From HATDeX to Dataswift: Reflections on the seed round raise

Irene Ng
Irene Ng
Sep 21 · 7 min read
The final team sprint as HAT Data Exchange Ltd in August 2019

2018. It was the year of GDPR, and the entire personal data landscape was hijacked by the GDPR narrative. Privacy and consent were the only issues with new startups propagating GDPR solutions. To paraphrase a common saying:

when the world is full of nails, every company looks like a hammer.

Including ours. We thought GDPR was an opportunity for us, but it actually made it harder to pitch our proposition.

By July 2018, the founders were exhausted and we settled on raising a small round, reducing the size of the company and moving many of us back to the academic realm. I took the decision to bring my academic time down to 50% and took over as CEO on 1 Sep 2018.

Being the CEO of what is seen to be a tech company didn’t sit very well with me. I’m a Professor who specialises in market design and service ecosystems. True, I am also an entrepreneur but I felt like an imposter. I wasn’t like any of the tech founders. I wasn’t a whiz in computer science or a super coder/engineer the way all tech founders of the world were. What chance would this company have?

Nevertheless, we had to persevere. Perhaps because I felt I didn’t have tech credentials I spent September to December building up the economic and legal governance model and reshaped the company into what I felt the market needed, rather than what people said the market needed. This was implemented in December and in January/February, the first of our partners came in to build on the platform. More started to show interest and I called a board meeting to propose that we start the raise.

February- March: We started to create the pitch deck. And had loads of disagreements. More deck making followed. End of March came and we started pitching.

The 2019 raise could not be more different than the 2018 raise. We focused on the solutions (Backend-as-a-Service, Data-as-a-Service) rather than what we had. We focused on being a company that is able to set up good governance and contracts between individuals and websites/applications that is scalable. We focused on being able to navigate the complexity of innovating on personal data at scale. We focused on the legal, economic and technology models that we have knitted together to created the solutions.

9/10 were responses of “we’re interested to hear more” from the VCs we reached out to.

Perhaps it’s a cliche to say that we focused on “market need and the problem to be solved” like some text book startup guide but what I learnt is that everyone saw the market need and problem differently and there was creativity in seeing a different market need and problem when the world only saw privacy as the market need and problem. In other words, in our world, privacy issues were a symptom of the real problem of individuals data rights and empowerment. We have always set out to solve what we thought was the real problem and but we had to persuade investors to see it from our point of view. In 2018 that was impossible. In 2019, with the GDPR furore over, the timing was much better.

April — May: Pitching. And more pitching. And even more pitching.

Finally in June, I had dinner with an old friend and he indicated a 250k investment. Three days later I was flying to Porto for the weekend, I got the phone call from the same investor who said he was prepared to take half.

He set the pace on fire.

We have been talking to IQ Capital by then so we asked if they were in or out. We went into IQ the following Monday and were grilled on every aspect of the model — the governance, legals, economic, tech and the ecosystem. We told them we would be pitching to Cambridge Angels on Wednesday so would like to know before then. They assured me they will give me a fast answer. I couldn’t sleep that night.

Next morning came a flurry of questions on cap table, investors, board etc. We knew they were working hard on building the case. At end of the day, we had a 930pm call to say that they were close to a decision but had a few more questions. I reiterated that I was pitching to Cambridge Angels at 1130am the next day (Wednesday) and we pushed for a decision.

19 June, Wednesday, 10am: We had a call. IQ confirmed they will lead. They want to tell the story of “this will change the world of computers and the Internet and it began in Cambridge”.

The joy. The relief. It was palpable.

1130am: I pitched to Cambridge Angels and finished my presentation with “our round has been confirmed to be led by IQ capital” as I was told to say. There was a clear silence in the room.

It felt good.

