Cash flow is always an interesting topic when you are running a start up, and my business partner Amie Wolken and I have already had numerous ups and downs of adjusting our income so we can keep running our company, Geo AR Games.
Let’s start with a little bit of context of what we do and how we managed to survive for 16 months to date.
Melanie Langlotz, left, and Amie Wolken of Geo AR Games.
We have developed the world’s first augmented reality digital playground called “Magical Park”, which we are mighty proud of. Imagine a normal flat urban city park and your typical kids aged 6-11 years old who are more interested in mobile games than playing outside in the fresh air. We get those kids off the couch and active outside through digital outdoor mobile games. Councils subscribe to our mobile games for an annual fee and we turn their city parks into a magical wonderland filled with virtual dragons, fairies and dinosaurs using the latest geospatial augmented reality technology and mobile devices almost every household has at home.
Shortly after we launched a mentor of ours introduced us to the concept of business incubators, and so we ended up being accepted into two female-focused business incubators which allowed us to fund almost 11 months of our startup journey and got us ready to pitch in front of investors. Our first incubator was S-Factory, which is a female focused pre accelerator program in Santiago, Chile and is part of the famous Start-Up Chile programme. The second incubator was Lightning Lab XX, which was a female-led accelerator incubator in Wellington.
It is clear to us that we wouldn’t be where we are today without those incubator experiences and all we learned through their programmes. But at the end of every incubator the question pops up: “how are we going to survive from here? Where is the next bit of money coming from?”
Fact is a lot of our mentors had told us it was unlikely we would be raising any investment in New Zealand simply because our local angel investors are more risk-averse and what we were doing was so new to most people and at the time pre-Pokemon Go, that investors laughed at us and our crazy idea to sell digital playgrounds to councils.
It was around the time when we had almost no money left that I decided to bite the bullet and join the first cohort of startups to go with the organisation FunderTech to China and pitch to investors in Chengdu and Chongqing. It felt like a suicidal and nutty idea to spend my last $3,000 of savings on a trip to China that was unlikely to get us any funding. Our company was still too early and we hadn’t made any revenue at that stage and on top of that we didn’t have enough time to translate our game into Chinese and present a local version. However the first thing I noticed after I had signed the contract with FunderTech was that angel investors seemed to take us more seriously. “It shows you are committed to the success of your company!” one of our angel mentors said to me.
I made a point of mentioning my trip to China to raise investment with every opportunity and whether it increased my confidence or the confidence of other people in our venture, fact is that things started to happen all of a sudden. We started selling Magical Park subscriptions in New Zealand and were approached with a partnership opportunity before I had even left for China.
FunderTech had done a great job in getting us ready for the trip. The trip was so well-organised that I only needed money to buy presents for my family back at home. Otherwise every single meal, taxi, train, flight tickets, accommodation and visiting tourist attractions were taken care of. Our presentations had been translated into Chinese and a interpreter was on stand-by pretty much the entire time.
It was very important to me to understand the difference in manners while in China to lay a good foundation for business relations. I had learnt that you don’t ask for favours like referrals. It is also considered bad manners to hold eye contact, which in the Western world is often a sign of strong character. Treat the business card you have been given as like a treasure and spend time reading, almost studying it and DO NOT put it in the back pocket of your trouser! That is considered a sign of how little you value the relationship.
My main goal was to network for a future benefit and not necessarily with an instant outcome in mind. It became obvious very quickly that the key question every single investor asked us was if we had plans to move to China and open an office there. Without a physical presence in China investors seemed to struggle to trust an overseas startup. Investors were also more interested in tangible products that could be rebranded and easily redistributed. A product like ours was met with more interest in Chongqing than in Chengdu. Lateral thinking didn’t seem to be a strength of most people. Later on a Chinese business friend explained to me that in China kids are educated to do as they're told and not to ask unnecessary questions. It sounded to me like “copy and stop thinking for yourself!” That to me explained the Chinese ability to follow a brief down to the tiniest detail and replicate a product with astounding accuracy, whereas the Western world has the ability to see something and come up with other ideas of what could else the concept could be used for. Imagination didn’t seem to be a Chinese investor trait is how I would describe it in short. They need to see a finished product and will want to buy a finished product and not the raw materials or a technology to further develop other ideas.
China wasn’t what I thought it was. It was WAY BETTER than what I had expected. Sure, we didn’t sign a big investment agreement, but my impression of doing business in China was positive. Locals were friendly, polite and helpful, falling over themselves to ensure you had a good stay and a positive impression of their country. I also noticed the lack of other foreigners in Southern China. It seemed like our little group of New Zealand entrepreneurs were the only one’s in the entire of Chengdu. At least it seemed that way. Of course do not forget that the cultural difference in China will always impact on communication and business expectations. The Chinese have a different value set from us and it will certainly be easier to work with or in China by making an effort to understand the Chinese code of conduct.
Beyond that the Chinese streets were clean and the city of Chengdu clearly liked their parks and green spaces which made this huge city more bearable. I remember seeing this huge black, majestic butterfly while sitting in the middle of city traffic in a taxi, wondering where it came from and where it was going. Just like us really…
So what’s been happening since my China trip? On my return sales started to roll in. We teamed up with the New Zealand Recreation Association and we branched out worldwide through a new partnership with SW&Partners. Within 10 weeks after China it got to a point were Amie and I were able to say “thank you, but right now we are not looking for any investment. We are happy to meet you though and build a future relationship!”