Connect Yorkshire - Butlers Blog

The future’s bright

2011-02-09T09:29:00.002+00:00

Despite the challenges over the last year, investment in high growth firms has held steady, and some experts are predicting greater interest in start-up funding thanks to falling property prices, hedge fund collapses and near zero interest rates on cash.

Our figures show that more than £5m has been invested in high growth firms that we have helped in the last 12 months.

Because of the economic climate, high growth businesses have been looking for support and the opportunity to meet potential funding providers.

Our investment forums (to find out more information click here) continue to attract a healthy number of investors and our bootcamps (to find out more information click here), and coaching programme help companies that are looking for funding.

It’s now more important than ever to assist businesses with high growth potential and ambition to secure the finance that they need to grow. Over the ten years since Connect Yorkshire was born our events have helped 300 companies raise investment of over £42 million in equity and the intention is to help even more companies in Yorkshire and the Humber raise investment.

We want to promote the ability of companies working together to achieve their full potential and raise the profile of Yorkshire as a place to do business in the high growth sector.

It seems that for now - at least - Yorkshire's next generations of technology entrepreneurs have no shortage of good ideas and are in an ideal place to prosper when an economics upturn arrives. In the meantime the sector still needs a great deal of support to ensure these ideas mature into profitable businesses in the UK and beyond.

Connect Supports Local Growth

2010-11-16T17:35:00.002+00:00

Deep in the Local Growth: realising every place's potential − a white paper published on the 28th of October the government say they will foster growth by funding the establishment of "growth hubs" which will provide access to specialist strategic advice, coaching and mentoring firms with high growth potential.

This is exactly what we provide at Connect Yorkshire and hope to obtain further public funding to support our work. Our strategic advice comes under our Springboard Programme which is strategic advice from successful entrepreneurs who have sold their businesses for £10m or more or are running businesses with a turnover of £25m or more.

The coaching is carried out by our select group of 20 coaches who have all been in charge of businesses which have raised funding and/or been sold successfully.

Pitch Mentoring is carried out by our top rank professionals who have experience in fund raising. We are sponsored by 45 leading professionals who give us cash and free time to the high growth companies we help.

Connect Yorkshire will continue to support businesses that are looking to grow their business by unlocking their full potential and enhancing their ability to secure appropriate finance.

Investors, you are cordially invited to our next Investment Forum on 2nd December where you’ll see 9 great prospects pitching for equity, please join us and register via our website.

The Fourth Peak

2010-09-14T09:21:00.001+01:00

We embarked on the Yorkshire Three Peaks challenge on Saturday 11th; it was a great effort by the team, who managed to complete the walk in less than 10 hours with no twists, sprains or breaks to report!

We were faced with some tough challenges on the day and the weather was not on our side! We had some patches of sunshine, but mostly rain which meant we had to watch our feet, be careful not to slip or become submerged in mud and take very cautious steps on the descent! Even on a misty day, the views were wonderful and so too was the sense of achievement once we reached the top of Ingleborough.

Thank you to all involved and well done team. We have now raised over £600 for Candlelighters, which is fantastic-and growing.

Candlelighters was established in 1976, is a charity formed and run by parents of children who have or have had cancer, ex-patients and the medical staff who treat them. The Connect Yorkshire and techmesh team were passionate to support a local charity as our ethos is to support regional businesses.

We are still rallying round for donations, so you have still time to support us please dig deep and make your donations today by visiting www.justgiving.com/Connect-Yorkshire

The Fourth Peak presents our biggest challenge yet, it is fast approaching – techmesh IT and Telecoms Expo on the 30th of September at the Royal Armouries, Leeds.

We have been working hard to attract local businesses, in particular IT managers, CEO and MD to join us on the day to meet Yorkshires IT and Telecoms businesses. There has not been an event like this in Yorkshire for 5 years, so we need everyone’s support in making this event a huge success.

Don’t miss this opportunity to join us, click here to guarantee your place and register for free today.

