The rise of the smartphone camera has ushered in multiple ways to curate and share photos and videos. But these solutions are mostly aimed at parents. Captivation Labs aims to change that.
The edtech startup has developed familia, a child-centric mobile app and digital storytelling platform.
Its aim is to empower children to develop their creative, narrative and social skills through play, at home and in the classroom. It does this by encouraging children to add their thoughts, feelings and recollections to photo and video content, to create digital stories.
Debt before equity
Established in 2015, Captivation Labs was bootstrapped by its founders to begin developing familia.
In July 2016, the firm raised £70,000 from friends, family and stakeholders, using a combination of equity and debt finance.
A year later, the company issued a convertible note for £10,000 to secure working capital and then negotiated additional loans totalling £100,000.
“Debt financing made sense at this stage in our development, when we’re still pre-traction,” says Konstantin. “Equity rounds will come later.”
The founders also opted for debt because, unlike equity finance, it didn’t require a business valuation. “It’s too early for this,” Konstantin affirms.
What’s more, it’s a faster process, with less in the way of legal complexities (and therefore costs). Securing the funding meant consulting legal and tax advisers; negotiating terms; setting out the agreements (using standard templates); then executing the deal.
The programme is a great match for a tech startup at the stage we're at.Konstantin Zlatanov
A strategic approach
“Fundraising for a business needs a proper strategic focus,” Konstantin affirms.
“You need to start planning your funding strategy early on. Consider the financing options available, and think about which will work for your venture, at which stage in its development."
“Then make time to put your plan into action,” he advises. “Focus your energy on networking, listening to the investment community, and pitching your company to potential funders. Raising finance is a full-time job.”