Can’t make it to London?  That’s OK! Join us online for the full event! You’ll be an active participant in our class.

As an entrepreneur you start pitching your business long before there is even a business to pitch.  You pitch potential team members, customers, industry partners, lenders, investors and members of the community in which you will work.  How you position your business in the minds of others is key to your marketing and sales efforts, your website design, the delivery of your products and services; even your future growth.

Getting your pitch right can dramatically increase your profitability and it can dramatically reduce the time it takes you to get your business up and running.  It can make your business more profitable more quickly.

Why?  Because the right pitch compellingly identifies the value you deliver to those you are serving and to those with whom you plan to work.  That clarity is key to your success.

For complete details about this event, please sign up by following the link below.  If you know others who might benefit, we hope you’ll forward a link to this page.  We think this is going to be one of our most important, and most entertaining events ever.

Why? Because there is nothing more important to learn, and little more fun to master, than the art and science of delivering the Perfect Pitch.  A great pitch delivered well is the closest thing you’ll see to “Practical Magic” in the business world.

For those attending online through S4Stv, the event starts at 6:30. For those attending the live event, registration starts at 5:30.  See You There!

http://www.schoolforstartups.co.uk/2010/05/17/perfect-your-pitch-s4stv-hosted-by-university-college-london/

Related posts:

1. The Pitch 2010 – A Very Important Event for UK Entrepreneurs
2. UK Startups Get Accelerated Training in How to Find Investors from Doug Richard at The Royal Institution of Great Britain
3. UK Startups are Prey for Rip Off Artists Disguised as Angel Groups & Financiers, says Doug Richard

If you have a very good startup or small business demonstrating a readiness to grow, and you have any kind of significant presence in the media, investors may well start finding you. Investors like to see that your business has a proven value which good market presence usually verifies. Investors also want all the fundamental uncertainty gone about whether or not you can run a business, and whether your business can find customers and sell them things. Once you’ve proven those properties in your business, and you have a plan for how to turn a little money invested into a lot of money returned, you start to be of interest to anyone who makes money off money.But how do you get to that point?

The earliest material support provided to entrepreneurs and their business usually comes from family and friends . . .

Why Family & Friends First?

Taking money from family and friends for your business . . . every entrepreneur I know initially quails at the thought.  But, here’s the thing.  If your early stage business is really strong enough for someone to put money into, then you should feel comfortable telling your family and friends about the opportunity.  Your path forward should be so clear, your prospects so certain, your customers so obviously ready to support your start or your growth that the funding that comes in from family and friends will go right back out to them at a profit.  That’s not always the case of course, but even early funding should be provided when a business model is solid enough you know where and how the revenues required to repay that investment will be earned.

Note, that I’m not talking about the few hundred dollars you need to buy a computer, cover basic travel costs, or address your need for printer paper and photocopies.  Family and friends of new entrepreneurs often provide this level of support without particular thought of return.  An old computer, a rail ticket, a used printer are often just holiday and birthday gifts.  In fact, as an entrepreneur one of the nicest things you can do as you become more successful is pass off your old equipment to friends and family working to start work on their own enterprises. That early “capital” is often the critical investment brand new businesses need most delivered at a time when they need it most.

But when you start needing cash to fulfill existing orders or scale your business up, family and friends will want a more formal relationship involving a discussion of return on investment and risk.  If your opportunity is good enough for them to take a risk on, given that you’ll see them every year for the rest of your life and you’d like to retain your family and friends, it is worth coming up with a formal business relationship for a short term loan or a small investment that lets you get that first “step ahead” of your bills into a cash flow positive position.

And if your opportunity is not good enough to guarantee that, you must ask yourself why it is a good enough risk for anyone else to take.  You must think about what you can do to make the opportunity better.

The Right Conditions for Family and Friends Investment

Investments from family and friends should be small, secure, and very safe. They should usually be based on the idea of fulfilling existing orders. They should generally be fully documented, with terms spelled out for what will happen in case of default.  For any except the smallest amounts, a lawyer should be involved in drawing up the agreement. It’s best to start with a very small deal, and then (as trust develops), deals can get larger.  Whether it is stated or not, all family and friend loans are “personally secured” if you intend to keep the family and friends after the deal. Obviously friends and family forgive debts all the time, but it is not something that’s ever particularly pleasant.

