Entrepreneur opens up about administration of FinTech start-up
A tech entrepreneur has broken his two-year silence on the closure of his FinTech business within a few months of a multi-million pound fundraise.
DueCourse was a software platform that allowed SMEs to get paid within hours after sending an invoice rather than waiting up to 90 days – unlocking money tied up in unpaid invoices.
In 2016 the Manchester-based start-up raised £6.25m in funding and was backed by founders and investors in Zoopla, LoveFilm, TransferWise and LinkedIn.
However in July 2017 there were shockwaves when the firm went into administration, prompting a restructure.
Until now co-founder Paul Haydock has stayed silent but he’s decided to speak out ahead of BusinessCloud’s Tech Investment breakfast on Friday March 22, which is being sponsored by Praetura Ventures.
“We took the decision to put DueCourse into administration when it became clear we couldn’t continue with the business in its current form,” said Haydock.
“We took all the lessons learned and created a new version of the product called Autopaid. Autopaid has just raised a fresh round of VC funding, so I felt now it was the right time to speak and share some lessons learnt with other founders.”
The 34-year-old, who has now stepped down as CEO of Autopaid but remains a major shareholder, has launched a new service called Founder Fundraising, which matches tech start-ups with investors.
“We made a conscious decision to shut DueCourse down when it ran into trouble,” said Haydock. “Having learned the lessons we then launched Autopaid and now that’s established and we’ve completed another round of funding, I felt now was the right time to speak.”
Bolton-born Haydock began his career as the co-founder of myparceldelivery.com, a courier service comparison site for SMEs now known as Sorted Group, with David Grimes.
In 2014 he co-founded DueCourse after identifying a problem SMEs had with the late payment of invoices.
He said: “We built software that connected with cloud account systems, like Zero and Sage One. You could create your account system in two clicks. We would offer you an advance against any outstanding invoice at any time.
“For example if had an outstanding £1,000 invoice, we’d give you £850 of it within an hour. When you got paid you reimbursed us plus any fees you incurred.”
DueCourse gained real momentum so Haydock went to London in search of funding.
“I did over 100 pitches and accepted an offer of a combination of VC funding and angel investment,” he explained. “We got £1.25m in equity investment and £5m in debt.”
The £5m debt facility allowed them to pay a percentage of the customer’s invoices while they were waiting to be paid.
“Raising money isn't the end game, building an amazing business is the end game,” said Haydock. “Raising funding is just a step along that journey so we didn't particularly celebrate.”
The entrepreneur admitted his biggest mistake was growing too fast, too quickly. “I hold my hands up,” he said. “I am ultimately responsible. I think we put the foot on the gas too early. I think the expectation was to grow at a phenomenal rate and I was complicit in that and executed that.
“In hindsight we weren't ready, I think we tried to premature scale, we were very close but we didn't quite nail it. We scaled very quickly and I think in the end we had to sort stuff out. It's one of the things you learn through experiences.”
Haydock said another problem they hadn’t foreseen was the number of clients who didn’t inform them when their outstanding invoice had been paid – effectively meaning they were paid twice.
“When we did the audit, about a third had been paid and they hadn't told us, so we had to go out and reclaim all that money,” he said. “As a small team this put a lot of operational strain on us. I think in hindsight we were too quick to put our foot on the gas pedal.”
Haydock said he’s learned from the mistakes of DueCourse with the launch of his new venture Autopaid, which has prioritised sorting out any glitches before seeking funding. His co-founder Nicola Weedall is now the CEO as he focuses on his other business Founder Fundraising,
“Given my experience of raising money multiple times and having built up a master investor network, I just know how painful raising money can be for founders,” he said. “You're trying to build the product, build the team, get new customers, service existing customers, then you've got to be out on the road meeting new investors doing pitches for three-six months.
“I wanted to help founders, especially in the north, raise the money they need to accelerate their businesses. It's called Founder Fundraising, so it's all about helping founders raise money. I've got a huge investor network, and a number of those have asked me to source deals on their behalf.”
Haydock had this advice for anyone seeking investment: “Once you understand why you're doing it, build your plan to what you want to achieve and then understand how much you need to execute that plan, and from there, depending on what it is, decide where to get it from and who to go to. It takes a lot of thought and a lot of planning and strategy before you actually go out there and plan.”
Haydock is one of 10 speakers at BusinessCloud’s Tech Investment breakfast at UKFast on Friday.
Other speakers include Mike Anderson, CEO, Padoq; Elizabeth Clark, CEO and founder, Dream Agility; Howard Simms, CEO, Apadmi Ventures; Mark Finlay, strategy director, Moneypenny; Louise Rigby, investment director, Praetura Ventures; Carly Gulliver, managing associate, Addleshaw Goddard LLP; Paul Billingham, founder, Knight Corporate Finance; Steve Kelly, founder, Smartkem and Northstar Advisors; and Richard Hayes, CEO & co-founder, Mojo Mortgages.