Only 9% of UK Angel Investments

Give a 10x Return.

Only 10% of UK Venture Capitalist Investments Give a 3X Return.

The UK Venture Capital Financial Returns 2024 report highlights several areas where due diligence can be improved to increase the number of high-returning investments. Here are three key recommendations:

1. Strengthening Market and Competitive Analysis

Issue: Many failed investments result from overestimating market size or underestimating competition.

Improvement: Due diligence should include detailed market research, customer validation, and competitor benchmarking to ensure startups have a clear competitive advantage

2. Evaluating the Management Team More Effectively

Issue: Many startups fail due to poor leadership or an inexperienced management team.

Improvement: Investors should conduct in-depth interviews and evaluate past performance, leadership skills, and adaptability to changing market conditions.

3. Improving Financial and Operational Due Diligence

Issue: Startups often present overly optimistic revenue projections without realistic assumptions.

Improvement: Due diligence should require detailed financial modeling, stress testing different scenarios, and ensuring the company has a clear path to profitability.

Implementing these recommendations is expensive and takes a long time, that's why Angel Investors often rely on their 'gut instinct' in making their investment decisions.

Using one of our Startup Races will increase the number of high-returning investments in your portfolio (whilst also reducing failure rates) because it incorporates most of the
recommended due diligence best practices as part of the gamification methodology.

Read on to discover how our gamification methodology can identify the best startup investment opportunities and how it is predicated on Startup/Scaleup principles invented in Silicon Valley by Dave McClure, Steve Blank and Eric Reis.

Summer 2025 The £100,000 Startup Race

In 2025, we are planning to exploit our lessons learned over the past ten years and run a 12-month Startup Race where the Winner secures a £100,000 investment deal, and after that, a £1,000,000 Startup Race in 2026.

We are also offering startup founders the opportunity to benefit from our Startup Race Preparation Programme so they can learn how to generate revenue and validate due diligence considerations as quickly as possible using our own version of Steve Blank's Investment Readiness Level.

Our main data processing partner will be LivePlan, as we will use their platform to automatically draw down data from the participants business bank account via Xero/QuickBooks.

If you would like to contribute to the £100,000 investment prize, support us in developing this initiative or ask questions.

Please register your interest via the button below.

You will need to self-certify you are a High-net-worth Individual or Sophisticated Investor to comply with the FCA Regulations.

Learn how you can increase the number of high-returning investments in your portfolio using a Startup Race to identify the best investment opportunities.

What is a Startup Race?

A Startup Race is a 'Growth Hacking', sales competition for Startup Founders that lasts for 12-months.
Startup Founders compete against each other to see who can generate the most revenue.
It's only for fast growth business models with little or no R&D.
It's only for ambitious and competitive entrepreneurs who want to concentrate on building the value of their startup rather than take their foot off the sales pedal for 6 - 12 months whilst they try to raise investment.
At the end of the Startup Race, the entrepreneur or team that has generated the most revenue gets an Investment deal.

This competitive process creates a Premier League of Startups

This League Table of 'fantasy' companies is a illustration of how a Startup Racer's position changes each week based on how much Revenue they have generated.

This gamification process is designed to motivate the Startup Racer to focus their time and energies on making money rather than 'perfectionitis'.

Based on previous Startup Race results where we set a minimum ARR, we see our gamification process enabling the most competitive Startup Racers to achieve 12X and 11X revenue growth.

If we have 100 Startup Founders enter, we expect 10 to achieve 12X Growth.

This means that not only does the 'First Prize Investor' get a great investment opportunity, but the observing investors can also get access to investment opportunities in the Runners-up that will increase the number of high-returning investments in their portfolio.

All of this is based on startup principles invented in Silicon Valley...

In 2007, Dave McClure (of 500 Startups) introduced his concept of Pirate Metrics as a simple framework for startups to measure and optimize their growth.

The term "Pirate Metrics" comes from the acronym AARRR:

Acquisition: How you get users to your product.
Activation: How you ensure users have a great first experience.
Retention: How you keep users coming back.
Revenue: How you make money from your users.
Referral: How you get users to bring in other users.

McLure's framework became highly influential in the startup ecosystem for its focus on actionable, stage-specific metrics.

But we believe Revenue is the key metric to to measure if you want to motivate entrepreneurs to do the right thing.

Watch Dave McClure introduce his Pirate Metrics concept in this video recorded at Ignite Seattle in 2007

2010 Steve Blank's Investment Readiness Level

In 2010, Obi Wan Kenobi of Silicon Valley, Steve Blank took a method used by NASA, the US Airforce, Army and European Space Agency to manage the funding and go/no decisions for their projects and applied it to new business ventures.

"The collective wisdom of venture investors (including angel investors, and venture capitalists) over the past decades has been mostly subjective. Investment decisions made on the basis of “awesome presentation”, “the demo blew us away”, or “great team” is used to measure startups. These are 20th century relics of the lack of data available from each team and the lack of comparative data across a cohort and portfolio.