A Yorkshire Wide Support Service

2010-07-24T08:10:00.000+01:00

As the new government contemplates how business support should be organised we all need to lobby the government. Having announced the abolition of Business Link and Yorkshire Forward and their apparent enthusiasm for Local Enterprise Partnerships (LEP) comprising of local authorities and business we need to decide what would serve business best a sub- regional service run by LEPs or a Yorkshire wide service run for the whole of Yorkshire.

I can't help thinking that having say 4 LEPs (e.g. Leeds, Sheffield, Hull and the Humber and North Yorkshire), would lead to more bureaucracy and probably lower quality help. Connect Yorkshire draws help from successful entrepreneurs throughout Yorkshire and the Humber. By "successful" I mean that they have built substantial businesses employing over 50/100, or run such businesses and have a lot to teach up and coming entrepreneurs. But there aren't that many in Yorkshire and the Humber and their help needs to be focused.

We must concentrate on the best up and coming companies; those that are going to make a major contribution to our economy. They need help from those with a proven track record.

So a Yorkshire wide organisation providing business support is needed. The Yorkshire Post and others have been calling for this and we at Connect Yorkshire support their efforts.

Have your say by posting your comments; I would be very interested to hear your views.

Raising Funding

2010-07-15T13:41:00.000+01:00

The new government have made it clear that they want business to play a big part in business support in the future.

Connect Yorkshire is just such a project. It started in the private sector. We are sponsored by 44 leading business people and professionals in Yorkshire who provide over £60k of cash and £250k of time to help businesses get ready for investment. A similar amount of cash has been provided by Yorkshire Forward for the last few years.

Companies we have helped have raised over £34m in equity. We are a not for profit company limited by guarantee with a Board of Directors drawn from leading business people and professionals who provide their time free.

Our private/public model is unique and is one we believe the Government should support and replicate throughout the country. I cannot overstate the quality and quantity of free help we get from the business community for the companies we help; from business people and professionals who have succeeded/are succeeding.

It is based on Connect in San Diego who use successful entrepreneurs, called Entrepreneurs in Residence, who give 6-8 weeks of time to get projects from the 50 Research Institutes in San Diego ready for investment.

Support and Survive

2010-07-02T11:31:00.002+01:00

Investment readiness is a key plank of any business support and we’re confident that the Connect model will survive and play a part in whatever support for business the new government decides on.

Our team morale is still high and we are working hard to deliver projects and operate as normal. Our investment Forum is on the 7th July, where nine companies and four University projects will pitch their propositions to investors from around the U.K.

After that we have our very first Investment Readiness Bootcamp on the 12th and 13th of July, the aim is that the business proposition will have been substantially improved as a result of attending and will help prepare individuals in the process of seeking funding.

In March, as part of the Solutions for Business initiative we launched our new Understanding Finance for Business programme; we have had to put a key part of the project on hold (the funded coaching) until we have confirmed decisions about our budget.

Over seven years Connect has enabled more than 243 companies to raise over £34m in equity investment.

For further information about Connect and its services, visit www.connectyorkshire.org

Survey Supports Professionals

2010-03-01T09:20:00.002+00:00

Connect’s business model is based upon linking private and public sector support to help entrepreneurs find the funding and advice they need to turn their plans into viable business propositions.

Reading the FT during the 20th/21st Feb weekend, reinforces my original belief – which, is that the support that companies receive via our programmes, delivered by top professionals in Yorkshire, really is of great value to them.

Delta Economics interviewed 2,120 businesses, with an average turnover of £1.23m, asking them to rank the usefulness of 10 different sources of advice. It was reported that accountants and family members are better sources of advice and support to entrepreneurs than the banks or some support orgainisations, according to a survey of high growth businesses.

Professional advisers were the most widely used, both during the start up stage and later in the company’s development. They were also ranked among the most useful, slightly behind family members, other entrepreneurs and mentors.

We have forty-four top professional services providers and many successful entrpreneurs that are ready to help free of charge, so if you know of any companies that have high growth potential, ask them to contact Connect today on 0113 384 5640

techmesh - a new business network

2009-11-30T17:40:00.002+00:00

We are delighted to inform you that we have recently been awarded a contract by the Regional Development Agency Yorkshire Forward to establish and run a business network to help the IT and Telecoms sector. We have called the business network “techmesh” and you can see our beta version of the site at http://www.techmesh.org/.