Related posts:

1. Entrepreneur’s Guide to Creating & Testing Business Models
2. An Entrepreneur’s Quick Guide to Closing Online Sales
3. The Insanity of Angel Investors

Anyone who has attended my events or read my articles knows my aversion to entrepreneurs seeking outside funding for a project before its generating revenue on its own.  That even applies to social enterprises that have “good works” as well as good business in mind when they begin.  A social enterprise is not a charity . . .

That said, I’m very cognizant that many new business owners can’t turn even to family and friends these days to help defray expenses like a computer, photocopying or basic travel expenses.  I also understand how hard it is for new businesses to connect to the mentors and incubators that can help them launch correctly and well with support from peers.

That is why School for Startups has teamed up with UnLtd, the Foundation for Social Entrepreneurs, to make competitive Catalyst awards for up to £5,000 available to entrepreneurs pitching at School for Startups “Start Here! Starting & Growing a Successful Business” events across the UK.  These awards to individuals are designed to help them grow an entrepreneurial idea into a self-sustaining enterprise that creates positive social change.

To see if you are eligible to apply for a Catalyst award, please click here.

To apply, please click here and complete the online application form.   Please quote as a reference on the field ‘Project Name’ S4S/[ event you are attending] i.e. Leicester/London/Brighton/Cambridge along with the name of the project if you have one.

For more information about this program and others than can help out new entrepreneurs, check out our Funding for Startups page.

UnLtd and School for Startups financial awards come with additional support and mentoring designed to help social enterprises get off to the best possible start.

Practical help from experienced entrepreneurs delivered at exactly the right time can help a new social enterprise get off to the best possible start. Real help, rather than expensive loans or investment with long strings attached, is hard to find.  School for Startups is glad to be part of a program that provides practical assistance to the nascent superheros we call social entrepreneurs.

Related posts:

1. UnLtd Award Programmes in collaboration with School for Startups
2. UnLtd
3. Choosing a Social Enterprise Legal Structure: CLS, CLG, CIC or Cooperative

The 4 Ps?

Product, Price, Promotion, Place, the Four P’s that historically have defined marketing operations have long been a road map for businesses who want to bring a product to market.

• Develop a product that packages a set of features and benefits
• Determine the proper price for that product
• Decide how to promote it
• Determine how to distribute it.

That’s how you market a product. At least it used to be.

For many businesses the traditional interpretation of the 4 P’s is is misleading at best and toxic at worst.  Online games and iphone apps, open source software and social networking sites blur the line between promotion and product.  Grocery stores now take orders online for home delivery. Print shops let you upload documents that are subsequently printed and couriered to clients. Many schools now consist of students and faculty that never meet face to face. Aren’t we all Internet businesses these days?

Understanding What Has Changed . . .

The reality is that over the last decade the process by which products are brought to market has changed radically and many otherwise competent business professionals are still struggling to cope with new realities.

For example, many software startups still identify their product as being a long series of specific features that let the customer achieve a given set of objectives.   When you ask these businesses to add a form that lets someone invite a friend to use the application, or to create a Facebook widget that lets the product communicate with customers through their favorite social network, these developers say “We need to work on core features first.  Lets save that for Version 2.”

• They see all “code” as a component of the “product”.
• They don’t understand that they, like everyone else in the market, must create the code required to connect their product to customers and their customers to one another.
• They don’t understand that they never get a version 2 if they haven’t integrated their product or service into its marketplace by creating the necessary code.
• They seem to believe, despite the fact that they have no customers and usually haven’t done much in the way of classic marketing research, that they know what the customer wants and it is embodied in their feature list.

The last decade of software successes demonstrates that this is “flawed” thinking. Twitter does one thing very well and everyone that uses it invites others to use it.  There is no clear division between the Twitter service and its methodology. Facebook, Linkedin, Google, Magento, and many other very successful businesses have discovered the same solution.

More traditional businesses face other cognitive challenges.

• Brick and Mortar companies believe they have a “core business” which may be anything from producing cast iron pots to selling accounting services.
• They use the web for this thing called “marketing” which is seen as an auxilliary operation they undertake in order to increase product sales.
• Annually, or quarterly, the marketing budget is calculated. Some money is spent on advertising, some is spent on the website, some is spend on bulk mail. There is no adherence to any kind of specific strategy or methodology for this development which is considered “marketing”. Companies still think in terms of campaigns.

These businesses do not see the Internet and other communication connectivity as a necessary core element to their product or service because they do not see themselves as a “software” or “internet” company. Over the last fifteen years, Amazon, Lulu, Netflix and Ebay are just a few of the businesses that have re-envisioned traditionally brick and mortar businesses leveraging new communication options.

