The Underestimated - Issue 08
The Diversity X newsletter showcasing the underestimated founders making a positive impact in the world and keeping you up to date on the Diversity X journey.
What is coming up in this issue?
📖 Trickle-Down Economics
🌱 Community Update
👏🏾 Diversity X Team and Fund Update
📰 Monthly update on what has been going on with Diversity X
🤝 🔦Spotlight on four Diversity X Founders’ Community members (two startups (including our first sister-co-founders))
📆Upcoming events and plans
Trickle-Down Economics
What a September we’ve lived through in the UK. We had Liz Truss anointed as our new PM. Our Queen passed, and the throne has a King to sit upon it. No white males sit in any of the seats of the Great Offices of State. And we have our first Black person as Chancellor of the Exchequer.
If all that was not enough, the new PM and her Chancellor shared the “mini-budget” with the world. The effect? Calls for a U-turn, the £ took a hammering against most currencies and in particular against the $. The markets spoke. The British rich will become better off, and any gains for the poorer will be eaten by rising costs. This, our friends is what we call “trickle-down economics”.
However, for startups and investors, there is a blue sky and sun. Let’s take a look.
SEIS
The Seed Enterprise Investment Scheme (SEIS) was introduced to help with investing into SME’s. The mini-budget has increased the amounts that startups can raise. From April 2023, the amount companies can raise through SEIS will increase from £150k to £250k (a two-thirds increase 👍🏾). The gross asset limit was also increased to £350k, and the eligible age limit of companies to raise SEIS increased to three years.
EIS
The Enterprise Investment Scheme (EIS) has a sunset clause which is due to expire in April 2025. The Chancellor announced that they remain supportive of the EIS scheme and see value in extending the scheme beyond the current slated date in 2025.
Stock options
Companies are currently able to issue shares to their employees through the Company Share Option Plan (CSOP). From April 2023 companies will now be able to issue £60k of Company Share Option Plan (CSOP) options to employees, up from the current £30k limit.
Removing IR35 Changes
IR35, the UK’s off-payroll working rules aimed at tackling tax avoidance by contractors and freelancers, has been widely criticised by businesses since it was reformed in 2021. It is now set to be repealed entirely from April next year, at which point, “workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and National Insurance contributions”, the government said.
Pension Investment Reform
The mini-budget announced plans to bring forward draft regulations to reform the pension charge cap, which will give pension schemes greater flexibility to invest in innovative British businesses. Hopefully, a future Diversity X fund will benefit from this as pension funds look at the greater opportunities to invest in the private market.
So what is the Diversity X take on the mini-budget? There is no specific help to support underestimated founders® or address the lack of financial support going towards underestimated founders®. The benefits for early-stage companies through the increased SEIS amounts that can be raised and extension of the EIS, there will undoubtedly be some “trickle-down” to underestimated founders®, though not necessarily any change to the overall funding landscape for such founders.
From a wider viewpoint, while there are incentives to support early-stage businesses, the question is will the growth come from trickle-down economics? There are suggestions (including from within the UK government), that this will not be the case, as only “the few” have been served with real benefits. Much like the venture funding landscape when you think about it.
We are asking all founders to start reviewing at your budgets and financial forecasts so you can build in the currency issues and wider macroeconomics that will be affecting your businesses. And seriously, think about when and how much you will be raising.
Community Update
Not a huge amount to report this month. It has been slow to increase community numbers, but we are open to new members joining this free community. In fact, we have ambitions to have 500 members by the end of the year and (whisper it) 1000 by next June.
On October 8th, the community will celebrate its first birthday. It has been a great first year - so many wonderful stories shared, the support given, and even tears shed.
If you would like to join this diverse group of startups and scale-ups led by brilliant, unique underestimated founders®, contact us at admin@diversityx.vc
DX Team and Fund Update
No changes to our internal team this month, but we’ve been a busy bunch.
Marquis has started his Newton Ventures program and is in a cohort with some friends from an emerging manager community we are members.
