This post was contributed by Amber Raney-Kincade, marketing consultant.
This evening’s presentation was designed to look at entrepreneurship in London. We started with a brief introduction by Helen Lawton Smith, who recapped the five myths about entrepreneurship from The Economist 2009.
Myth 1: Entrepreneurs are orphans and outcasts. In reality, they need business partners and social networks to thrive.
Myth 2: Most entrepreneurs are young kids. In fact, Harland Sanders of KFC was 65, Gary Burrell was 52.
Myth 3: Entrepreneurship is driven mainly by Venture Capital. In fact, VCs only fund a small fraction of start-ups. This was delved into more detail later on.
Myth 4: You have to be a world changer. In fact, Richard Branson didn’t change flying, he just added entertainment.
Myth 5: Entrepreneurship can’t flourish in big companies. In fact, many firms want to keep employees on their toes and they often supply start ups with their “bread and butter”. Lawton Smith recapped that with Boris Johnson at the helm, the political leadership sets the tone and image for entrepreneurial London, as he has many initiatives to improve and increase growth.
The next speaker was Pierre Nadeau, whose urged the audience to “choose wisely” when selecting a new venture financier. Nadeau recapped the failure risk of new ventures: 24% fail within 2 years, 52% within 4 years, 63% within 6years. Those numbers are strong warning signs, and as always the number one issue for failure is finance. A business goes through stages: Development/seed stage (idea concept), Start up, Early Growth, Rapid growth / expansion, Exit. In each stage, there are several different levels of risk, so it’s important to know where you are so you choose your source wisely.
Over time, as you progress, your venture risk is expected to decrease and the value is anticipated to go up, and different investors are attracted at different times! In the idea concept phase, if you go to a VC, they will most likely say “come back later”. Just as there are different stages of a business, there are different phases of funding. These include: bootstrapping (from you, friends, family, business angels), seed financing — R&D financing –start up finance (business angels), first stage, second stage, third stage, mezzanine (this is the VC stage!!), (trade credit and factoring), asset based finance, bridge finance LBO,MBO,IPO (the buyer stage). When you know which stage your business is in, you know where to ask for the money.
Nadeau ended his talk with a video of Jason Green, partner of Emergence Capital Partners. Green says you can always say “NO”… then negotiate from a strong position. “One thing that drives entrepreneurship … Belief. Belief that you feel the investment partner understands what you are trying to achieve in life.” Green says that when you are trying to get funding, the financial transaction usually takes over, so make sure there is a compatibility match in this marriage, because it’s hard to get a divorce. Remember, they are buying a share of the person’s dreams! Are they going to be there long-term?
Also, Green warns entrepreneurs to think about how they are treated in the process. The 6th sense always matters, if you have that gut feeling that may tell you that this isn’t the right partnership to get into. Have the same confidence in raising money as you did in building your business. Best advice: Allow yourself the opportunity to say no, and “date”.
The next presenter was Hasan Siber (@HasanSiber) who is a student at Birkbeck and is in the process of launching The Starts Hub. This will be a student run nonprofit organisation to assist students in launching their businesses. Siber’s mantra is all about innovation, and with the help of UCL and Bristol University, he has researched and assessed the need for an onsite assistance community to help students take their innovation and make it reality. The Starts Hub will be more than an incubation office; it will include a guest speaker series, collaboration, networking and workshops to assist with business planning, app and website development, IP property rights and marketing. It will also be a vehicle to assist social enterprises with reaching a larger audience. The Starts Hub is awaiting funding.
The next part of the meeting was “Stories from Real Life.” and included Andrew Atter, Nigel Biggs, Thomas Davies and a man who confidently goes by @SaintSal.
Andrew Atter is Managing Partner of Executive Dialogue, a company that brings dialogue into the organization via mentoring, change, consulting, etc. Atter presented the notion that as businesses evolve they navigate through complex changes, each stage requiring realignment of mindset, behaviors and outcomes at board level. “You have to focus on the leaders of the business to make sure they continue to evolve with business.”
Atter explained that a business has a similar growth pattern to a human: concept, child, infant, teen, adult, exit. It’s between teen/adult phase that businesses fail. Atter shared the story of a CEO who loves what he does, and wants to continue to run the business. However the chairman is keen to have him move on because the business cannot scale up with the CEO at the helm. Each person brings different values to the business and change dialogue has to take place.
Atter’s closing remarks are clear: “Evolution is critical just as technology or assets are.” London is a global city and you can’t hide away from the world!! Downsides: as an entrepreneur, you have to think about international risk much earlier in cycle. But the upside is you can go global much earlier in the cycle.
Nigel Biggs is a part-time Entrepreneurship Residence at University of Surrey, and a graduate of Birkbeck. He told a rather more personal story. “At 39, I wanted to work for me. Took the plunge and ten years later, realised why I wanted to do this… my grandparents had run small businesses, so it was in the blood!” Biggs started in software consultancy with large clients like British Rail, until Thatcher privatized BR. He stresses “Outside events are very important in business.”
Thomas Davies, Investment Director for Seedrs, was the next presenter. Crowdfunding is a popular concept, and his company is harnessing this trend. “At Seedrs, investing in start-ups is made simple and rewarding.” Seedrs launches next Friday, and will provide everyday people an opportunity to invest in start-ups via an online platform, similar to Kickstarter in the USA.
The next presenter was Sal, or as his slide professed, SaintSal. (@SaintSal) He has been behind six start-ups over the last few years, and specifically shared stories from leancamp and Founder Centric. Leancamp is a grassroots nonprofit event to bring entrepreneurs together to trade notes. Founder Centric is a start-up support group for founders, by founders. Sal’s main takeaway is that there is a common thread with startups and those who have been through it before. Often they say “I wish I knew that sooner”, and so Sal’s advice is to learn from others’ mistakes. He also stressed the importance of not believing your customers. “Customers lie to you, so you need to make the conversation useful. Instead of asking “would you use this” and then run off and create it, only to find they won’t use it, ask about their problem and have them explain how it might be solved.”
The evening closed with a round of questions from the audience, and here were two that stood out:
Are there common patterns?
(Andrew Atter) Yes. inventors/founders become too emotionally invested and are unable to be objective in decision making. This leads to exaggerated self belief, inability to listen, etc.
What about the role of women as entrepreneurs?
(Andrew Atter) There are many differences on how we work together, women are chronically underrepresented in the entrepreneurial world. There is a lot of opportunity and benefits for women in the business world. Naturally we are all looking for a natural balance in the genders.
(Thomas Davies) Mumsnet has really latched onto this… women who are incredibly brilliant and don’t want to work long hours. There is a mislabeling that to be an entrepreneur you have to be reckless, and men are stereotypically this person. Women have qualities that are needed for business. Reckless isn’t good.
Category: Business Economics and Informatics
Tags: Business Week 2012, entrepreneurship, innovation, London