STEVE POMFRET, CEO AND FOUNDER, CYGNETISE
Cygnetise is a blockchain-product that digitises the process of managing authorised signatories, something that is currently done on paper and then shared via PDFs.
“Once I understood what the blockchain was, I wanted to find a very specific problem which it could solve,” says Steve Pomfret, founder and CEO. “A lot of the blockchain products and concepts that I saw were not suitable and did not have a business case. I wanted to develop a product which solved a very specific problem and that people would be willing to pay for, so it could be profitable for us and beneficial for our clients.”
The company began in May 2016 when its three co-founders developed a proof-of-concept that took six weeks, £30,000 (€32,950) and a third-party tech company.
A further £100,000 was raised through friends and family to build a demo version to put before clients, followed by a further £500,000 to grow the company and hire a COO and sales team.
The company has participated in two accelerator programmes in Tokyo and Abu Dhabi. It signed its first client in December 2017 and it now has 41 clients, many of which are either corporate service providers or fund administrators and it is currently looking to complete the signing of a major asset manager.
Pomfret says the aim is to be cash-flow positive by December 2020 and to have 100 customers and the first Series A fundraising by December 2021.
What has been your biggest challenge?
Everything takes so much longer than you think. Start-ups move at a much faster pace than the large institutions. Internal approvals need to be sought, business cases need to be presented and you may be unlucky and find that your key contact has moved company.
This has a big impact on cash flow. At what point do you run out of cash? You either sell more or raise more cash, but it is hard to raise cash if you are not selling anything.
What impact has Covid-19 had?
Covid has made this more of an issue. When people are working remotely, it is very hard to get decisions made. You need people in the same room. Trying to close a deal via Zoom is near-impossible. There is always cash flow pressure, but when you flatline for six months and cannot pay your bills because of Covid-19, that pressure becomes more intense. But at the same time, Covid-19 has helped to prove the business case for our product, so there is a long-term benefit.
There are not any regulatory barriers, especially as we are not a regulated company, but the due diligence in the procurement process is so stringent that we have to perform at the same level as a regulated company.
What advice would you have for other start-ups?
Never underestimate the length of your cash runway. Everything takes longer than you expect.