There is a new road map for bring products and services to market because what businesses are now expected to sell is a good “customer experience” that extends all the way from presales, to product adoption, to long term use.  Actually, businesses have always been in the business of selling “good customer experiences” it is just that these days that requires that elements of “marketing” and “software development” be incorporated into almost every successful widely-adopted product or service.

Ship Early, Ship a Little, Ship Fast

Given the changes in how products are developed, priced, promoted and distributed, there has been a concurrent change to how most enterpreneurs should launch their businesses.

• Create a very stripped down version of your product or service with a very small number of features, maybe even just one really great feature.  Ceate all the code required to connect this product or service to its target market.
• Launch the product aggressively, so people who need the tool can find it and share it with friends.
• Wait for the “wall of sound” that comes as customers adopt the product and begin providing feedback. Release new versions of the product based on what actual customers want from the product rather than what they imagine the “ideal feature set” to be.

This methodology for bringing a product to market offers many advantages over more traditional strategies.

• It allows startups and small businesses to start their business with a minimum of debt or outside investment and in a relatively short period of time.  The objective is to create a very elegant, very useful, very simple solution to a given customer problem.
• It lets them leverage the Internet for solution distribution at a minimum cost and for a minimum purchase price at a reasonable profit.
• It lets them refine the product over time based on feedback from paying customers.

The Ship Early, Ship Little, Ship Fast methodology works for almost any new product or service because it jetisons an antiquated understanding of what a product is, how it is promoted and how it will be delivered.

Related posts:

1. What Businesses Will Be Worrying About Next Year
2. The Price of Money (At Least You Can Eat Catfish)
3. Sex, Lies and the Bottom Feeders of the Angel Community

(Download The Entrepreneurs’ Manifesto and Declaration of Rights PDF)

The Entrepreneurs Manifesto is a public declaration aimed at supporting the UK’s 4.4 million small business owners and entrepreneurs.

Authored by Doug Richard, the high profile entrepreneur and former TV ‘Dragon’, the manifesto calls for a new deal for entrepreneurs as a “recession buster” solution for the UK.

The document consists of two sections:

• The Entrepreneurs Manifesto
  A statement of principles highlighting the challenges that the UK must overcome to truly harness the potential of its entrepreneurs
• The Declaration of Rights
  A series of practical recommendations for the current and incoming Government to clear the path for an explosion in entrepreneurial activity

Doug Richard will be speaking about the manifesto at the major social enterprise conference Growing a Successful Social Enterprise at the Royal Institution, London on Tuesday 19th January 2010, hosted by the University of Essex and supported by the Transformation Fund of the Department of Business, Innovation and Skills.

The Entrepreneurs Manifesto

And what it held
stood ready to be loosed
with all the power that being changed can give.
Philip Larkin

A spectre is haunting the United Kingdom – the spectre of Capitalism.

As a nation we fear that nothing has changed; that greedy bankers will continue to be rewarded for their failure, that amoral corporations will continue to put profits in front of people and the environment, and that the State, however bloated and costly, is not only unable to control the beast but must compete with other nations to be its servant at an unbearable cost to itself.

We have banks so large that they dwarf the very governments whose guarantees they rely upon for our trust. We have become hostage creditors to their uncoupled risk taking. And worse, as nations we are reduced to acting like market stall vendors shouting our best price louder than the adjoining shopkeeper hoping they will purchase just one more night. They are not just too big to fail. They are too big to even let leave.

The largest corporations pit our tax systems against each other. Their capital alights like a wind born leaf ready to whisp away on the slightest breeze of taxation. In the failure of a global commons their profits shoulder a fraction of the costs of the infrastructure and shared society whose foundations support them.

The environment has no voice, the consumer has no collective;  thus the largest corporations are neither charged for their cost to the world nor rewarded for building products that endure.

Yet our State continues to grow. It has devoured every pound of taxation and growls for more. Our civil servants earn uncivil wages. When the economy grew, it outgrew the economy. Despite a decade that has seen more than a 40% increase in welfare spending (i), our rates of poverty and joblessness have continued to climb.  One in four UK citizens live in poverty; nearly three million children do (ii).  Over the last ten years our index of production has fallen more than 10%. In the last two years our index of services has fallen over 5% as well (iii). Our national debt is now 60% of our GDP (iv). We are demonstrably poorer as a nation. The system does not work.

In their fear, and amplified by their impotence, our politicians rail against the excesses of the global financial system, the greed of the corporations and the system that drives it: capitalism.

