Early bets, big markets: how Frontline came to invest in Signal

The early founding team of Signal

Today, Frontline is very excited to announce our Series A funding into Signal, alongside great lead investors MMC Ventures and Hearst Ventures. It has been an incredible journey so far — one that I am humbled to have been a part of as one of the first seed investors.

I met Signal’s CEO David Benigson in February 2014 — through a good friend, Rebecca Sweetman of Kano. Warm introductions from people I respect often lead to meeting great companies and this was a perfect example. Rebecca had been helping David with some operations since the early days of Signal and sent me a WhatsApp saying I had to meet him.

David and I met for a quick 30-minute coffee at one of my favourite Marylebone cafes. It was a rather informal talk, as he would not start fundraising for another 6 months, and moreso just wanted to start the conversation.

It was here that I first heard the origin story of Signal. David was sitting at the dinner table with his parents, who run an executive search firm called The MBS Group. They run a newsletter that is sent to thousands of senior executives at FTSE100 companies — a daily round-up of all the key news in their industry.

His father was lamenting the high amount of resources needed to curate and send the weekly campaigns. They had employed full-time help dedicated to this sole task, and had signed up for two media monitoring tools — one was too expensive, the other too complex. They were wasting a lot of time and money in something that David deemed to be solvable by technology.

It was this initial curiosity that led David to exploring the existing solutions, and he found existing tools like Factiva or Gorkana to be pretty subpar for the exorbitant costs they were charging. It became pretty clear to him that there was a big gap in the market.

Armed with this research and resolve, David went on to found Signal and build his early founding team. Through his impressive network, he found Wes (Signal’s early CTO) and Miguel (Head of Research). Wes and Miguel brought with them 1o+ years and one PhD in tech, machine learning, and natural language processing expertise.

By the time I met David in February 2014, the team had been working together for nearly a year from David’s parents’ garage in North London.

I continued to loop back with the group every 4–6 weeks. When May came around, they had three paying customers using an API version of the initial product. I felt very confident in David and his founding team for a couple of reasons:

1. As a CEO and co-founder, David is extremely ambitious. Another trait he has stands out even more though — he is a great listener. Every time I gave David feedback or advice, he would return in a couple of weeks having not only listened to my concerns, but also made actions on where he saw fit.
2. David had taken a bare-bones idea (developed at his parents’ dinner table) and managed to build a world-class founding team around it — Wes and Miguel, both of whom are incredible. Even as a young, first-time entrepreneur with little funding, David still had the drive and network to attract such star talent. That gave me high confidence in his ability to build out the Signal team in the future.
3. I intimately understood the problem. In a previous life, I was an investment banker at Lehman Brothers where I was using Factiva (a media monitoring competitor of Signal’s) nearly everyday. Factiva was clunky to use, had a terrible way of charging their customers, and often had errors. When David pitched me Signal, I understood the demand immediately, as he was solving a problem that I knew extremely well.

It was for these reasons that, at the end of May 2014, we decided to formally move into deeper due diligence with Signal — I had 10+ calls with potential customers, larger competitors, investors of competitors, machine learning experts, etc.

My research yielded the unsurprising conclusion that the industry’s incumbents haven’t updated their tech in over a decade and that none were employing intelligent machine learning. It became clear that Signal was bringing a high level of technological innovation to a sector that had been fairly stagnant for the past 10 years.

Feedback on the demand side also showed that Signal brought a very attractive pricing structure to their enterprise customers. Signal was using a less human-intensive process and the cost structure reflected that — they charge an “all you can eat” model. Customers can get as much as they want in whatever is happening in the news, whereas with most of Signal’s competitors, you pay per article.

And, as expected, the founder due diligence revealed nothing but extremely positive feedback. Everyone I spoke with held the founding team in very high regards.

Frontline issued Signal a term sheet in mid-June of 2014, and the seed round closed in August. We were the lead investor.

In the same way that David was incredibly ambitious in creating a team, he was equally as ambitious with filling his round — we invested alongside strong angels like Jon Moulton, Darren Shapland, Turi Munthe, Rahul Powar, Andy Phillips, and Johnny Goodwin and co-investors like LocalGlobe and Samos.

It has now been two years since then, and David has continually exceeded expectations in every way. What always strikes me is how self-aware he is — he understands what he’s really good at and what he’s not good at. When you’re an early-stage entrepreneur, you could be doing everything — but once you scale, you hire for those competencies that are not your core strengths.

David has continually built his team with very high calibre people. For example, Signal’s early sales hire was the Head of Sales from his biggest competitor — showing his long-term ambition level.

The market still remains a no-brainer. It has been two years, and the incumbents have not reacted to the changes in technology. While this is a great market, I am most excited for what is next for Signal — not just monitoring, but also bringing insight from the media.

With the current product, machine learning is already being employed to understand the context of what articles are saying (already a step beyond existing incumbents). But what Miguel’s team is working on is bringing insight to that context. Signal will not only pull insight from specific news pieces, but also bring understanding to a more macro level.

It has been a pleasure to work with David and the Signal team over the years. When Frontline first got involved in the early days, the seed and bridge rounds allowed the company time to really understand what the enterprise needed: functionalities, features, etc.

Now, with the announcement of their £5.8M Series A, I’m excited to see the team:

1. Finish up the core elements of their media monitoring product, so that it’s a no-brainer when comparing against existing competitors.
2. Move further into insights from a product perspective.
3. Solidify large UK customers and expand into the US.

There is still lots of work to be done, but I cannot be more confident in David, Miguel, and the Signal team. Onwards and upwards!

Thanks to our Head of Platform Kim for helping me with this post.

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