EmpowerRD: Harinder Sandhu
An alternative to expensive accountants, EmpowerRD helps start-ups and scale-ups keep more of their R&D tax credit - and file in a fraction of the time
Name: Harinder Sandhu
Company name: EmpowerRD
Date launched: January 2018
Tell us what your business does?
EmpowerRD provides an alternative to expensive accountants and advisors for start-up and scale-up businesses. It allows them to retain significantly more of their taxpayer funded R&D tax credit, and file in a fraction of the time.
Essentially, we utilise clever technology and in-person domain expertise to help our clients submit R&D claims in a more cost-effective way (think 5% instead of 20-25%). By opening up the R&D process and giving our clients expert guidance, we also enable them to submit claims faster (think hours instead of weeks).
Where did the idea come from?
I started EmpowerRD after an established career working in management consultancy and tax for one of the UK’s ‘Big Four’ accounting firms. Sitting on HMRC's R&D Consultative Committee, I realised that for start-ups and scale-ups the process for creating R&D claims could be convoluted, expensive and ultimately structured to the advantage of the advisor.
Compounding this, many advisors demonstrated a limited interest in making the process more efficient (at least for claimants) or more transparent. I saw there was a better way and set out to democratise the process on behalf of UK start-up and scale-up businesses.
How did you know there was a market for it?
For me there were three elements to this:
Having a large circle of entrepreneurs around me helped me validate the urgency, need and demand of this service.
The formal experience of helping larger companies file was immensely helpful in structuring a new way of working for small and medium enterprises that was not only cheaper than the standard but also a magnitude faster.
Finally, the fact that the government publishes a lot of data about the number and type of claimants was really helpful in determining market size (a relatively richer data set to build and test assumptions from versus your traditional tech start-up).
What were you doing before starting up?
I was a national sector lead for government incentives at a ‘Big Four' professional services firm.
Have you always wanted to run your own business?
Yes. I'm a long time believer in ethical capitalism and EmpowerRD's mission derives from that belief in creating economic and social value, whilst having a positive impact on our wider network of stakeholders; whether it's investors, employees, clients or, indeed, the government.
How did you raise the money?
As with much in life, it was serendipity. A friend had previously pitched to Forward Partners and suggested they might be a good fit given their ability to quickly deploy a day-one technical team (product, full-stack dev, UX, branding specialists etc) to help prove the assumptions around the business.
Not having had much experience of VCs, I decided to go in and test my business with them at one of their monthly 15-minute office hour sessions – and the rest is history.
Describe you business model and how you make money:
We charge a fixed 5% fee on the value of the credit we help a company receive from HMRC.
What challenges have you faced and how have you overcome them?
For any tech business coming into a saturated industry, one of the biggest challenges is trying to gain a share of marketing voice. More established businesses can drown out your messages with greater spend. Rather than competing on these terms, you need to get more creative.
For us the strongest voice in the market since we launched has been that of our clients. Across sectors, industries and regions the fact that the amazing businesses we've been working with believe in our mission, have seen the value we're creating and choose to share this within their networks is a humbling experience for us.
What was your first breakthrough?
As with most tech entrepreneurs, VC funding is a nirvana you pursue. FOMO and all that. For me it was more about testing the idea's viability and scalability with the VC community. Getting this validation from the wonderful folks at Forward Partners helped underline my belief.
In terms of how I achieved this – I'm pretty confident that Forward Partners invested in a combination of the idea and the founder (i.e. me). Having been a national lead in the government incentives space with the ‘Big Four' for many years, I was able to demonstrate an understanding of the domain and market dynamics, which I'm sure played a key role in the decision making process.
At an early stage of your business there's not much in the way of empirically-tested product, but I had a working prototype that helped convey the ‘art of the possible'. We wanted to be sure that the idea could fly and that I was the right person to pilot it, so we tested it in some real world scenarios, which was a great experience.
What advice would you give to budding entrepreneurs?
On pitch decks: Unless you have a year or two's worth of revenue numbers and customer traction, don't stress too much on the projections. They're definitely wrong and could work against you, indicating naivety or worse. In general, focus on backing up your statements with as much factual data as possible (real world, preferably from a trusted source).
On funding rounds:
- Budget for what you need, then add three to six months' worth to determine how much you need to raise.
- Don't ‘spray and pray'. Reach out to only those VCs or Angels that have a demonstrable interest in investing in your domain.
- Keep your head up and believe in yourself!
Where do you want to be in five years' time?
Coming through our soft launch, we've proved the end-to-end model works and we're receiving wonderful feedback from clients who are helpfully evangelising on our behalf.
Five years from now, my aim is for EmpowerRD to encourage small and medium businesses to become more self-sufficient in interacting with and obtaining innovation incentives from the UK government. Our aim is for EmpowerRD to be seen as utility service supporting transparent, validated and free access to government incentives.