Their fear reflects the real power of capitalism. It is the acknowledged force that respects no nation’s boundaries and no politicians’ calls for fairness.

But the current economic downturn, precipitated by the credit crisis in the financial system is neither proof of the failure of capitalism nor an endorsement of the profligate spendthrift ineffectiveness of our government.

It marks the first recession in a globally connected economy and the speed by which local folly is amplified into a global crisis. It demonstrates the short‐sightedness of permitting investment banks to co‐habit with retail banks thus coupling the low risk savings and loans business that underpin our citizens to the high risk and volatile business of financial inventions and speculation. And it is a vivid demonstration that much of what we call financial services adds little or no economic value to the nation.

Unleashing the wealth creators

But, the wealth of this nation, and of every nation rests on the shoulders of entrepreneurial activity. The innovators who open new markets, create new products, deliver new services and change the processes of business itself; by the very act of creation, destroy less efficient industries, create greater productivity and as a direct result create all new wealth.

The State is not our society.  It is the largest servant of our society and to the degree it intends to deliver greater benefits and services to all of its citizen’s in equal measure the greater its moral obligation to ensure that it harnesses the power of the entrepreneur  to constantly improve the delivery of its services. The size of the State, itself, is not the enemy. Thus focusing on its size will not lead us to a solution. “Societies that try to reap the gain of creative destruction without the pain find themselves enduring the pain but not the gain.” (v)

The tax receipts that flow from the entrepreneurs’ efforts pay for all the services we receive. Yet the services we receive are not beneficiaries of that gale of creative destruction. The State, often operates from the flawed assumption that if it’s the State’s obligation to ensure we are safe, healthy and educated, then only the State can deliver a fair service. That notion of fairness is the fairness of the least: that no one can benefit more than the least the state can deliver. Thus, everyone gets the least, we cannot improve until we can improve everyone and we end up improving no one.

But to the smallest degree that the State aspires to deliver more than it can afford; it has no choice at all: it must recuse itself from the monolithic delivery of all services and create playing fields upon which entrepreneurs can be unleashed. Harness the collective creative self‐interest of our entrepreneurial output for the benefit of meeting our social objectives and we can ensure that they will improve at the fastest possible pace. We will see a flowering of ideas, a manifold unfolding of new approaches and a gale of creative destruction that sweeps the Kafkaesque bureaucracy and sclerosis from the implementation of government.

Beyond the state, the promise for the United Kingdom is to lead the world, not follow. To create the economic freedoms necessary to nurture innovation and entrepreneurialism and to realise that entrepreneurs, like teachers and doctors are key contributors to the healthiest societies. That is the promise of entrepreneurship. That is the opportunity for the United Kingdom.

The Entrepreneurs Declaration of Rights

We stand at a crossroads. The United Kingdom has the potential to remain a central economic and political power amongst the world’s nations or it can sink slowly beneath the weight of its problems and the impotency of its remedies.

We are a nation that has everything it needs to enter the 21st century on a wave of growth and prosperity. But to do so we must harness the only force for growth, for prosperity and for fairness and social justice that exists: the entrepreneurial culture.

This is not about capital. This is not about the few getting rich at the expense of the many. This is not about the preservation of privilege. If anything it is the key to the opposite: the creation of ladders of social mobility, and increasing of the wealth of the nation so we can afford the services we believe are the rights of our citizens: to be healthy, to be educated, to be safe and to remain free.

But harnessing entrepreneurialism first means understanding it: an entrepreneur takes on the risk of innovating in the expectation of being rewarded for success. Reducing the incentives of being rewarded, increasing the obstacles to create new enterprises, limiting the shape and type of entrepreneurial activity and not investing in the key infrastructure upon which the next wave of innovation will depend, all combine to emasculate our nascent entrepreneurs.

Thus we call for our government to change its priorities.

We must increase economic freedom for new businesses and small businesses and all businesses that take new business risk. We must cut the time it takes to start a new business. We must radically streamline the effort of complying with government regulation and exempt the smallest businesses from many of the regulations entirely.

We must sweep clean the entire government funded industry of business support and leave behind solely an institution whose remit is to expedite and simplify the effort of small business to manage the burden that government places upon it.

We must free up the savings of our families, friends and communities so that they may give, invest or lend their own small capital into the nascent businesses of their children, their friends and their communities with credits and exemptions that radically encourage the activity.