Our ambition is to help the IT and Telecom companies and professionals in Yorkshire grow primarily by helping them achieve more sales and by finding more collaborators that can help them win business.

If you have any ideas or suggestions for this business network or you are interested in getting involved in someway, please feel free to email me; nick@connectyorkshire.org

On Wednesday 2nd December techmesh is orgainising its first TechTalk event in association with Connect Yorkshire. The theme for TechTalk is based around emerging technologies such as social computing platforms, Microblogging and Google Wave. The keynote speaker is Mark Rock – CEO & Founder of Audioboo and Best Before.

If you are ready to ride the next IT wave, then why not register online today!

Pitch Perfect

2009-10-29T10:19:00.005+00:00

Our Winter Investment Forum is fast approaching and we are now seeking applicants to present and exhibit. A fundamental part of the process leading up to the event, is that we provide 'pitch' mentoring to help companies hone their idea into something non-specialists in their field can understand.

We often find that young ambitious companies have the ability to talk about their proposition and the technical aspects, but often lack the ability to discuss this in layman's terms as this is what these companies do day in day out. However when it comes to raising investment it's crucial.

This is also an invaluable opportunity for presenters to get feedback, share good practice and see the other side of presenting an understandable pitch. Often it is not until you have tried to explain what is so sparkling about a proposition that you realise it isn't polished enough!These Company Assessment Groups (CAGs) are made up of the mentors that are assigned to each company that are drawn from our sponsors. The companies get high-quality feedback from people who have heard it all before. So when they present at the Forum, they have the best possible chance of winning over investors and raising the finance they need to take their business to the next level.

This mentoring and support is a key part of the Connect model.

We are also offering exhibition space at the event to companies who do not wish to make a presentation on this occasion but who wish to raise finance in the next 6-12 months.

If you are interested in getting your business plan more polished or pitch perfect, do get in touch...

Aspire to Inspire in Leeds and Sheffield

2009-09-29T15:32:00.003+01:00

Elizabeth Jackson, Chief Executive of Directorbank, the UK’s leading private equity recruitment specialist will be inspiring young leaders and business people from Leeds and beyond at the Aspire to Inspire event on 30th September.

Guests who attend this event will also hear from other inspiring speakers including representatives from The Aspire Fund, Forward Ladies and SYIF.

We are working in partnership with The Aspire Fund Manager, Capital for Enterprise Ltd, and Forward Ladies to promote the fund amongst female entrepreneurs in the region.

The Aspire Fund was established with the objective of increasing the number of successful women- led businesses in the UK. The Fund is able to make equity investments of between £100k and £1m, on a co-investment basis, in order to strengthen business and underpin growth.

A key element of the fund is to seek to improve the linkage between those providing funding and those providing investment readiness support; which is where we fit in.

We are honoured to be working with so many proactive and successful businesswomen. We hope that many women-led businesses will join us at the event and hear about how Elizabeth built a successful business, leading to a secondary buy-out of Directorbank.

This event is kindly being hosted by DLA Piper. We do hope that you will be able to join us and if not then we are also running a similar event in Sheffield on the 5th October. To reserve your place visit: www.forwardladies.com/networking-events

South Yorkshire adds chicken tikka to its pudding

2009-08-28T11:05:00.000+01:00

The Asian Business Director's Network (ABDN), with the help of Connect Yorkshire launched its South Yorkshire operation in Sheffield. It was a well supported event and it was really good to meet and talk with many businesses from the Sheffield community.

The event, held at Aroma restaurant aimed to give Asian-led companies access to the mainstream business community. Lynn Harrison, Business Link partnership manager, discussed the Train to Gain proposition; and Insider’s editor Richard Stirling informed that he wants to receive more business news from within the Sheffield community and I, all spoke at the event.

Arshad the chairman of ABDN, made a fantastic speech that was inspiring, he described ABDN as being, “a bit like chicken tikka masala, served with Yorkshire pud.”

He also added; “The ethos of the ABDN is to break through the barriers. We want BME (Black and Minority Ethnic) businesses to break out of dealing with their own communities because that is where the business is, that is where the need is.”

