Arieso

Case Study - How the Enterprise Hub helped one company raised £1.5 million.

“There are more variables for building a perfect 3G network than there are atoms in the universe.” Jim Trotter, Arieso

Overview:

Arieso Ltd is a young telecommunications company making a big splash in the world of mobile phone network technology with its 3G network software.

Origins:

The brainchild of CEO Shirin Dehghan, an electronics graduate and entrepreneur, who set out with an idea for ‘super software’ that had the speed and mathematical power to galvanise networks and smooth the transition from 2G to 3G technology.

Pedigree:

Shirin already had a burgeoning reputation in the world of 3G technology from her time at Vodafone. An increasing array of industry heavyweights are now on board, including ex-Vodafone founder director Mike Pinches.

Achievements:

With the support of the Newbury Enterprise Hub and the Oxfordshire Investment Opportunity Network the company secured £1.5 million funding from Venture Capitalists Top Technology Ventures and Add Partners. Key products, including Altaro, being trialled by the major network operators.

Future:

Arieso’s software is set to make a real impression, using highly specialised algorithms and parallel processing to make networks faster and more effective. Arieso expect its tools to save clients 30% on capital and operating costs. When you consider it costs between £100 million and £1 billion to build a 3G network in the UK, you can begin to appreciate the appeal of the products to network operators.

Shirin Dehghan says: “I want the company to have a £5-6 million turnover within five-six years.”

All start-up companies need backing, but who is going to provide the funds to get your ground breaking product into the market place? If you’re a small retail business, perhaps the usual methods of loans such as re-mortgaging the house or using personal savings will cover the costs, but if you’re a technology company looking to deliver cutting edge products you’ll need a different level of finance to develop your business. This is where Business Angels and Venture Capitalists come in. Venture Capitalists look to invest money in new enterprises, but they do so with a view to making a profit on their investment and they won’t start signing cheques until you make a strong business case. Business Angels fulfil a similar role, but can move a little faster and more flexibly,although generally with a smaller scale of investment.

Arieso is an example of what Venture Capital can offer an emerging young business. But the company’s success in securing £1.5 million in funds from VCs is the result of persistence and determination, and was by no means straightforward even for a company with impressive credentials and a quality product to offer. VCs use a process they call ‘due diligence’ to assess risk levels, and in Arieso’s case its progress was followed closely by the VCs for 12-18 months before they were awarded the grants.

CEO Shirin Dehghan first had to prove the potential of the company’s products through trials, and until this happened the VCs deemed any investment to be too risky. Crucially, through, being part of the Newbury Enterprise Hub, Arieso was put in contact with Oxfordshire Investment Opportunity Network (OION), Europe’s leading Business Angel network.

OION specialises in helping young technology firms to secure grants in the £500K to £2 million bracket, and it was at one of OION’s monthly meetings that Arieso’s presentation attracted a £500K commitment from Top Technology Ventures, which in turn leveraged a further £1million from Add Partners.

Shirin was quick to acknowledge the value of having the help of both the Newbury Enterprise Hub and OION, underlining the value of a support structure and contacts for any new business. A quality team of proven business perfomers also helped their cause.

As John Cox, Manager of OION, said: “Arieso has both a strong executive and non-executive team. Having people of that calibre ticks a major box for investors.”

As a new business, particularly in the field of new technology, it is worth remembering that most investors do not have more than a general knowledge of your area of expertise. Therefore it is important not to blind investors with science or have them reaching for the jargon busting dictionary. OION help companies in this area by offering a ‘dry run panel’ so that companies can make a practice presentation in front of a panel, to fine tune their pitch to suit their potential investors.

Arieso’s Business Development and Research Consultant, Jim Trotter, believes that young businesses should also be prepared for possible difficult negotiation periods, and have to be prepared to compromise when negotiating with VCs. He also warns that tenacity is essential, pointing out that Shirin worked extremely hard for two years and made great sacrifices before finally securing funds. He suggests: “Persistence is very important, as is having healthy relationships with a number of investors.”

Above all, it is important for businesses to do their research and pick the right VC firm for their needs. Different VCs specialise in different areas and selecting one that understands your business is crucial. It also helps to have a support and contact network like that at Arieso. It was the company’s hot desking arrangement at the Newbury Hub that led directly to its contact with OION, through Hub Director Ed Cooper. In turn this led to the meeting that secured the crucial first investment from Top Technology Ventures.

What is 3G?

Essentially, 3G is the future of everyday communications. It is the technology that drives the newest, cutting edge mobile phones, which offer video technology and fast and wide ranging access to several voice, data and video services at any time.