Generation start-up: 'Matchmaker' platform for start-ups unveils plans to head out global

When Derek Watson quit the original world of finance to greatly help start-ups find their footing, he knew he previously made the proper decision.

“The crash of 2008 to 2009 essentially just type of killed my enthusiasm for capitalistic models. I sort of saw through them,” says Mr Watson, 52, founder of N2 Technology, which connects start-ups to investors.

“Capitalism isn’t really what it attempt to be; it doesn’t really do what it says ... any more.”

There are several parallels between your financial sector following the crisis and a global struggling with the consequences of the Covid-19.

The pandemic, which disrupted trade and travel, has fuelled unemployment worldwide. According to the International Labour Organisation, labour income all over the world fell by $3.5 trillion in the first three quarters of 2020, a 10.7 % reduction weighed against the same period in 2019.

Job creation is a high priority for several countries around the world today and N2 Technology is helping the region by fostering entrepreneurship.

A veteran banker with an increase of than 2 decades of experience in trading and wealth management in London and Switzerland, Mr Watson moved to the UAE seven years ago to begin Wake2o, which specialised in providing liquidity solutions in the choice asset management industry.

N2 Technology, which he founded in 2018 and launched in September this past year, was formed as he became more centered on private markets and the technology revolution that was under way in your community.

Mr Watson realised there is a gap to be filled after he sensed a mismatch between start-ups and their usage of finance, particularly to find the right investor.

“I result from finance, so I know how those mechanisms work. But also for these guys to get in front of the proper person to raise investment is incredibly difficult. And among the big problems is normally that they basically do not know what the starting place is - they don’t find out where to start,” he says.

N2 Technology, which appears to bridge this gap, allows start-ups to join up and be matched with venture capitalists for a sum of $799.

The matching process is based on an algorithm, which Mr Watson likens to a “decision tree”. Investors and start-ups are matched based on their requirements. Some capital raising companies, for example, may only focus on start-ups that happen to be halal-compliant, operate by women or that promise greater diversity and compliance with environmental, social and governance standards.

N2 Technology’s algorithm considers the needs of both investors and start-ups and helps hook up those with mutual interests.

The platform vets and qualifies investors to make sure they have the administrative centre and interest in the start-ups they are matched with.

Mr Watson says the vetting process means that all the registered investors have the administrative centre to purchase start-ups.

“It surprised me actually, the quantity of guys away there that truly do not have any money,” he says.

The process filters funds which may be gathering data to accomplish another possible round of fund raising.

“We don’t hook them up to there because we don’t want to waste the entrepreneurs’ time sitting down all night, writing up a lot of different pitch books and stories,” he says.

Mr Watson said the shortest time taken up to match a start-up to an investor was nine minutes. However, the process could consider longer if a company is not ready using its pitch book.

Pitching online is currently the only way for most start-ups to connect with investors as a result of cancellation of roadshows therefore of the pandemic.

The online process hasn't taken away the hustle from entrepreneurs that plan to grow their businesses, Mr Watson says.

“They love the hustle; they would like to get in front of individuals. Definitely. And what we say is, at least enter front of the proper people,” he says.

“Use your best ammunition, use your very best sales pitch and that is what we want this business to do at the end of the day.”

N2 Technology has up to now attracted 260 investors to its platform and about 200 start-ups have uploaded their profiles to the website.

“So, we've ... [helped arrange] about $150 million worth of deals up to now,” he says.

About 50 % of the start-ups on the platform are in the seed stage while 28 % are trying to find pre-series A funding. About 16 per cent are in the series A round and 5 % of them are in series B stage.

Mr Watson, who also mentors entrepreneurs, plans to employ his skills to improve N2 Technology’s growth later on.

The UAE’s signing of the Abraham Accord this past year with Israel also helped N2 Technology attract start-ups from Tel Aviv’s thriving entrepreneurial ecosystem.

“I think we have registered 40 investors out of Israel, immediately on the trunk of this,” says Mr Watson.

N2 Technology, which has a occurrence across South Asia - notably in India, Pakistan and Bangladesh - intends to leverage on the business ties between entrepreneurs in the region and the UAE.

Meanwhile, the business has set a rise target of 40 per cent.

N2 Technology, which is partly self-funded has raised $1.7m so far and happens to be in pre-series A round of funding.

The majority of its investors are actually high-net-worth people, Mr Watson says. The company is not financed by any institutional investors, to avoid bias on the platform.

Mr Watson plans to take on his program global in the long-term and has his sights on the significant private market ecosystem.

“Fifty-two million people contain private market investments. So, it really is an absolutely enormous market.”

Q&A with Derek Watson, founder of N2 Tech

How has Covid-19 influenced the start-up community?

Covid-19 created an enormous problem. And what occurred with the pandemic was that essentially everybody had to choose and appearance at their portfolio companies. Every single bit of history, each and every investment that that they had received before that, you could basically throw it away. Each and every entrepreneur either failed or their business took off, or they were busy pivoting. This meant that the data you had out as an investor, outside of your portfolio firms was sort of irrelevant.

Do the venture capitalists possess a stake in your firm?

No, they do not have a stake inside our company. That is one thing we wanted to make certain of. First point was just how do we arrange gain access to for start-ups very quickly and that was by firmly taking service fees off the table that managed to get transparent.

Do you help to make any benefit from possible deals that the start-ups and venture capitalists enter?

We can not sell and we usually do not sell your product to investors. What we do is simply hook up you in a nanosecond. Our success isn't based about how many people have brought up [funds] on the platform. That would be similar to asking Tinder just how many people [who fulfilled through their system] finished up married.

How does one match start-ups and venture capitalists?

They have all given their live investment preferences so while you are matched you know it is going to someone that's actually asked for it. So, it is this invert solicitation. Actually, this is what I am thinking of buying. It really is what I am seeking to invest in, at this time, today, rather than what I was performing a year ago.

How are South Asian venture capitalists different to the ones in the Middle East?

In India, in particular, everything you see is they have not labelled themselves as venture capital companies. There are lots of family offices there that understand organization from the roots up and they make an enormous difference.