We are looking forward to working with members of ABDN who are looking to raise investment to help grow their business.

We do hope that Connect is not perceived to be Leeds centric; and to reiterate - we are not! This years plan is to hold a total of seven events in Sheffield this Autumn; starting from the 5th October. Don’t miss your opportunity to join us; further details will be displayed on our events page shortly.

Race to the Pole

2009-07-23T13:16:00.000+01:00

A documentary on the BBC2; ‘On Thin Ice’ got me thinking……

After almost two weeks of intensive Polar Training in Antarctica; James Cracknell, Ben Fogle and Ed Coates set off to race from the edge of the Antarctica continent, to race over 370 nautical miles across the largest ice cap in the world to the Geographic South Pole.

The racers will face constant challenges throughout their journey: surving in temperatures as low as -50C, navigating and skiing while pulling a 70Kg. pulk, climbing up to 9300 ft. to the South Pole and through everything working together as a team.

The bottom line is that, as in sport, there are no guarantees of success but equally there is no substitute for preparation. That's why coming up with a well thought out business plan is key.
In September we will be holding the InvestorQuest Investment Challenge and we are now seeking applicants to present at the event. It will be interesting to see how many of the business propositions can articulate exactly what they do and why they might be one of the winners...

Each presenting company has the chance of winning up to £1000 of top level Intellectual Property, Accountancy, Legal and Marketing advice from four of our Sponsors (£4000 in total).

Investors look for attributes that they have seen in ventures that have generally made it in the past: clear vision and value proposition, strong management that can navigate through the blizzards to success, understanding of the competitive landscape, a feasible route to market, etc.

The aim of the Investment Challenge is to encourage people seeking early-stage funding and business support to put their ideas forward. The funds involved so far are the Viking Fund, YFM Group and Aquarius Equity Partners. If you’re interested, then check out the InvestorQuest page of our web site for more information.

Open Collaboration: Friend or Foe?

2009-06-29T10:47:00.003+01:00

Open innovation is a hot theme at the moment. The idea is that you only know so much within your organisation and outside there is so much more knowledge if only it could be harnessed for (your?) benefit.

The more council you take the more certain you can be that your decision or approach is (the wisdom of crowds sampled by taking point measurements?) However, the more you share your ideas the more open they are to be copied or stolen. Also, your IP position can be a concern or even a sticking point for establishing a win-win situation with a third-party that is bringing something to the table. But the bottom line is that people work together when they can achieve more together than they can alone (which is why mergers take place!)

So like most good ideas there are pros and cons and like capitalism 'it may not be perfect but its better than the alternatives'. Initiative like Connect have a role to play in helping break down barriers, enable cross-silo thinking and generally help catalyse action - if the market participants want to. The region’s ability to commercialise science and technology depends on the strength of its “social business infrastructure” and an entrepreneur’s ease of access to critical resources. We want to make it easier, not harder to start a business or gain market traction.

Experienced people will be willing to give time pro-bono if they get a “return on involvement”: either altruistic satisfaction or the promise that everyone will profit from a rising tide. The development of a “culture of collaboration” that goes beyond mere networking towards a process of co-creation and information exchange that creates trust-based relationships, and so instills a sense of shared ‘ownership’ in both the risks and rewards.

Living in splendid isolation (and having absolute focus on your own bottom line) has its place, but equally there is always space for serendipity, participation and collaboration where everbody wins.

Clouded Thinking?

2009-06-01T10:00:00.003+01:00

TeckTalk 2008 on June 17th will debate the issues surrounding 'cloud' computing. How important is it for enterprises to be able to 'hug' their data? Is day when all server machines no longer belt out heat from your own rack but sit somewhere out in cyber space, maintained and upgraded by men in white coats.

The technology promises to bring the cost of application hosting, data storage and connectivity down via 'pay as you go' services and open source tools. But have may of us have already found that's not the whole story and the vendor perspective can be "when we have them by their databases, their hearts, minds and wallets will follow".

Cloud computing brings together high performance supercomputing capabilities to the masses. Is your application taking off? The promise is that you can scale processing power as your application grows. Backups? All taken care of for you. But what about security? That probably still is the Achilles heel of the cloud - are you going to entrust your precious corporate data to some outside your firewall?

