Greasing the wheels of early-stage investment
Is BlackBox right on time?
One thing I’ve found with launching PreSeed Now this year, is that there are investors who will seize any opportunity to expand and diversify their dealflow. Founders, meanwhile, are often crying out for venues to tell their story in a clear, understandable way that is aligned with investors’ interests.
With that in mind, today we’re looking at BlackBox, a new product targeting the exact readership of this newsletter - early-stage tech investors and founders.
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Next week we’ll have reached the point where many investors jet off on skiing holidays or just close their laptops for the year. And even if some VCs and angels are still out there deal-hunting, most founders seem to assume all their potential investors are somewhere up a French mountain.
So this is the final edition of the newsletter until early January, when I’ll be back with lots more B2B and deep tech startups from across the UK. In the meantime, please feel free to get in touch with me any time - I love to hear from readers 👋
BlackBox wants to grease the wheels of early-stage tech investment
The early-stage funding process can be a breeze if you’re lucky enough to be a founder with the right connections. But for many, locating people who believe in your specific idea enough to fund it at a largely unproven stage can be difficult.
BlackBox from Propelia is a new product designed to oil the wheels of pre-seed and seed funding rounds, making life easier for founders and investors alike.
It’s the brainchild of Dan Simmons, who has been exploring the concept of founder-market fit through his business Propelia and the FounderTech Decoded podcast (which I have appeared on in the past) for some time.
“In the very early stages, more often than not, what breaks down conversations and deal flow is that the founder is essentially pre-product,” says Simmons.
“The investor is trying to get comfort and assurance, asking product-driven questions to gain that assurance even though most good investors understand that the founder is at least 80 to 90 percent of the equation. Everybody says ‘it's all about the founder’, and yet there is no tool to enable them to efficiently gauge and evaluate that founder very quickly.”
How it works
BlackBox takes the form of an app that is designed to connect founders with the right kinds of investors. It’s initially going to be aimed at UK-based deals below £1 million.
Founders are walked through an onboarding process in which they share details about their startup, the space they’re targeting, any prior investment, the amount they’re looking for, the timeframe they’re targeting for the raise, and their SEIS status.
Following this, the founder needs to set up their ‘flight path’ (the app is packed with plane-related metaphors). This is a video pitch (“a TikTok crossed with a TED Talk”, as Simmons puts it) focused on the founder’s journey so far. It does seem a little odd that despite being something so important to the investability of a startup, the founder’s background is often no more than a few words on a slide in an investment deck.
“The founder is guided through four waypoints that demarcate different stages of their journey up to where they are and where they're going over the next three to six months. What they're asked to do is to map out through these waypoints, the four different stages of those journeys. You have an ‘anchor point’, a ‘checkpoint’, a ‘vantage point’ and a ‘vision point’,” explains Simmons.
The app allows the founder to record audio notes based on these prompts that they can edit into a script. This script forms the basis of their ‘flight path’ video. To make this easier, each ‘point’ can be recorded separately and redone until they’re happy with it. As well as aiding the investment process, these videos can also be shared by founders on social media as a piece of self-promotional content that also raises awareness of BlackBox. Let’s face it, LinkedIn’s algorithm laps that stuff up.
A big part of early-stage investment’s founder focus is trust in the founders themselves. How do investors know that the founder’s story is real? To address this, BlackBox prompts them to add five ‘co-pilots’ (another flight metaphor). These are essentially referees who can vouch for the founder.
Meanwhile, investors are onboarded by sharing the sectors they’re interested in, the range of their investment sizes, the speed at which they do deals, and details of their investments over the past six to 12 months.
BlackBox then matches up founders and investors who are potentially a good fit. They can then arrange an initial call. Thanks to the app’s matching process, it should be far more informed on both sides than many such calls in the early stage space.
Keeping the flight references going, the matching takes place in an ‘airspace’ section, and either side can easily ‘eject’ from a match at any time, just as a fighter pilot might eject from their jet.
BlackBox itself will be free to use, and Simmons says initial revenue will come from affiliate deals from partners. He is in discussions with potential partners in what he describes as the ‘foundertech’ space. This refers to products designed to make the investment process easier. Think of the likes of SeedLegals, Vestd, Swoop, and even Landscape (which we’ve previously featured here at PreSeed Now).
The idea is BlackBox will make it easy for founders to move from the app to these partners to continue the investment process. BlackBox will then get a cut from deals that are initiated through the platform. Simmons doesn’t want to mention any names of partners just yet.
Later, Simmons hopes to generate revenue by charging for access to data about the early-stage space as it is generated through activity on the platform.
Inside the BlackBox
Simmons started his career in the music industry in the late 1990s, helping to develop the careers of American artists like Marilyn Manson, Beck, and Hole as they gained traction internationally. His own career then went through a transition period working at the intersection of music and tech at a time when artists were only just starting to realise that the future was digital.
He then moved on to launch Propelia, where his goal was to develop “big ideas” in the same way a music artist would be developed by a label. Along the way he’s worked with the likes of Mumbli, which we covered at PreSeed Now earlier this year.
Simmons says BlackBox is the culmination of processes and techniques Propelia has developed while working with founders in the past. Simmons has co-founded BlackBox with CTO Alasdair Scott. In all, it’s a team of six which includes Matt Hussey, who I used to work with at The Next Web, and input from Mumbli CEO Marion Marincat.
Investment, future plans, and analysis
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