Backing Risk: A Snapshot of REACT

REACT have nurtured more than 50 projects from drawing board to prototype so far. But what happens next? REACT Producer Gabriel Gilson finds backing risk pays off

My favourite part of any new project is the kick off meeting. Everyone's full of anticipation and high on new ideas. When you ask what they hope to achieve, the teams will often make a joke about 'buying their first yacht'. The dream of entrepreneurial wealth is strong. But how close is that to reality? Are any of our teams heading for the sunset?

Before we look at the slate, it's worth having a think about what success really means. Comparing two well known companies it's clear success can be what you want it to be. Facebook reports profits in billions. Amazon often report a net loss, saying they prefer to plough their cash into growing and evolving. Success is relative, success is strategic.

The View From REACT

At REACT we've funded 53 projects so far, usually offering them between £15k and £50k split between Creatives, Academics and a production budget. Of those, about 40 have been around long enough to report meaningful progress:

  • Launch: About two thirds, 26 out of the 40, have got as far as a public release, i.e. taking a step beyond user testing.
  • Inspiration: Two thirds say the work they did with us has actively gone on to help with other projects.
  • Money: Just over a quarter of the 40, 14 projects, have generated income or had investment in their product. That's been from a variety of sources including crowd funding, commissions using their product, linear documentary commission with the REACT project as the digital accompaniment and traditional investment

Of those who've generated income I'd say these are the commonalities between the projects:

  • Concept: They all have a clear concept and a clear demonstration of that concept.
  • Monetisation: They have several ways to generate income, e.g. commissions or sales.
  • Design: They have clear and credible design and branding at all levels.
  • Passion: They're all extremely keen to get their product in front of an audience, often regardless of money.

It's worth looking at a few projects in more detail to flesh out the story:

Case Study 1 – Colour Story

 

Arthur Buxton analyses dominant colours in images and creates stylish pictorial representations of them for sale. They had Feasibility funding from us and he's more than earnt that back with investment from a Bristol incubator fund and kickstarter. Small steps, but his app is now a live beta.

Case Study 2 - Ghosts In The Garden



New company Splash and Ripple created a location triggered audio tour using evocative steam punk 'radios' as the delivery device. After a successful trial installation in Bath they received a major commission from the National Trust, selling the core concept of a locative branching narrative.

Case Study 3 – Nth Screen/Nth Camera

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Somewhere between the first two examples comes Nth Screen and Nth Camera. This is an app to turn a group of phones or tablets into connected screens with synchronous filming and playback. Tim Kindberg has earnt a commission from the BBC for a pilot using his technology. He wants to launch it as a complete new platform – the next Vine, You Tube or Nth Tube – that's proving harder as investors wait for more audience feedback.

Beyond REACT

So how does success look beyond the portals of REACT? Many Start Up support agencies are run for profit and have investors to think of which obviously changes what stage of projects they'll back compared to REACT.

I spoke first to an incubator fund based in Bristol – Webstart BristolThey invest up to £10k in new ideas and offer 10 weeks of mentoring to get teams on their way. They've funded twenty projects so far of which they say about half have received significant further investment from a mix of Crowd Sourcing, Angels and Seed Investment (more on this later). 

It's interesting to note they view REACT as providing grants for creativity and new ideas, providing backing for unproven projects others might not be able to take the risk on. They suggest teams looking to get further investment become experts in their chosen sector and think about the mindset of potential investors.

Following the money trail I also spoke to Jenson Solutions who manage a seed fund taking advantage of the Government backed SEIS (Seed Enterprise Investment Scheme) which offers a potential 80%+ guarantee to investors. The SEIS limit is £150k per project. Jenson's have invested in 46 ideas so far, some coming from WebStart Bristol. They say it's 'too early' to report specifics of success though they did say most projects miss their initial sales targets. They were impressed by our slate but suggested our projects might need to come through an Incubator first to collect solid audience evidence. They also recommended our teams find ways to spend even more time on sales and marketing to have the best chance of success.

Can Business Be Creative?

There's an intriguing trend here. We're celebrated for our creativity and risk backing but we're advised to spend time on business planning to get further investment. Sometimes the language used implies artists can't be good at business and vice versa. Looking at the case studies above, I think we're doing fine. We just have to remember most of our products are new or disruptive, they are deliberately risky. 

Back in 1991 Geoffrey Moore first published his analysis of how new tech' products are adopted by the public, describing the 'chasm' that all must cross to make the leap from early adopters to the early mainstream. Understanding this process can really focus your efforts. It's been distilled in to the well known Canvas and Lean Stack business planning tools. I think this model also gives a seal of approval for our projects. Those who've been successful are following this pattern of early to mainstream adoption whether they intend it or not. All they need is a bridge not a yacht!

Back To The Classroom


For anyone feeling that they fall firmly on the creative side, can business success be learnt? Jenson Solutions say while they don't think success can be taught they can teach people how to avoid failure. Another view comes from Upstarter who run workshops to help new Start Ups and Makers with new product ideas. They've been working in the US and are now launching in Europe. Asked if they thought business acumen can be learnt they said absolutely: the trick is to view accounting decisions as being just as creative as content or design solutions. In the right hands, a well designed business plan is as much a thing of beauty as a steam punk radio.

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