And what about the green agenda? One of the companies backed by the South Yorkshire Seedcorn Fund has a novel approach to server cooling (no not locate them at the North Pole!). Full tilt computing generates a serious amount of hot air where ever the processor is located and that needs to go somewhere.

So on the 17th, let's hope the debate produces some clear thinking and we get demistify what cloud computing has to offer for the future and lets hope it not all vapourware! We have a great keynote speaker lined up from Oracle and a supporting panel to debate the issue: Cloud Computing - Is it all hot air or is there a silver lining? See you there.

Power, Job Titles & Oxymorons

2009-05-26T10:30:00.000+01:00

The current controversy surrounding the power residing with the Prime Minister versus parliament and the legislature has similar parallels in business. Tensions mount when shareholders and executives having misaligned interests. Surely a lot of the problems the banks have faced are linked to this disconnect. And any system of remuneration that lacks audit or control is always asking for trouble as the politicians have found. In isolation, one can justify any reward or find good reason for a payment that wouldn't stand up to external scrutiny or a wider perspective, which is why this is so important in keeping reality real.

On the subject of power bases, I am always wary of companies that have job titles that start with the 'Deputy' or 'Assistant' which implies that the person they report to believes themselves to warrant such a supporting cast. Similarly, I am not a fan of joint roles and responsibilities, which just serves to be divisive and confusing to other staff. If you have functional heads accountable for the performance of the company in that area then that focus is beneficial and good. Everyone needs to be part of the team, but in the end someone needs to do something to move things forwards in specific areas. Even more against the grain is the 'Executive Chairman' role which is surely an oxymoron, which was a subject of a previous post 'Are Two Heads Better Than One?'.

Clucking About Geography

2009-05-18T11:13:00.000+01:00

A recent Northern Way magazine article by Mark l'Anson highlighted that 70% of the fund management 'capacity' is clustered around London. Is it the quality of the company that drives the deal or does geography really matter? Business angels mare certainly more likely to stay closer to home, but professional fund managers really should be where the action is.

Is this a chicken and the egg problem or has the bird well and truly flown? The relative absence of VC money may actually damped demand is an argument the article puts forward. Is it the role of the RDA's to redress this imbalance and provide regional funding to need local business needs? The Northern Way have recently published its first recommendations report ' Realising the £25bn Potential: Stimulating the long term private venture capital markets in the regions'.

The report to my mind misses a key point - supply and demand - it's no use having regional fund managers in place twiddling their thumbs without activities to support and stimulate the innovation ecosystem. At the end of the day it is a fund managers responsibility to make money - not to redistribute wealth.

Activities like Connect are more orientated to helping to stimulate innovation and enterprise at the grass roots level. Putting too much focus on fund management as a means of economic regeneration without regard for the health of the ecosystem is not optimal. Fund managers are tasked with plucking good opportunities out of the ecosystem and then fattening them up. If there are not enough good opportunities, they will look elsewhere. Hence the focus of regeneration should be on creating an environment where good investment opportunities develop. I can't help believing that if the opportunities are there, the fund managers will come to harvest them.

For What It's Worth...

2009-05-11T09:37:00.003+01:00

I will be leading a Investment Readiness Programme seminar on How To Do A Deal: Money, Valuations and Deal Structures on the 20th May. How do you value an asset? In simple terms, it is the discounted value of all future cash flows it can generate plus any comfort or benefit you might derive while owning it! But also if you think an asset will go up 20% from what someone else thinks it's worth today, then you might be seduced into buying it. Equally if you think it will be worth less tomorrow than it is today you would be hard pushed to buy it. Which is why macroeconomics and recessions cause all sorts of problems (at least in the short term). Particularly if the only cash an asset is going to generate is when you sell it (as with our fixation with houses as an 'investment' rather than as somewhere nice to live!).

There are all manner of ways of valuing a company and it it is instructive to see what each method comes up with, but in the end the value of an asset is what someone else is prepared to pay for it. Which begs the question is a company sold or bought? My experience is definitely the latter. I know investors want you to have an exit strategy, but it should be just that. Spending too much time too soon trying to sell something you haven't yet formulated can be counter productive. The key focus has to be creating value and reducing risks, both of which mean a higher valuation at whatever point this is crystalised.