Ilaria has done a fantastic job with building out the plan for the Diversity X Founders’ University - this is something that is more than an accelerator, and we have been told there is nothing quite like it out there. We will soon start looking to recruit our first cohort for an early 2023 start. Our ask: we need partners/sponsors and mentors. If you are interested in supporting underestimated founders®, please reach out to admin@diversityx.vc.
Kevin has met a number of startups and started discussions with some on potential investment opportunities for the targeted fund 1. Exciting times.
Speaking of Fund 1, we are going through the FCA-authorised representative and approved person regimes. We hope to be in a position to make a special announcement during the course of this month so stay tuned - we may do a special post for all our subscribers. As emerging managers, Diversity X will be going down the AR route with Frank Investments already supporting us and leading us through the FCA process for DX as AR and Kevin as an appointed person. We have also engaged our Receiving Agent and Custodian, and our fund lawyers, Mills & Reeves. We feel we are well served and now moving full pace ahead. Our ask here is that if you or anyone one you know is an HNWI or sophisticated investor, are genuinely keen to learn how you can support underestimated founders®, or want to learn more about the Diversity X vision; please email either Kevin or Marquis for more information.
News from the Diversity X journey
Highlights over the last month:
💥 As mentioned in the last issue, we moved our Founders’ Community to a new home, hosted on the Heartbeat platform. We have managed to move from 143 members to 164. This is ok, but we recognise a lot of work is needed to happen to transition members from the WhatsApp group to this new home, and then drive towards getting to 500 members.
💥 425 views of issue 7 (up 52 from issue 7) and 236 subscribers (to date, up 1 from issue 7).
💥💥We have talked about building a VC Firm. Progress is being made for Fund 1 so we can start to walk the talk, and support underestimated founders® with capital. Stay tuned. If you are still deploying capital, and have allowances for SEIS and or EIS left, then contact us to learn more about our plans for supporting underestimated founders® - please email Kevin Withane at kevin@diversityx.vc or Marquis Caines at marquis@diversityx.vc.
💥 Thank you to everyone who has supported the journey so far.
Meet the Underestimated
Elena Cismigiu and Matthew Critchley - Neuro XR
The Co-Founder:
Elena Cismigiu is CEO and Co-Founder of Neuro XR, with a background in behavioural neuroscience.
Elena is also a disabled, immigrant and LGBTQIA+ entrepreneur and is passionate about bringing accessibility, inclusion and safety to the digital space and business in general. She manages the operations and business strategy for NeuroXR. She was a finalist for the Staffordshire Business Awards and has won multiple university grants.
Matthew is the Co-Founder and CTO of Neuro XR and drives the technology and product strategy. He has filed 2 patents for a cognitive analysis headset and the analytics platform currently being developed. He manages the software development and the IP side of the business. Matthew has a background in commercial psychology.
The Startup:
Neuro XR is developing a neuroscience-based analytics tool for use in the Metaverse. Neuro XR started as a consulting business and realised the value of cognitive analysis in commercial applications. In alignment with improvements in VR/AR/XR headsets, there is a need for an analytics tool to optimise platform designs for metaverse systems.
Besides bringing profitability and high customer engagement to VR and Metaverse businesses, the team also aims to increase digital health awareness, and decrease digital addiction. The team plans to partner with health organisations and companies to understand the digital addiction levels in Web3 and help increase safety and platform accessibility.
Thank you to Xavier Parkhouse-Parker for introducing us to Elena and Neuro XR.
💥How can you help Neuro XR? Connect with Elena to learn more about Neuro XR’s fundraising activity.
Jacqui Meskell and Perry Meskell - HuggNote
The Co-Founders:
Huggnote founders and sisters Jacqui and Perry Meskell are accomplished and experienced professionals who have already led their Huggnote idea to global scale and numerous awards.
