012 competition, the team has its feet firmly on the ground. Mr Bruce maintains: “We know that winning the competition was not going to bring us success. We are realistic the whole time.”
Mr Uhrich adds: “As things have been moving more slowly, we have also been taking matters in hand and started planning our future aside of Spotted. We are still pushing towards new leads and working on the current prototype, however our personal financial situation is limiting us to a certain degree.”
Mr Bruce and Mr Reuter have found full-time jobs, but the four are continuing to work on Spotted. All have also been earning money as freelance consultants.
Spotted is being paid to work with Mannheim Business School, consulting on entrepreneurship courses and initiatives. The Spotted team are the first graduates from the full-time MBA to start a business and the school wants their views on potential modifications to the programme to help future students who are considering becoming entrepreneurs to increase their chances of success.
It is not all gloom and doom because winning the competition has created several opportunities. One of the competition judges, angel investor Julian Costley, invited them to present at his France-based Sophia Business Angels (SBA) club.
As a result, Spotted attracted the interest of investor and entrepreneur Candace Johnson, co-founder of the SBA club. She is keen on investing in Spotted as part of a group of investors.
Mr Costley is also planning an introduction to the board of the Deutsche Messe, one of the biggest trade fair companies in the world, with revenues of about €300m. “As they are looking for investments in the mobile sector, we are looking towards a chance to discuss options for future collaboration and maybe an investment,” says Mr Uhrich.
After a presentation at a business angels conference in Mannheim, Spotted attracted interest from investors in Munich – Starnberg business angels club – and the four were invited to feature on its crowd funding website for 60 days. The minimum investment per investor is €250 and the aim is to raise a minimum of €50,000 from the crowd funding site before the Starnberg investors offer Spotted any money. So far, €11,000 has been raised from 18 investors and they have until mid-March to attract more investment from the public.
“Clearly we are not relying on that as a source of income, but if it does turn out to be successful, it could give us the flexibility to take the company forward part-time and invest the money solely in the necessary technology,” adds Mr Bruce.
The team remain positive as Mr Uhrich explains: “Even if things do not initially work out as one might have planned them, leading an idea towards success is definitely possible ... However, what we have learnt and the connections we have made in the last five months and from the MBA have given us opportunities and we are enjoying them as they come.”
Over the year we will follow the fortunes of the Spotted team as it makes funding decisions, decides on its business strategy and brings its product to market.
Read more about Spotted: http://www.spotted-app.com