And don't forget price is negotiable, so make sure you hone up these skills to maximise the price you get for you get for all your hard work. And remember if you are only selling part of the company, you have to work with whoever purchases equity from you so implicitly it can't be an overwealmingly good deal. Each side has to be reasonably happy with the outcome. If either side isn't just a little unhappy at the outcome it probably is a bad deal! Balancing risk and reward is what it is all about and remember the lower the risk and greater the future value is realised quicker the more you can expect to get if you sell something today. Do the sums can quickly shed some light on whether your business plan proposals have any chance of becoming a done deal.

To register for the workshop on the 20th May, click here!

Laying Polished Pitches Perfectly

2009-05-05T09:55:00.010+01:00

In the run up to our June Investment Forum we provide 'pitch' mentoring to presenting companies to help them hone idea into something non-specialists in their field can understand. The ability to talk about a technical subject in layman's terms is rarely what these companies have to do day in day out, but when it comes to raising investment it's crucial. This is also an invaluable opportunity for presenters to get feedback, share good practice and see the other side of presenting an understandable pitch. Often it is not until you have tried to explain what is so sparkling about a proposition that you realise it isn't polished enough!

These Company Assessment Groups (CAGs) are made up of the mentors that are assigned to each company that are drawn from our sponsors. The companies get high-quality feedback from people who have heard it all before. So when they present at the Forum, they have the best possible chance of winning over investors and raising the finance they need to make their dreams a reality. This mentoring and support is a key part of the Connect model. We also provide support to companies that may not looking to raise funding, but still want to benefit from this external input through our Springboard programme.

If you are interested in getting your business plan more polished or pitch perfect, do get in touch...

Mixing Ingredients For Success

2009-04-27T10:15:00.000+01:00

I think it’s important to appreciate the relationship between three key ingredients in any business: enterprise, innovation and finance. An entrepreneur is a person who operates and assumes the risk for a business venture. Innovation which is the process of making improvements by introducing something new. Every successful company needs combination of these two ingredients, plus a healthy dollop of money. And they need to be mixed!

Getting these three ingredients to work together is the key to success. Each needs better understand each other’s language, motivations and values. This is doubly important in the UK where VCs and equity funders traditionally have an accountancy background compared to their more tech savvy USA counterparts.

Initiatives like the Enterprise Fellowship Scheme funded by Yorkshire Forward is a sterling example of how researchers can get some entrepreneurial DNA spiced into them without compromising their academic integrity. Having a potential commercial outcome in mind from the outset can inform the research as much as that all important journal publication. At Connect, we are increasingly involving academics on our company assessment panels to help assess technical innovations coming from the private sector.

Great companies are built by teams that bringing together money, management and ideas. You need a critical mass of these components and the infrastructure to connect them. People are the ultimate technology transfer agent and commercialisation is a ‘Contact’ sport. And organisations like Connect can provide an important mechanism for catalyzing and promoting this reaction, linking entrepreneurs and innovators with the resources they need to succeed.

Our upcoming Connect Investment Forum provides a key platform for promoting this interaction. We also provide online introductions through MyDealMaker and publish a periodic Investor Bulletin to bring companies on our radar screen to the attention of potential investors.

It's a Jungle Out There

2009-04-21T09:39:00.004+01:00

I spoke at a recent Insider Spark event on the subject of 'What Education Can Do For Business'
In my experiences partnerships only work when both sides get something out of the relationship and ideally this happens when the whole is greater than the sum of the parts, creating a virtuous circle of success.

Mary Walshaw, the founder of Connect San Diego, talks about Shared Risk and Reward, and a collective sense of ‘ownership’. Community over individual institution or company. She also talks about creating an innovation ecosystem that is more rainforest than plantation. New ideas form at the intersection between disciplines, where cross fertilization occur, serendipity plays it part and diversity thrives in some chaos.