We must stop paying people to be un‐employed and begin to share the cost of them being taught to be employed. Apprenticeship is not solely for the trades; it is for any job in any company. We face a lost generation of students and young graduates with no hope for jobs whilst employers have no means to underwrite the period they need to make those students into productive employees.

We must recognize that the largest customer in the UK is the government itself. The government must adopt a requirement that a specific percentage of all of its procurement will be through small and medium businesses. It must place the responsibility for compliance with industry and at no cost to itself drive revenue to our entrepreneurs and open the doors of government to innovation.

We must broaden the scope for social entrepreneurs by creating new legal frameworks that explicitly encourage a broad range of social businesses from co‐ownership models such as John Lewis to for‐profit businesses that seek to achieve a social bottom line as well as a traditional profit.

Finally, we must recognize the centrality of connectedness in the competition amongst nations. The United Kingdom must wire itself and do so urgently. Just as our roads and trains are a public service and a natural monopoly; so too is true broadband. True broadband is not 1MBof information trickling down to some of our homes. It is 100Mb to every doorstep in this country. It is the key infrastructure that will kindle a wave of creative destruction and increased wealth that will match the industrial revolution. It will reduce the stress on our crowded transport systems, it will re‐vitalize neglected sections of our nation, it will place the key tools in place to amplify and distribute scarce resources in education and health care. And it is achievable now.

Finally, we must understand that we do not understand. People are not empowered to step out on their own, take risk, hope for reward, and move on from failure. The corrosive impact of an overprotective State is not merely the loss of our sense of responsibility to a civil society; it is the even more profound loss of our sense of capacity to change society, to have an impact, to be, in short, an entrepreneur.

Entrepreneurship can be taught and must be learned.

About Doug Richard

Doug Richard is a successful entrepreneur with 20 years’ experience in the development and leadership of technology and software ventures, Doug featured in the first two TV series of Dragon’s Den. He is the Founder and Vice‐Chairman of the Cambridge Angels and Chairman of the Conservative Party Small Business Task Force.

Between 1996 and 2000 Doug was President and CEO of Micrografx, a US publicly quoted software company. Prior to that he also founded and subsequently sold two other companies: Visual Software and ITAL Computers.

Doug holds a BA in Psychology from University of California at Berkeley and a Juris Doctor at the school of Law, University of California at Los Angeles. In 2006 Doug was an Honorary Recipient of The Queen’s Award for Enterprise Promotion. In 2007, Doug became a fellow of the RSA. In 2009  he received an honorary Doctorate from the University of Essex for his contributions to the teaching of Entrepreneurship.

Doug has always been a champion for startups and small businesses. Even before founding School for Startups he actively mentored, coached and supported many entrepreneurs. In 2008, after teaching a one‐day class in entrepreneurship, Doug decided to found an enterprise dedicated to helping people start better, more profitable, businesses. Since 2008 he has taught thousands in face to face and online classes across the UK.

His wry, candid, practical and ultimately upbeat courses in how to start a business quickly, with a minimum of outside investment and how to market and grow a business efficiently make him a sought after speaker.

As Doug says, “Entrepreneurship can be taught and must be learned.”

Sources

i   Centre for Social Justice report ‐ “Dynamic Benefits: Towards Welfare That Works”

ii  Households Below Average Income (HBAI) survey for 2007/08

iii Office of National Statistics – Index of Production & Index of Services charts

iv  Office National Statistics – November 2009, UK public sector net debt was £829.7 billion (59.2% of National GDP)

v   Joseph Schumpeter, economist

Related posts:

1. Entrepreneurs’ Manifesto Press Round-Up
2. The Entrepreneurs’ Manifesto Has Been Released
3. Dragon says Birmingham’s Entrepreneurs can fire up economic fight back

Following the huge success of our seminars around the UK, Doug and the School for Startups team are returning to The Royal Institution. This must-attend event is for aspiring social/ethical entrepreneurs as well as existing small social/ethical businesses wishing to grow and become more successful and sustainable.

“Growing a Successful Social Enterprise” is hosted by Doug Richard and comprises two main sections, followed by a 1 hour live S4Stv ‘entrepreneurial surgery’. As an attendee you will have the opportunity to interact with Doug and our impressive panel of guest speakers including Uday Thakkar of Red Ochre, Antony Ross of Bridges Ventures, Jonathan Jenkins of UnLtd and Julie Devonshire of ONE.

At “Growing a Successful Social Enterprise” you will learn 20 key questions every social entrepreneur must be able to address:

• What type of social enterprise are you?
• How does a social enterprise get the capital investment it needs?
• Who is your target market?
• What is your industry and what are its characteristics?
• etc.

