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This startup raised £300k with just an idea

North AI is the exception that proves the rule

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It’s common knowledge that in 2024’s tough investment landscape, raising money with nothing more than idea just isn’t possible.

…But what if it is? While it’s incredibly rare, it can happen. Today, we dig into a fresh example of a founder who raised based on a founding team and an idea.

How did they do it, and why is it unlikely most other founders could do the same? Read on for the story of North AI

But first:

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This issue of PreSeed Now is brought to you by EHE Ventures.

Known for backing high-growth tech, EHE just announced they're building a £15m AI tech fund, and have finalised their core Fund Advisory team. The fund itself seeks to support and accelerate the growth of AI technologies, empowering the brightest minds in tech at pre-seed, seed and Series A.

Learn more about their mission and the fund here

How North AI raised VC cash with just an idea

North AI co-founder, Rishi Kapoor

In summary:

Premium subscribers get the full version of this article, plus a TLDR summary right here, and access to our Startup Tracker for updates about what this startup does next.

Raising investment money for a startup based on nothing but an idea is a non-starter in 2024, right? 

With investors now far more careful than they were a couple of years ago, founders have to prove they’ve got something worth putting money into.

But there are almost always exceptions to rules, and North AI is one such exception.

This Manchester-based startup has raised £300,000 in VC cash on top of £280,000 in grant funding for a product so early-stage that they haven’t even started building it yet.

Before we get to how that happened, here’s what North AI is going to build.

What they’re building

“North AI is essentially a data analytics company enhanced by A.I., for the media and entertainment sector,” explains co-founder Rishi Kapoor.

The product draws on Kapoor’s experience in sales and business strategy at Sony Pictures Entertainment, NBCUniversal, and Warner Bros, and his previous startup, Paus, which built a global community of filmmakers.

He found film producers often didn’t know the best markets and distribution channels for their productions. Meanwhile, distributors often didn’t know which new content was worth taking on, and which of their older content there might be a fresh market for.

While streaming services have rich data about what people watch on their services, where, and for how long, at what playback speed, and much more, Kapoor identified a hole in the data.

“What they really want to know is what do people want to watch? Where are they? What should people be producing?

“I think with people using generative A.I. tools to make content, that probably is going to get much worse, because more people will be making more content. 

“In the A.I. space, we have headlines about new tools that are going to help people build and promote content, which is going to create more of a problem of ‘what should I actually be making?’”

North AI’s concept takes the form of a content dashboard that will likely be available to media and entertainment professionals for a monthly subscription fee.

The dashboard will provide data about the likely global market appeal and commercial viability of a piece of content or a library of content.

On top of this, they plan to use generative A.I. to help create ‘minimum viable product’ versions of content that can be shown to real audiences.

“We aim to use off the shelf, text to video generative A.I.,” says Kapoor.

“If you're investing in a startup idea, what you really want to see is an MVP in most cases. We can help build the MVP of a piece of content using off-the-shelf technology. 

“It’s going to be in one easy-to-access, web-based interface that will give you a dashboard of the data analytics around your content, plus feedback from primary audiences as well.”

The story so far

Kapoor joined the media industry off the back of an economics degree and an MBA. This was at the time when streaming was beginning to transform film and TV.

After working in the distribution side of the business for Sony and NBCUniversal, he became a strategic analyst for Warner Bros before becoming a freelance consultant in the same space.

Then in 2020, he co-founded Paus, which was inspired by the fact that despite the wealth of streaming services, TV channels, and other outlets available today, there is far more professional content made than gets widely distributed.

“We set out to solve that problem by creating our own distribution network for emerging and also known film producers, giving them the tools for marketing, distribution and monetisation,” says Kapoor.

He says Paus raised angel and VC money on top of an equity crowdfunding raise. The startup was acquired last year by a company called Cindie, which distributes independent TV and film content in Latin America..

Now Kapoor has co-founded North AI with Oleh Kurtianyk and Lucas Cazelli, both of whom he worked with at Paus.

The startup is so named because it aims to help content producers and distributors find their ‘true north’ in terms of audience… and not because Kapoor is based in Manchester in the North of England.

So how did they get funded so early?

North AI has secured a £280,000 Innovate UK grant for the R&D around the product. This was contingent on the startup securing investor cash too. That’s where the £300,000, led by SFC Capital alongside angel investors from the media industry, comes in.

Kapoor says that the terms of the grant mean development can’t even begin until the start of April. So why did SFC Capital invest in such an early-stage product? 

In a statement to PreSeed Now, Ed Stevenson, investment executive at SFC Capital, explained:

“The golden times of 2021 are over so you need more than just a pitch deck to raise money. Our investment into North AI at this stage was a rare exception for us which was due to an exceptional founder with a strong previous exit and overall great track record. We’re excited to see how they can shape the future of media.”

So, a second-time founder with a strong track record and an exit to their name, a compelling idea involving A.I., and some grant funding in the bag, can raise investment for an idea.

But on behalf of startup advisers and investors everywhere, I cannot stress enough how rare this is, and how almost all founders still very much have to build something before they’ll begin to attract investor interest.

And there’s more!

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  • What’s next for the startup now that they’ve raised

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