Now I am not saying orderly process and a commercialisation pipeline do not have a part to play, but innovation is non-linear and trying to select the winners and losers at too early a stage is not necessarily useful or doable. A vibrant innovation ecosystem gives new commercial concepts and ideas a fighting chance. Yes, if they do have the right DNA to thrive then the plantation analogy takes hold and that is where real VC funding comes into play. Once something emerges from the 'forest' that looks promising, then the emphasis needs to shift towards control, replication and development with a 'plantation' mentality to leverage value. These stages of a companies development are very different and the people that revelled in the early-stage anarchy may not be best suited to raising things in straight lines to regimented schedules.

But at the Proof Of Concept and Seedcorn stage you have to accept failure is necessarily omnipresent with success. There is a tendency to want to wait until something is proven before wanting to invest in it. We all want to make managed stepwise progress that avoids the risk of failure. The fact of life is that no matter how carefully you plan, you can't avoid making mistakes as part of the journey. Being too focused on the certain winners can be counter productive to the health of the overall ecosystem.

The key question is whether this early stage funding and support is seen as being focused on maintaining the diversity and health of the innovation jungle or is it to grow good ideas in plantations?

A Debt to Equity

2009-04-14T09:24:00.004+01:00

A new website http://www.firstfunding.org/ focused on raising debt financing from Business Angels has recently launched which is extolling the virtues of companies of this form of finance, rather than equity funding. As they note, most funding rounds for early stage businesses may incorporate a mixture of debt and equity, normally with the equity funders leveraging off the debt funding that is available from government back schemes, such as the Enterprise Capital Fund. Therefore, I am a bit bemused that the website leads on debt financing.

Making money by lending to companies the banks won't back is a tough ask without the equity element. The reality for most Business Angel deals is that the ones that fly need to pay for the ones that don't and no matter what interest rate you apply to a loan, the reality is that participation in the equity upside is required to make the numbers add up from a portfolio perspective. Our own FastInvest loan scheme seeks to do this by us agreeing with the company an appropriate equity option. Obviously not all companies we back will go on to greatness, but if some do we have a chance of getting back more than the accrued interest and capital.

There is a danger for many young businesses that they take on too much debt too early and not enough equity. Connect Yorkshire exists to help companies make the right funding choices and we offer impartial advice. Just as with the banks, making loans to companies requires that they generate sufficient cash flows to repay on the agreed schedule. The great virtue of equity is that there is usually no obligation to repay it unless there is an exit for all shareholders. Between pure debt and equity are a range of instruments to balance risk and reward. Attending our Investor Readiness Programme that gets underway on the 22nd April is a great way to get to grips with this subject. Why not register to come along and learn more about debt and equity funding!

Is Planning 20/20 Vision?

2009-04-06T09:10:00.006+01:00

Someone once said making predictions is hard, especially about the future. So while the G20 where planning our collective futures, the 20:20 Vision event last week featured Mark Faulkner, a former colonel in the Royal Dragoon Guards, who talked about "Fighting the tactical battle whilst winning the war against the economy". So what can waging war teach us about business? Well, quite a lot actually!

'Effect Orientation' was a major theme. Your soldiers (employees) need to understand the intent and context i.e. what your goals are and what stands in your way. The 'How' is devolved down, allowing initiative within constraints. The ultimate goal is to achieve a common purpose, not necessarily just to follow due process that gets you nowhere. This allows proactive action and initiative, rather than just being reactive to the enemy (competitors).

Colonel Faulkner put forward a framework (not a process) for thinking about planning a campaign:

Identify the What and the Why.
Define what you know and don't know
What resources you have
The actions to take (which lead to effects)
Timeline (when to do things in a synergistic or harmonious way).
Monitoring
Control

Mike Briercliffe commented in his summation"No plan survives contact with the enemy", so the ability to be adaptive and resilient is just as important as a well thought out cunning plan! However good it is, it's going to change as you engage reality.

For those of you involved in software development this has parallels in object orientated development where the focus in on identifying decoupled activities and focus on the external impact of objects, rather than the internal workings. This also emphasises hierarchical decomposition and solving independent subproblems in parallel.

One attendee commented that this theme might be incorporated into our Investment Readiness Programme. I couldn't agree more! Everyone in business is waging a war on uncertainty and making decisions with limited information. In any campaign, effect orientation (what difference an activity or action makes) is the key.