Don’t miss the chance to learn from highly successful and foremost experts and join Doug and his special guests for a seminar guaranteed to help prepare you on the road to successful social entrepreneurship.

Who should attend?

• Owners & managers of growing social/ethical businesses
• People thinking about starting a social/ethical business
• People interested in learning about social/ethical enterprise

What’s included?

• 6 hours of business tuition with one of the UK’s leading entrepreneurs
• Business resource information from various participating social / ethical organisations
• Access to online resources and materials, including membership of VentureNavigator
• Accreditation as a Graduate of School for Startups (web-badge)
• Free refreshments throughout the afternoon, followed by an evening drinks reception

Where?

The Royal Institution
21 Albemarle Street
W1S 4BS London
United Kingdom

When?

Tuesday, January 19, 2010 from 12:00 PM – 8:30 PM (GMT)

TICKET INFORMATION

• Online bookings policy – We only accept online bookings with a credit or debit card.
• Unfortunately we do not issue invoices for future payment or allow attendees to pay on the day.
• Anyone who has not paid for their ticket in full before the event will not be granted access.
• Refunds and changes to ticket details policy – Unfortunately we cannot offer refunds or change the name on the booking once tickets have been booked.

AGENDA

Summary:

• Registration Starts: 12:00hrs
• Event Starts: 13:00hrs
• Event Ends: 20:30HRS

12:00-13:00
Registration

13:00-14:15
Introduction by Doug Richard
The core principles of starting a successful social enterprise
and the key 20 questions to ensure success
Introducing Carole Ann of The Real Coaching Co and coaching opportunities

14:15-14:30
Showcase One: Featured Entrepreneur

14:30 – 15:00
Joint session Doug Richard and Uday Thakker, Founder of Red Ochre
What type of social enterprise are you?

15:00 – 15:15
Julie Devonshire – Presents the story of ONE
A thoroughly successful social enterprise

15:15 – 15:30
Showcase Two: Featured Entrepreneur

15:30 – 16:00
Break

16:00 – 16:45
Doug Richard: Social Enterprise and Investment
How does a social enterprise get the capital investment it needs

16:45 – 17:15
Interactive Panel Discussion: Doug Richard, Antony Ross of Bridges Ventures
& Jonathan Jenkins of UnLtd
How to source & secure early stage funding & what investors look for

17:15 – 17:30
Showcase Three: Featured Entrepreneur
With Doug, Antony & Jonathan

17:30 – 17:45
Showcase Four: Featured Entrepreneur
With Doug Antony & Jonathan

17:45 – 18:00
Wrap up

18:00 – 18:30
Break

18:30 – 19:30

S4Stv Live Web Broadcast:

Doug Richard & Antony Ross, Featuring Social Entrepreneurs
Interactive coaching sessions hosted by Doug Richard & Anthony Ross in the form of ‘entrepreneurial surgeries’ where pre-qualified social entrepreneurs will have the opportunity to discuss and promote their businesses. Delegates attending the live event will have the opportunity to participate in the interactive discussions with Doug and our guest expert panellist as international online viewers contribute their ideas via the live chat-room & #S4Stv Twitter feed.

19:30 – 20:30
Networking

School for Startups are proud to present The Royal Institution as our official strategic event partner.

About the Royal Institution of Great Britain

The Royal Institution is the leading science based community delivering balanced, relevant understanding of science and technology and its impact on our rapidly changing world. As an independent charity, it is dedicated to increasing knowledge, excitement and involvement in science and technology for current and future generations. www.rigb.org

Related posts:

1. Growing a Successful Social Enterprise
2. Start Here! STARTING & GROWING A SUCCESSFUL BUSINESS
3. What is a Social Enterprise? Not Another Word for Charity or Non-Profit . . .

This week I received an email from Nikki Hesford, the founder of www.missfituk.com, entitled “Not sure if I was being scammed?” She wrote to say,

