Dear NEM Community
This is an open call for opinions, thoughts and ideas in relation to a new initiative we want to start running in 2020 to support both the Catapult launch and ecosystem wide adoption in general. At present it is conceptual but we would appreciate your input on whether you think it is heading in the right direction etc.
The primary goal is to encourage early stage companies to build on NEM to a proof of concept or pilot stage, validating their ideas and various use cases on NEM, while also providing support to those that need (and deserve) it in relation to commercialising their ideas.
Origin of the Idea
The team have been involved in a couple of smaller hackathons recently, usually diverse 16-30 year old teams, who have in many cases great ideas and can explain them but not necessarily in investment terms and really need a small financial assistance coupled with some experienced mentors to form the idea.
What is in it for NEM? Basically we help onboard very early stage companies and ensure we fully understand the strengths, weaknesses and commitment to NEM before assessing them for investment etc. We give something back to the industry and ecosystem which also has a positive impact for us.
Overview of the Challenges
NEM Ventures have now processed 70+ proposals, a few trends starting to appear that are sub-optimal, particularly in the smaller ticket proposals:
- Several encouraging ideas show promise but aren’t ready to be invested in due to lack of prep work for various reasons, one of which is funding. They therefore fail due diligence with us another investors but what they really need is an incubator like approach.
- Some of the teams don’t really have the experience to know how to start planning to commercialise a technical idea, but with some help or introductions to people who do, could have a viable commercial business
- Quite a few of the “small” tickets are looking for seed funding, but pitch very high for their stage of investment, we suspect partly due to lack of fund raise experience that can be easily explained by an experienced mentor.
- The most promising proposals tend to be coming to us post seed funding, we would prefer to engage with these as early as possible as an investor, both for our own gain but also to help them realise the full potential with effectively free advisors
NEM Ventures wants to draw in promising projects as early as possible and help them onboard to NEM, ultimately so the ecosystem is healthier and so we can try to maximise positive returns.
We have been to several hackathons/incubator kick off and accelerator events, there are a lot of very motivated people, doing very cool stuff, most of who will fail, some will succeed and almost all of whom don’t consider NEM, that is a problem for us as an ecosystem and NEM Ventures as an investment company looking for promising early stage startups.
Run regular Virtual Hackathon like events, the winners of which receive a small cash prize and mentoring from some of our team to help form it into a commercial business plan ready for investment.
We are still working out the details, but it is likely to be approx $5,000 funding available each month.
- Each quarter (or month once we see how it works in practice) we open a new cohort/round
- Requirements to be accepted will be submitting an application, similar to the current proposal one but simpler and with a lower set of requirements, something along the lines of the below, essentially the type of thing you would see a hackathon team present at the end of the event, but they get to pick the problem they are working on:
- A Pitch Deck
- Business Plan Canvas
- Protype of UIs if appropriate
- Pitch video of not more than 5 mins
- Explanation of what you know about NEM and how you think it might fit into your business solution
- Signed confirmation the company has not commenced trading or been operational for more than 12 months
- Detail of any funding received, awarded or won to date
- Accept a maximum of 10 applications a period, its important to limit workload intially until it settles in
- Following close, we review the submissions with a revolving panel of 2 of us and select 3 projects to take to final pitch session
- Schedule a call with those 3 and give them 15-30 mins to pitch live
- The judges pick a winner (and maybe a runner up) from them to be funded, for example with $1,000 and $4,000 prize which is to be spent on scoping and developing their idea in the next 3 months on Catapult, under contract as a condition of receiving the prize
- During those three months, the have access to one of us for emails, chat, video call, introductions type support
- After 3 months they present the full business plan and investment case to a panel and we decide if they have done enough to take it forward to a formal investment.
- As a condition of receiving the prize, we have first refusal on their next funding round, likely in the form of a convertible note, similar to other incubators
- There is no guarantee that any project will win, for example of only 3 enter, and none are good enough to win, none win and we wait for the next period
What do we hope to achieve with this
- Onboarding more projects onto Nem – of the ones that don’t win the prize, some will go on and continue anyway. That is in the region of 9 x 12 = 118 per year, even at 10% continuation we could onboard 12 projects who may still be viable and prove adoption.
- Brand awareness, this kind of stuff can hit PR well and other chains already do it
- Naturally NEM Ventures is also interested to increase the volume and quality of our dealflow by enaging startups very early as well to help is continue building a sustainable investment vehicle to support the NEM ecosystem
So, what do you think?
NEM Ventures Team