Another key point was in resource limited situations, you don't simply respond by spreading your jam uniformly thin, but focus resources where they can make most impact. Companies that are responding to the recession by simply freezing wages or cutting marketing budgets may end up surviving the battle but lost the war.

Are Two Heads Better Than One?

2009-03-30T09:38:00.006+01:00

The controversy surrounding Sir Stuart Green's stewardship of Marks & Spenser by combining the Chief Executive and Chairman role has resurfaced once again with shareholders up in arms that so much power resides with one man. They are right to be agrieved that anyone, however good, believes they alone can be relied upon to deliver superior returns for shareholders.

Any good CEO needs a good chairman - the two roles are different and necessary. Even small SMEs can benefit from the perspective an external chairman or mentor can bring to the company. It is widely recognised that a CEO can perform even better with a sounding board for his or her ideas. I would be with Sir Stuart in resisting having an executive chairman on board. Anyone full time in the role is simply going to get in the way operationally and loses that all important external perspective.

Similarly, I am not a fan of joint roles and responsibilities, which just serves to be divisive and confusing to other staff. If you have functional heads accountable for the performance of the company in that area then that focus is beneficial and good. Everyone needs to be part of the team, but in the end someone needs to do something to move things forwards in specific areas. I do hope that Sir Stuart is a good delegator because doing the work of two people (as soon as you can afford not to) ain't a smart move in business, however good you are.

Taking The Plunge In A Recession

2009-03-23T09:00:00.001+00:00

Some top tips if you are thinking of starting your own business:

Do not be put off by the downturn. Many companies will be reconsidering their cost base and you may be able to offer a more cost-effective solution. Adversity stimulates change.
Don't leave your job too soon. Develop your new project at weekends, in the evening or in your lunch break for as long as you can. You need to keep the cash coming in and when you make the leap, make sure you are not going to run out of it.

Do not take on overheads. Fancy offices and expense accounts can wait. Be ruthless about keeping fixed costs low.

Do not spend money on shotgun advertising. PR and targeted advertising is a much better bet for a young company.

Do not engage expensive professional advisers too soon. Learn the basics yourself and tap into free advice available from the likes of Business Link and Connect Yorkshire!

Do not rely on bank debt exclusively (chance would be a fine thing). You need a range of sources of finance. Equity, leasing, invoice discounting, customer discounts to pay upfront (or even before you can ship anything to them if you can).

Do not be too ambitious, too soon. By all means dream, but set achievable goals and realistic targets. You need to get to base camp before trying to reach the summit of your ambitions.

Know your customer. Every product needs tweeking once the first customers get their grubby hands on it - don't expect to get it right first time nomatter how hard you try.

Know your market sell into it well. No matter how good you think you are, you need to beat a path to the customers door and not the other way around.

Keep going. You have to be in the game to win it.

To find out more about getting fit for finance and developing your business idea, come to our upcoming Investment Readiness seminars.

Reflections On The Enterprise Show

2009-03-16T10:14:00.005+00:00

Having spent a day at the Enterprise Show it reminds me of the need to have an alignment from encouraging entrepreneurs to providing the right start up advice, access to finance, and networks to inspire enterprise and growth ambition. The right business support made available at the right time, especially so at the early stage, is essential for innovation to flourish. Most importantly, innovation requires strong and effective business networks. The evidence is that building a successful business is a contact sport and partnerships, teamwork and community are essential.

Physical closeness is undoubtedly important. Silicon Valley and the Cambridge cluster, the rise of the high-tech community around Boston and San Diego all have things in common, not least the active involvement a dominant research-led university. Yorkshire is blessed with not one but at least five world class academic institutions which not surprisingly tend to vie with each other for superiority which with this catalysing focus in mind is not necessarily entirely a good thing. Good networks and geographic focus can help to foster commercialisation and growth.

The Enterprise show is a good example of a key element that fills one of the gaping holes in provision - which is help for the general public to get their business idea off the ground. This is also the space where Connect primarily operates. It will be interesting to see whether the new innovation voucher scheme leads to more engagement between the general public and the universities in pursuing enterprise and innovation. They have thirteen in the region to choose from...