“Hi Doug,

I have a ladies clothing brand for big busted women and I have been trading for about 6-7 months, Ive built the brand from nothing (Im a young single mum) manufactured the products, defined the brand etc etc, but now I am looking for an angel …. I was at Business North West conference in Manchester last week and was recommended to a chap called Nigel [I’ve changed his name for the moment] who contacted me saying that he helped small businesses find money, either through grants, loans or investors, that he would be able to tailor my business plan, “make it green” and tick the boxes to secure funding. For this, his fee was 5% of any money raised. He sent me over his agreement and asked me to sign it, however before I’d had chance to read it he contacted me saying he’d phoned my local Businesslink and that I was to ring a chap called Phil and arrange a meeting with an advisor. I hadn’t asked him to do this. I did as advised, I met with a lady and she told me there was a rural grant of up to 60,000 euros and I was the type of applicant the money was intended for. I relayed the outcome of the meeting to Nigel and he said ‘great, we’ll get started on the business plan’ but I said that with respect, it was very similar to a grant I had received last year and that Businesslink thought my plan was fine as it was, so said I didn’t need any help I would do it myself and save my business his 5% fee. His response was he had introduced me to Businesslink and that any money I got from them was subject to his fee. I strongly disagreed with this, I hadn’t asked him to phone Businesslink and I certainly had no idea that his phonecall to them was sealing an agreement for me to pay 5% of all money raised through Businesslink, more so since I was already familiar with Businesslink and was registered on their system from 2 years ago when I started Miss Fit.

Thankfully I hadn’t signed the agreement and insisted that I would not agree to these terms. I said I would only sign the agreement if the definition of ‘introduction’ was clarified, he said he would not do this, and so I said we must part company.

He was also planning to find me an investor, and said I needed to have two salaried non-exec directors on board to be taken seriously. I said that I wanted to get my grant, develop and improve my business with the grant money and then approach an investor when I was in a stronger position with stronger sales figures. He advised against this, stating that an investor should be brought on board asap who would help me use the grant money effectively, but I said no, I wasn’t going to hand over say 50% of my business for £50,000 when for the sake of waiting 2-3 months, I could hand over 26% for £50,000. By this point I had decided to part ways, and now about 30 minutes ago I found your blog about corporate financiers charging young businesses a fee to match them to investors, and that is exactly what I was almost entering into. Do you think it was a scam that I was being encouraged to enter into? Have I dodged a bullet?”

My public reply to Nikki, and to everyone else, especially Nigel, is as follows:

First, Nigel, you more than anyone should know that Nikki was not bound by your actions before she had agreed to them contractually.

Second, there is a considerable difference between directing someone to a BusinessLink grant programme and hustling to find real investors. If she had signed the contract with you that you had sent her, (which I have read) you would have been contractually entitled to the money I suppose. But that merely begs the question that the contract you wanted her to sign was extraordinarily greedy. How so?

1. Though you told her you would work with her on the creation of a business plan, (which may or may not have been necessary) the contract you proposed obliged you to nothing more than an initial introduction.
2. Further, you were including in your definition anyone that was introduced to Nikki by anyone you introduced her to. Meaning that if she had been directed by Business Link to anyone at all, you were planning on taking a cut. This of course (if you have forgotten) is the same Business Link that is funded by the taxpayer, is a public service, and does not need you to direct people towards.
3. You also were demanding not only 5% of the money raised but 5% of any money raised from that investor for three years after the initial investment. You must be kidding.
4. You included all forms of value, whatever that means, even if no cash were involved. Thus Nikki would have presumably had to pay you cash even if she had received none herself.

Third, you told her she needed two salaried non-execs on board to be taken seriously.  Now that is really a load of bullshit. In fact, it is just the opposite that is true. I would not expect Nikki to have salaried non-execs at this stage of her business nor for a long while to come. I’m afraid that your advice is SO bad I can only presume you had an ulterior motive. Did you have some friends who collect non-executive directorships Nigel?

Finally, Nigel you really do offer an unusual collection of services. I took a look at your website. You offer offshore banking, offshore company formation, secured loans, unsecured loans, venture capital, cashback for reading online subscriptions, business consultancy, IT Training, and even claim backs for unfair credit card charges. You are a talented and diverse man Nigel.

I am not sure what words I should use to describe someone who would take advantage of a single mother who is bootstrapping her way out of difficult circumstances by starting an online business, but they are not fit to print.

Yes Nikki, you were being scammed.

Related posts:

1. Pitching Investors: Mastering the Story That Sells
2. Sex, Lies and the Bottom Feeders of the Angel Community
3. The Price of Money (At Least You Can Eat Catfish)

Nov 01, 2009 – (London, UK) In preparing to speak at an 18 November “Find, Pitch and Close: The Art of Securing Investment” event to be held at the Royal Institution in London, Dragons Den investor and serial entrepreneur, Doug Richard has been researching start up and small business funding options in the UK. He has begun sharing his insights into the industry with visitors to his blog at www.schoolforstartups.co.uk.

