No Agent's FD explains why he only wants 'smart money'

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Courtesy of No Agent
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It can be hard to get noticed in the crowded startup nerve centre of East London, but the online property management platform No Agent has managed to break away from the startup peloton.

This April, the business garnered more than £584,000 in a crowdfunding campaign, with contributions from more than 200 investors. This was further boosted by a private funding round last month, explains Tom Benians, the finance director charged with steering the expanding company's finances. Altogether, No Agent collected £1.5m.

And now Benians has set his sights on a Series A funding round in 2018.

It’s a long way from Christmas Eve 2015 when Benians, then still employed at Deloitte, patched together a financial model around the founder’s kitchen table. “The founder, Calum [Brannan], is a serial entrepreneur and he contacted me to ask for help. What I did that night turned into the foundations of the business.”

Moving into an exciting 2018, Benians chatted with AccountingWEB about his baptism by fire as a startup FD, equity investment versus raising debt, smart money, company valuations and growing a finance team.


Moving into a startup, there was a lot of baptism by fire. In a corporate, you have your set role. But when I started at No Agent I was dealing with finances, but I was helping out with HR, even marketing. I still do.

We built a very basic minimum viable product with our seed round. Then in summer 2016, we experimented with a few landlords. On the back of that, we raised some equity investment which we used that to hire our first employee. And we had a few IT contractors to pay.

Up until recently I was trapped in this notion of ‘no need to hire this person’, I can do that easily. But we were growing so fast and I realised, taking a step back, I was getting distracted by the basic tasks and I wasn’t focusing on the big, strategic picture.

That’s a damaging effect that negates saving a bit of money. So we’re finally building a finance team now. We’ve just hired a junior financial controller and the company’s headcount is at 30. She’s taken over the bookkeeping and the preparation of management accounts. It allows me to focus on preparing our Series A round.

We haven’t really looked at raising debt finance. Part of the reason is that the mainstream routes for debt finance need some sort of collateral. We had nothing to offer in that respect, so we couldn’t go down that route of bank loans. We have a company credit card with Barclays. Initially the limit was £500 - but that has increased massively.

We have explored doing debt-based funding rounds in the past. But we much prefer the equity model because they’re not just investing money, they’re investing in the idea. It’s that idea of smart money and dumb money. We want smart money, people that have experience, they can bring expertise. Gillian Kent, the ex-MD of Microsoft MSN, Nick Hynes and Carl Uminski are on our board now and they’re very experienced tech veterans.

Series A is when you refine the business and Series B is rocket fuel. Series A is about refining and exploring some of the marketing channels we haven’t done before. Get our branding out there.

In terms of preparation for Series A, there’s a couple of key things I need to do as the FD. Firstly, there’s the forecasting and modelling. There’s a lot of complicated forecasts I built. They’re essentially using what we’ve learned so far: that is, how we know the business works, the numbers and our user acquisition numbers. We use those assumptions to create a more accurate forecast and in theory you want to be able to say if we inject money into here, we’ll get this result.

Then there’s due diligence for a Series A. We have to prepare data rooms. You have to give an investor access to your data. Ours is in the cloud. It’s a well-organised place in the cloud where everything is available for due diligence purposes: contracts with key suppliers, legal specifications, employee history etc.

Then there’s the question of valuation. That’s always a difficult question for any startup. You’ve seen a lot of crazy valuations in recent times. From our perspective, we don’t just want to storm into a VC’s office and say we want a valuation of X million. It’s a mix of ‘here’s a benchmark, here’s where we are, here’s what the industry is doing’. We need to prove what sort of return we want to give.

Eighteen months ago, when we started, a lot of forecasts were based on rough assumptions. But as we’ve evolved, we’ve got the costs down to the penny. So we can narrow our runway down to which week in a given month where the runway will last until. We also know which costs we can adjust to extend the runway if there’s a bad month, for instance.

The revenue growth is increasing quickly every month. We don’t just want to break even, so we’re investing all the growth in more growth.

Calum [No Agent’s founder] and I work well together. He’s charismatic and optimistic and I’m the pessimistic accountant. One of our non-executive directors is a chartered accountant, too. On the board, we’re the two finance people and it allows me to bounce ideas off of him. But a lot of people have this misconception of accountants being risk-averse, but we’re a startup. We can’t mitigate all of the risks.

About Francois Badenhorst


I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter. 


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