Geraldine Calpin and Nick Silk, the internet entrepreneurs of the soon-to-start-up Visitalocal.com, have leapfrogged even their own idea since they began work to cash in on the dotcom gold rush.
Despite a few setbacks they have ironically benefited in the long term from the sluggish process of going live on the internet. Visitalocal, the soon-to-be web-based restaurant locator that won the Accountancy Age/ Business Incubator competition last summer, has since been working on finance and a prototype site.
Silk explains: ‘A lot has happened over the past six months. There have been ups and downs. We have followed different leads and gone down different paths. The key thing was at the end of last year, we produced a prototype that helps us explain our product to people.’
They have also registered on the National Business Angels Network site, which helps businesses from old and new economies obtain equity finance and assists private investors, or business angels, in their search for investment opportunities.
Yet affluent investors continue to elude the team. They admit this is understandable given the current climate for both new and old economies.
But the two are not suffering from any illusions as to the availability of funds.
Graham Johnson, director of corporate finance at Moore Stephens, agrees the climate for raising finance in this sector is difficult, but he says the biggest issue is make sure proposals go to the top of the pile. ‘Investors tell me they are seeing about 70 proposals a week,’ says Johnson. ‘Business plans need to be concise and the figures need to be realistic.
‘The way investors are approached is also very important. They will probably respond more quickly to a professional introduction rather than going direct to them,’ he suggests.
Patience and determination are the crucial virtues in the success of Visitalocal.com. They retain the belief and enthusiasm for their idea and claim there is still nothing out there to rival their product. ‘Financial markets have been obviously flat, in my view, for a long time. A lot of people we’ve been talking to have been educating themselves about the sector. Investors either have their funds already tied up or they haven’t released investment from the first round. The reality of it is that if they have a fund of #8m, 95% of it is committed,’ says Silk. ‘And because that 95% hadn’t come to fruition, they weren’t about to risk the other 5% on a similar venture,’ continues Calpin.
Through a database of customer profiles held on Visitalocal.com, Silk and Calpin aim to bring people and restaurants together. The site will provide registrants with venues and maps to match their preferences. They are also keen on getting restaurants and pubs to inform them of promotional offers.
The Visitalocal business plan reached partial fruition in the middle of last year when the duo fought off opponents to win the AccountancyAge.com and business-incubator.com competition. The prize of #15,000 worth of e-business advice from the incubator’s consortium of Oracle, Cisco Systems, Exodus and Sun Microsystems, enabled Calpin and Silk to get the fundamentals in place. They now need #0.5m to steam ahead with a fully-fledged launch.
‘We’ve had a lot of continued support from the incubator consortium,’ says Calpin, confident for the future despite mounting fears of the impending economic slowdown.
But biding their time for the last six months, they claim, has been vital to their future success. Originally their idea had been simple as far as the technology concerned; a business-to-business site ensuring restaurants and other types of eateries market to the right people.
Through attending and speaking at various e-commerce conferences and seminars, Calpin and Silk have realised that with the mobile internet technology available and that which will be available in the future, they can take a huge leap beyond their original business plan.
During a seminar at the end of last year where Silk was one of the keynote speakers and a number of telecoms companies were present, it became clear that mobile internet technology would more than complement what Visitalocal.com has to offer.
Given some sort of agreement with a telecoms company, Visitalocal would be able to send data direct to a registrant’s mobile.
The mobile phone is the nation’s fastest growing gadget with more than 24 million Britons owning one, according to figures released this month.
And growth is expected to gather pace in the next few years as the mobile phone overtakes the personal computer as the most used method of accessing the internet.
Analysts are already predicting that within a few years more people will watch six o’clock news bulletins on their mobile phone than on tv. Mobile ownership in the UK, say analysts, will rise to at least 60% by the end of next year.
Added to this phenomenal growth, third generation mobile phone licences are to be rolled out in 2002 further expanding the capabilities of net access direct to cellphones.
These advances, say Calpin and Silk, have made their product even more viable. ‘If people have already input their preferences onto our site, the new technology will automatically know that a person looking for a restaurant to suit their tastes is stood between Oxford Street and Regent Street for example,’ explains Silk. ‘Visitalocal data can then be sent direct with directions to the mobile.’
