Chris Smith: Bottling creativity for investment
At just 28 years old, Chris Smith has already raised more than $10 million in capital. He started his first company Dash – an online ticketing provider – at the age of 21 and three years later it was acquired by Ministry of Sound. Having started more creative-tech businesses including STQRY and Ticketure since then, Chris recently launched Area360 as the parent company for his creative-tech products.
In his presentation at Creative3 Forum 2016, Chris shared his “war stories” from working with investors over the past seven years. Having heard ‘no’ more times than ‘yes’, he explained the importance of having a clear strategy when it comes to seeking investment, pitching your business idea and scaling your business. If you don’t manage growth properly, he said, “You won’t have fun things to do.”
Like many creative-tech entrepreneurs, Chris is passionate about what he does and has a creative mind, but says that when it comes to seeking investment, it’s important to speak the language of investors. He also highlighted the importance of targeting investors who are already aligned with your company.
His funny and enlightening talk resonated with the audience, so we asked Chris a few more questions about his journey and the advice he has for other entrepreneurs.
You started your first company, Dash, when you were 21. Do you think you are never too young to be an entrepreneur?
Age is nothing but a number. I know it’s such a cliché thing to say, but when it comes to entrepreneurship, it definitely holds weight. If you have an idea, passion and a go-getter attitude, it doesn’t matter what age, gender, background or nationality you are – chase your dream!
What piece of advice do you wish you had been given when you were starting Dash?
It’s not easy. Seriously, it’s not easy at all. You will work harder than you could ever imagine, and not only on the parts that you are passionate about. There is a lot to running a business that isn’t necessarily fun: the business licenses/registrations, accounting, and management of time, money and resources. There is a tendency to want to spend all of your time on the front-facing and, actually, most meaningful and powerful parts of the business. However, you have to remember to manage the details because they matter greatly too.
If you can, work with a partner or have a team member who is dedicated to running those necessary aspects of the business, which will allow you to focus your best energies on the creative growth of your company. A key lesson I learned is that choosing complementary team members and partners greatly influences success.
Since then you’ve started a number of companies and worked with a number of investors – what are your top tips for finding the right investor?
You will likely be spending years with your investors. That means it is critical for you to get along (very well) with them as people. Can you sit down at lunch and spend hours talking? If not, you are already setting yourself up for a potentially frustrating relationship that will likely never realise its greatest potential. When you have a natural and positive relationship with your investors, they will become allies in your business, supporting you and your business with the scope of their skills and connections.
It’s really critical that your investors get your business. As my businesses have had some very advanced and unique technical aspects, it was necessary for me to spend a lot of time with my investors to ensure that they understood the breadth and depth of what we had and what we were building. It was important that they could not only see the current state of the business, but also that they could understand the future dream potential as well.
The worst thing ever is if your goals are misaligned and your investors are not 100% onboard. So my biggest piece of advice is this: spend time getting to know your investors before they invest in you and choose the ones who relate to you and your business, and can impact it at the highest level.
There was a lot of talk about ‘smart money’ at the forum this year. Can you explain the difference between smart and dumb money?
‘Smart money’ is when the investors actually contribute and support the business with their time, advice, connections, etc., and you’ve made a fair deal.
‘Dumb money’ could be several things – when an investor pours some money into the business and then disappears (is not helpful in any way), or when the investor requires an unbalanced proportion of your shares, or if the investor gets a controlling power in your business and has different views on how it should be run (and exerts control). ‘Dumb money’ is when you take money because you are too hungry or desperate, without taking time to get to know your investors to be sure they are the right fit.
Also, always remember that investors are masters at the money-for-shares negotiation. Remember you have something they want and you have negotiating power. Keep control and maximum shares so that you continue to run your business.
You also mentioned that entrepreneurs only have five minutes to wow an investor during a pitch. What are your top tips for doing this?
Tell a meaningful story – one where the right investor can relate and immediately think, “Oh I have felt that pain before and I totally get your solution!” And always make sure you get across the enormity of your opportunity. Every investor is looking for something potentially very large and lucrative. Be sure you are able to quickly and succinctly tell your story, highlight why it is powerful and game-changing and futuristic, and share the enthusiasm and excitement that burns inside you.
Another theme in your talk was the disconnect between the language of creatives and investors. Can you break down some of the investment jargon that creatives need to know?
For me as a creative, my early pitches focused on the ‘shiny ball’ aspects of the business and future potential. I didn’t spend enough time on other areas that are of high interest to investors. They want to see that you have a plan to productise your creative idea (replicate at scale), that you have a solid and workable distribution roadmap and that you have strong financial planning (both in terms of revenue opportunity and expense management). Once I was able to understand these other key concerns and put focus into those areas as well, my pitches started yielding much better and quicker results.
What was your main takeaway from Creative3 Forum 2016?
The theme of this year’s forum for me was connection, on so many levels: connecting to other humans through empathy, understanding and shared ideas; connecting businesses to consumers through safety buoys or video chat; connecting entrepreneurs with investors; connecting with and inspiring children with technology, etc. And very personally for me, connecting with the amazing team behind Creative3 Forum, as well as other creatives, entrepreneurs and investors.
I connected with people who inspired and motivated and challenged me. I am so grateful for the experience and look forward to continued connections and future visits!
What segment of the creative-tech industry are you most excited about?
Personally, two segments are really exciting to me right now – social media engagement and 3D printing. There are so many as-yet uncharted directions these two segments can take, as they are both relatively new developments that have huge room for growth.
I’m actually working on side projects in these areas in my spare time … and I am very much looking forward to seeing how these two segments evolve over the next few years.