20 June, Thursday: No term sheet yet. The team had a “cautious” celebration on Thursday in London with bottomless ribs ;)

21 June, Friday: Still no term sheet by end of day Friday.

22 June, Saturday: Term sheet arrived at 1120am. Woohoo!

23 June, Sunday: Founders meeting Sunday morning 0930am. Approved term sheet.

23 June, Sunday 6pm: Term sheet signed and sent

23 June to 13 Sep: Two and half months of working through the agreement, due diligence, negotiations, finding 3 more investors, loads of other stories to tell but it’s too long to tell here. Suffice to say there were many sleepless nights, and at least once or twice when the deal was under threat.

707pm, 13 Sep 2019: Agreement fully signed and completed.

17 Sep 2019: We announced.

One of the achievements of the round that I am particularly proud of, is that our governance model of mission-locking the company and having the HAT Community Foundation as the guardian shareholder was accepted by the new investors. As one who crafted the legal, governance and economic model for this company, I knew why I had to do what I did (I will be doing a more academic post on doing “institutional work” and the design of the personal data service ecosystem later) but until we receive our first institutional investment, we would not know if this would be accepted by investors/market. My thanks go to Patrick Andrews, the foundation’s lawyer and director who have been on our journey from the beginning, and who helped us reinforce the alignment of incentives that this company can profit and grow while serving its statutory purpose of personal data exchange for public benefit.

Thank you to…….

My team. All of you are awesome. We had no money left, we were overdrawn by £162 and you all stayed. You stayed till we raised and you held back your claims to help the cashflow. You are the reason why we will change the Internet. Tsekis Marios, Peilin M, Jay Shen, Eleftherios Myteletsis, Jonathan Holtby, Augustinas Markevicius, Theresa Marie Rabing, Paul Tasker, Terry Lee , Hayley; and a warm welcome to new team members Phoebe Yiin, Vinicius Roratto Carvalho, Michael Braithwaite, Raimonda, Isidora and Yin F Lim.

Team playing Cards against humanity at midnight on the night of completion when i was snowed under with documents and signatures. Whisky helped ;)

Shout out. Jonathan Holtby, our Chief Commercial Officer — you pitched. Everywhere. Your dedication is a sight to behold (see pitch montage). Thank you for reminding me, during dark dark days, that “every rejection brings us closer to an investment”.

Jonathan pitch montage

Shout out. Augustinas Markevicius, Our CTO — you kept all the lights on for the technology. Thank you for your open mind to absorb the non-technical economic/legal stuff you weren’t sure about, but had the patience and wisdom to work with me all the way. You are why our technology will make the market.

Shout out. Jay Shen (Jason), CFO and my right hand man on all matters Finance and Due Diligence. Working across 2 time zones isn’t easy but you made everything smooth and I truly believe you worked 24hrs a day over the 2 months of trying to close the deal.

Shout out. Paul Tasker, co-founder, Director and Head of Governance. Your support through the entire negotiation process have been not just invaluable, but has helped me stay sane and calm. I can only apologise for the roller coaster that I have put you on but can only hope that it will all be worth it :)

My husband. Thanks for feeding the team, keeping us sane, keeping me sane. For stressing so much that I end up having to calm you down, which is a great distraction from my own stress ;)

Finally, thank you to our new investors (Daniel (IQ), Aly (Alphanumeric) and Thye Seng (Pacific & Orient Properties) for believing in us: There were 3 notable things Daniel said to me that I want to put down lest I forget.

  1. Complexity is not scary when you know you’ve invested in someone who can navigate through it.
  2. It’s the ecosystem, really.
  3. Good Professors can be good entrepreneurs. Especially when the context calls for rather advanced thinking in the academic realm, and also good execution in practice.
  4. No, I’m not too old. Maturity matters. Sometimes ;)

On behalf of the HAT community, we warmly welcome IQ Capital as the lead investor for the £1.6m seed investment of Dataswift Ltd (formerly HAT Data Exchange Ltd), together with the Alphanumeric Corporation, Pacific and Orient Properties. Thank you to our existing investors as well who signed the agreements so quickly!

The story continues on to Series A (of which discussions have already started. WTF!!!!!)

Irene Ng

Written by

Irene Ng

CEO, Dataswift Ltd.; Director, HATLAB; Professor, WMG, University of Warwick; Website

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