Those days are over."

2013 Steve Blank at the Lean Startup Conference

What’s been missing for everyone is:

A common language for investors to communicate objectives to startups
A language corporate innovation groups can use to communicate to business units and finance
Data that investors, accelerators and incubators can use to inform selection

To solve this problem, Steve Blank created the Investment Readiness Level.

Is This Startup Ready For Investment?

"Teams can prove their competence and validate their ideas by showing investors evidence that there’s a repeatable and scalable business model. While it doesn’t eliminate great investor judgment, pattern recognition skills and mentoring, we’ve developed an Investment Readiness Level tool that fills in these missing pieces."

How Investors Make Better Decisions

"As Selections Committee chair for our Sacramento Angels investor group, I review applications from dozens of startup entrepreneurs looking for investment.

In the past, the ranking process relied on our Selection Committee members having an intuitive “feel” for whether a startup was worth considering for investment.

As part of our screening process, I’ve embraced the Investment Readiness Level (IRL) framework as a more-precise way to think through where applicant companies would rank."

John Selep

Meanwhile, in the UK...

Today's Problem

Despite the failure of the portfoilio, too many UK Venture Investors still use 20th century relics!
Steve Blank's Investment Readiness Level is still only available in Silicon Valley.

We also believe that:

Too many organisations in the UK still develop startup founder's 'Magical Thinking' and Jackanory story telling abilities with business plan competitions.
Too many Startup Founders still drift, wasting time, energy and money.
Ergo, the majority of startup's still take a long time to build something nobody wants

This needs to change because...

Today's Solution

After investing years of thinking about how to simplify Steve Blank's methodology and make it accessible in the UK, we decided to use a simple yet powerful gamification process to motivate startup founders to do the right thing: a time-limited competition that benchmarks startups generating sales revenue.

Increase the number of high-returning investments in your portfolio
Give startup founders around the world access to Lean Startup implementation resources.
Reward the behaviour we want to encourage: startup founders generating revenue.
Give startup founders a clear understanding of what Pirate Metrics they need to achieve.
Enable startups to quickly build a company that solves a real problem for lots of people.

The Startup Race in a Competitive Matrix

Using the continuum of Story Telling - Selling and TV Shows - Startups, you can see the Startup Race is in the Selling/Startups quadrant.

We believe initiatives in this quadrant give observers the opportunity to watch what startup founders do over a significant period of time rather than make a key decision based on what they say on stage. Fundamentally, we want to reward the correct behaviour we want to encourage in startups...

Ultimately, we belive that investing in this quadrant will increase the number of high-returning investments in your portfolio.

1 Jan 2020 The £1,000 Startup Race

With support from the Startup Ecosystem in Edinburgh, The Startup Race Ltd. launched its first initiative in January 2020.

We offered a £1,000 cash prize to the startup that achieved the most points calculated by using Dave McClure's Pirate Metrics of Acquisition, Activation, Revenue, Retention and Referral over a ten-week period.

We had 30 local startup founders apply to take part and accepted 10 into the competition as it took a lot of effort and time each week to assess the data and adjust the league table positions.

Along with 5 UK Angel Investors observing the performance of the participants, we saw the winner Jonas Virsilas achieve a 12X and Mike Davis the runner-up achieve a 11X in revenue growth in just ten weeks.

Jan 2021 The Startup Race Virtual International Accelerator

In 2021, due to Covid-19 Lockdowns, we launched an online accelerator programme using LeanStack as a main partner.

Ash Maurya, author of Running Lean and creator of LeanStack is the only alternative to Steve Blank's LaunchPad Central.

These two platforms are still the ONLY ones in the world that provide resources to enable startup founders to understand and implement the Lean Startup methodology developed by Eric Reis in 2008!

Our UK based Virtual International Accelerator programme received over 1,000 applicants from entrepreneurs around the world.

We gave them free access to our LeanStack pre-accelerator programme to see if they had the mindset to embrace and implement the Lean Startup methodologies.

Over two years, only 76 met the entry criteria.

Jan 2022 The £10,000 Startup Race

In 2022 we put up £10,000 of our own money as first prize in our second Startup Race. It would run for 6 months and entrants had to have generated less than £100 in sales revenue to be able to participate.

We had 558 startup founders apply but we only allowed 17 to take part.

In addition to giving all participants free access access to our LeanStack pre-accelerator programme, we partnered with Planky to draw down sales revenue figures straight from their business bank account.

This was an attempt at simplifiying and automating the weekly position deliberations.

In only 6 months, the winner, Priyanshu Nath, startup founder at The House of Tula achieved 44X revenue growth and secured the £10,000 Cash Prize!

The runner up, Mariely Macias Olmedo achieved 17X revenue growth!

Both of these female entrepreneurs were members of our Virtual International Accelerator programme and this empowered them to implement the Lean Startup methodology to validate their most important assumptions, develop a compelling value proposition and master their Pirate metrics to be able sell their products.