There are products such as the online yellow pages directories that could also provide this service, but they are not as precise. ‘The Visitalocal service would only tell you about the restaurants that match your profile.
So all the clicking on the mobile phone screen would be very much reduced and the content is really tailored to what you want, so it’s minimising all the clicks and giving people personalised information for mobile internet technology,’ says Calpin. The big issue now is that with the price tag of billions of pounds attached to third generation mobile phone licences mean telecoms companies will not be forthcoming in sharing their profits.
Other issues to smooth out will be the implications of the Data Protection Act on mobile internet technology and the fears of misuse and abuse of such a system and where in cyberspace the database would be placed. The new technology would be able to pinpoint the exact location of the phone’s owner. The potential for this to be exploited is huge.
Government auctions forced companies into bidding higher than expected for the third generation mobile licences. In the UK alone the licence auction boosted the Treasury’s coffers by around #22bn. Vodafone paid the highest, coughing up #6bn for its licences, while Orange 3G forked out #4.1bn.
They are aware of the challenges facing them and are planning for a stand-alone operation. ‘The big problem here is there are thousands of people like us who want to talk to telecoms companies. And for the companies, well this is a new business for them too, so their business development managers have to get up to speed,’ says Silk.
With the potential for growth, Visitalocal is looking at other possibilities to offer a broader package. And since eating out is often spontaneous, Calpin reckons the new technology would enhance their product. ‘We need to find other application providers and unite to offer an all-inclusive package. For example we could team up with people who do garages or clothes shops,’ adds Silk.
The pair, with collective marketing experience in the hotel and restaurant industry spanning 30 years, has returned to marketing work. ‘We’ve spent a lot of money and time on the project, so we’re going to wait a few months and in about four or five months go looking (for partners) again,’ says Silk.
The new year kicked off with news of a drop in shares for online retailer Letsbuyit.com. Shares fell 68% on 2 January 2001 after it resumed trading on Frankfurt’s Neuer Markt. Letsbuyit.com shares were suspended on 29 December 2000 at the company’s own request. The decision was taken after the company filed for bankruptcy protection and stopped taking customer orders on its websites until its future was clarified.
The news was followed by eToys.co.uk, the online retail toys website announced that on 19 January it too would be shutting down. ‘Disappointing recent performance of the company as a whole and the negative capital market conditions have forced us to close down,’ said a statement posted on its website.
The duo’s decision to stand outside of the game looking inside could prove to be critical. The middle of the year will be a crucial time for them to show the telecoms sector just what they have on offer. Until then Silk and Calpin will continue to expand their database.
For more information on finding finance see www.nationalbusangels.com
To see the award winning idea visit www.visitalocal.com
For help on internet dotcom start-ups go to www.business-incubator.com
More information on the story www.accountancyage.com/IT/107624
PROGRESS, IN THEIR OWN WORDS
Last November a company called SpotOn Mobile approached us, writes Geraldine Calpin.
They’re interested in our product as they believe it’s the perfect content for the mobile internet: as we will understand our customer’s preferences we can help telecom operators to personalise content and promote London-based subscriptions from end users. We met SpotOn Mobile and talked through opportunities, and came out feeling enthused.
We got another First Tuesday invite, this time to what they call ‘Wireless Wednesday’. This is run on the same lines as the previous event, but with a different set of investors and entrepreneurs. We put our learning from the last event into action and got straight in there with our pitch to VCs. This world is all about technology or content. This is where business to consumer is okay if you are offering personalised content for the telecom operators to deliver – which is what we can do. They put together a first class panel of experts who wanted to talk about the industry rather than products.
Met ThinkSpark who presented us with the final working prototype of our site. It is only a prototype but the design looks great.
To keep cashflow positive we went to meet the marketing director for our prospective client. We presented our ideas for their loyalty programme and how we believe they can increase profitability through reduced costs and increased revenues via a customer loyalty programme.
It works on the same basis as Visitalocal – you must understand your customers and offer them what’s relevant in a way that’s appropriate.
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