“I’ve been asked repeatedly who One Direction are by potential angels and tech co-founders,” says Oliver Meakings, founder and chief executive of digital media start-up Teen Events, who has documented his start-up journey in occasionally excruciating detail.
Meakings is just one of dozens of media start-ups who are finding it difficult to generate interest from, and even secure meetings with, traditional technology investors in Europe, who are failing to capitalise on the potential of the UK in particular.
Despite the successes of companies such as Songkick, Spotify and Netflix, British investors remain woefully ignorant of the opportunities made available by the internet and lack understanding of “an entire generation of fanatics who are tech-savvy, hyper-connected and rapidly mobilised”, according to a survey undertaken by The Kernel.
The top speculative reasons for the shortfall in understanding were given as “snobbery”, “age” and “general lack of interest”. Serial entrepreneurs said it was “four to five times harder” to get meetings for content and entertainment start-ups as for web and mobile platform businesses, despite the late-stage moribundity of the latter sector in Europe.
Founders also noted that investors who had children themselves seemed not to convey their learnings as parents into their professional judgments, appearing “disdainful” of start-ups seeking to capitalise on the popularity of reality television and talent shows. “Ridiculously few” start-ups have been funded to capitalise on these “hugely profitable franchises”, said respondents.
This was “not a lack of interest or ideas” from founders, but rather a “toxic combination” of “arrogance, ignorance and terror” from internet investors Europe-wide about the publishing and media industries.
Founders said it made starting a music or content start-up much harder, because money was not forthcoming to prove new business models, forcing companies to grow more slowly, often running out of cash before they have the chance to prove themselves.
“The tech community fails to make products for teenagers and fanatics despite the fact they are incredibly savvy and passionate,” said Meakings, who responded to our survey. “The only exception really is Moshi Monsters, but even that’s for tweens not teens,” he said.
Teen Events, which lost out to a lesbian social network called Dattch in the last round of admissions for Telefónica’s Wayra accelerator programme, is a platform that will provide teenage music fanatics sharing and following tools so they need never miss out on a signing or public appearance by their favourite artists.
It has seen impressive traction since it launched in beta, with 28,000 “event follows” and 16,500 followers on Twitter. It has also struck promotional deals with major labels such as Universal.
Yet accelerators TechStars, Wayra, Seedcamp and ignite100 showed no interest in the company, and angels have asked “who are One Direction” when presented with Teen Event’s business plan.
Other digital media and entertainment start-up founders preferred not to be named when they spoke to us. One said: “I look at some of the terrible ideas out there getting meetings and money and posts on TechCrunch and it shocks me.
“Think about it. Millions of rabid young fans with money to burn and harassed parents who just want to shut them up. They’re desperate to find out everything about their favourite artists. The commercial possibilities are endless. But I can’t get a meeting because no one understands pop culture in the tech industry.
“I won’t say they’re snobby, exactly,” he added. “But I can feel investors turning their noses up when I mention The X Factor in pitches, which is shocking really. How much is Simon Cowell worth? £200 million, isn’t it?”
The Kernel reached out to several of the angel investors mentioned confidentially by survey respondents but received no response to our enquiries.
In April, the Wall Street Journal reported that online revenue for musicians was exceeding radio play royalties for the first time, but the technology companies making money and hitting the headlines are not often European, despite the continent’s strong cultural history – and the big-money investors are normally from outside of Europe too.
One partner at a well-known venture fund said: “It’s easy to look out on the landscape and say Europe does really well at music, advertising and so on. But if you see, as I sometimes do, the incredible potential of businesses that don’t even get a seed round, it makes for depressing viewing.
“If they want to help build better apps and services to market – the sort of stuff that doesn’t just appeal to hipsters but to millions of ordinary people – start-up investors in Europe need to put down the Financial Times and turn on the TV once in a while.”