CEO Jacqui is a ‘Female Entrepreneur of the Year’ and ‘Digital Trailblazer of the Year’ finalist and is responsible for the implementation of Huggnote’s overall strategic mission to become a global market-defining brand. Jacqui is a former broadcast journalist and producer (TV/Radio including Euronews) and management consultant where she capitalised on her acute analytical skills leading diverse teams (tech, communications, design) on multi-million-euro projects for clients including the European Commission. She holds a BA in Journalism & French (DCU) and MPhil in International Peace Studies (Trinity College). Jacqui is a natural leader, visionary and strategist. She is also a powerful communicator as evidenced by her many pitching awards and natural media flair. She speaks French and German and is also a qualified yoga teacher.
COO Perry is a detail-oriented, pragmatist and is responsible for designing and implementing business operations at Huggnote, applying a data-led approach to Huggnote’s commercialisation plan and establishing policies that promote company culture and vision. Perry has over ten years of experience working with senior management of one of Ireland’s leading third-level institutions, where she facilitated the development, implementation and monitoring of institutional policy, strategy, and related developmental initiatives. She boasts two first-class honours Postgraduate Degrees in Technology Commercialisation and Business Administration (University of Limerick) and recently completed a Master’s in Business Internationalisation (SETU). Perry's primary degree is a BA in Psychology, Sociology and Politics from National University Galway, Ireland.
The Startup:
What is Huggnote? Multi-award-winning Huggnote is a category-creating messaging app, which curates songs by emotion to turn them into ‘virtual hugs’ to instantly make someone’s day. With themes from ‘I Love You’ to ‘Merry Christmas’, Huggnote shows exciting viral global traction of 400,000 users in 204 countries growing 1911% YoY declining active-user CAC (100% YoY) and projected revenues of €400M in 2025. It aims to become one of the first European female-founded social tech unicorns.
Why Huggnote? Founded by Irish sisters Jacqui and Perry Meskell, the idea came about when Jacqui needed to be there for a friend but couldn’t. Then a song on the radio brought back such happy memories, it said everything words couldn’t! Because music IS emotion and a powerful re-kindler of memories – Huggnote makes users cry!
How it Works: It was important to the founders that Huggnote could be used by anyone, any age or level of tech literacy – so it’s a web app (nothing to download). Simply go to www.huggnote.com, sign-up, select a theme, song, add a message and send via text or WhatsApp! Currently in freemium BETA – Huggnote is free to use!
Awards: Named one of Ireland’s ’50 Most Ambitious Start-Ups’ earlier this year, Huggnote has also won multiple awards both nationally and internationally – including a National Start-Up Award, a National Digital Award, Google’s Adopt a Start-Up and the Mozilla ‘Builders Award’ for companies with ‘the potential to fix the internet’. It is the only Irish start-up to win the $50k top prize on US TV Show ‘Two Minute Drill’ (Bloomberg TV/Amazon Prime).
💥What can you do to support this startup? Raising its first pre-seed/Angel round in mid-October. Contact Jacqui for more info. Go to www.huggnote.com to try Huggnote’s limited edition ‘Happy Halloween’ theme – perfect to send some spooky ‘virtual hugs’ to anyone, anywhere to make their day!
Upcoming Events
Every Friday - A Week in Review call
Diversity X will be at the Sifted Summit - (Looking forward to meeting investors wanting to learn more about our fund(s) plans and underestimated founders® seeking to join our founders’ community. Also, if you are attending go check out the Podcast Stage where our own community member Hattie Willis will be hosting the Not My First Guess Podcast.
Diversity X is partnering with The Portfolio Collective to offer Community Networking to our members and theirs on 28th October 1-2pm BST. Kevin and Ilaria met at TPC, and a few of our members are already connected too. This is a great chance to network in a community of interesting advisors, coaches, entrepreneurs and more. You can register your place here.
And that’s a wrap for this month….
Reach out with any questions to admin@diversityx.vc
INVESTORS - let’s chat - contact either myself (kevin@diversityx.vc) or Marquis (marquis@diversityx.vc)….we have exciting news to share.
Underestimated founders® - come join a community that is welcoming and a safe space.
Thank you to Lexi from Services to Literature for the last-minute editing!
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