“When I wrote the report for the Conservative Party on small business support and its effectiveness or ineffectiveness I was struck by the number of bottom feeders in the marketplace who make their money by preying on insecure and inexperienced entrepreneurs,” Richard writes. “Just to be clear . . . start-ups should not be charged to pitch their businesses to angel investors. . . . Corporate financiers do not make their money on [upfront] fees but by taking a percentage of the money raised.” In summary, Richard says entrepreneurs must differentiate between “corporate finance, angel group investing and rip-off artists.”

Since 2008, Doug’s School for Startups has been providing accelerated instruction to UK entrepreneurs.   His 1-day courses have included “Start Here! Starting and Growing a Successful Business”, “Fast Growth Marketing” and “Six Rules for Startups”. On 18 November, together with O2, Doug will be speaking to several hundred UK entrepreneurs at the Royal Institution about how to raise funds to develop and grow small to medium sized enterprises.   Topics covered in the one day course will include how to know when a business is ready for money, how to know how much money is required, where to find investors, secrets for increasing company value, and three things to avoid in any investment.

Speaking about the ongoing series of blogs about investing, Doug says, “My customers are all UK entrepreneurs and my blogs are a record of my investigation into the funding market they face in these turbulent times.  While I’m in no position to govern who my customers give their money to when they look for funding, I’m definitely in a position to tell them that, in my experience, reputable, honest, effective angels don’t make you pay to pitch them. And real angels and real financiers document their successes very publicly.  Look for their track record of success.  If you can’t find it, think twice.”

To read Richard’s current and future blogs about investment and small business finance, to learn more about his accelerated online and face to face training in starting and running successful businesses, go to www.schoolforstartups.co.uk.  You can also follow Doug Richard via twitter @s4startups and @s4stv.

About School for Startups:

School for Startups was started by Doug Richard in 2008 to provide accelerated instruction to entrepreneurs.  His one-day classes cover how to start a business, how to grow a business, how to seek financing, how to build an effective management time, and how to design great products and services. School for Startups provides on going support and services to its students. Visit our site at  www.schoolforstartups.co.uk.

About the Royal Institution:

The Royal Institution is an independent charity dedicated to connecting people with the world of science. We’re an events space, a museum and a place to eat and drink. But we’re more than that as well. We’re also a philanthropic organization that has been actively supporting many of the world’s leading scientists, engineers and entrepreneurs for more than 200 years.  For more information on all that we do, please visit www.rigb.org.

About O2 UK :
Telefónica O2 UK Limited is a leading communications company for consumers and businesses in the UK, with 20.7 million mobile customers and 457,000 fixed broadband customers as of 30 June 2009. Telefónica O2 UK Limited is part of Telefónica Europe plc which is a business division of Telefónica S.A. and which owns O2 in the UK, Ireland, Slovakia, Germany and the Czech Republic, and has 46 million customers.

O2’s UK mobile network covers 99% of the UK’s population. O2’s 3G network covers over 80% of the UK population and is fully HSDPA-enabled, providing speeds of up to 3.6 Mbps for customers with an HSDPA-enabled device.

O2 was ranked highest in customer satisfaction for both UK mobile and fixed broadband customers according to the J.D. Power and Associates UK Mobile and Fixed Broadband Studies 2009.  For more information on O2, please visit www.o2.co.uk.

Contact:
Nicola Coleman
School for Start-Ups
Wellington House, East Road
Cambridge
CB1 1BH
+44 (0) 7702 313 226
www.schoolforstartups.co.uk
info@schoolforstartups.co.uk

Related posts:

1. UK Startups Get Accelerated Training in How to Find Investors from Doug Richard at The Royal Institution of Great Britain
2. Sex, Lies and the Bottom Feeders of the Angel Community
3. Press Release-Doug Richard to Teach UK Entrepreneurs How to Start and Grow a Business at Newcastle University on February 3

“How do you know whether the angel investor has any money to invest? It’s all fine and good that they aren’t asking you for money to pitch; but that doesn’t mean they’re in the money. Do you ask for proof of funds from a bank, references from previous businesses they’ve invested in, or a public credit rating for them or for their business?  The best recommendation is obviously a public record of funding successful enterprises, but even that doesn’t guarantee that someone is currently solvent or negotiating in good faith.  Or is all of this a little like asking for the pedigree of someone you’ve already slept with.  Should you have these answers before you even agree to pitch? That seems seriously impractical.”

Nothing quite like a timely question. Let’s take the Angel’s point of view for a moment. As an angel investor you almost certainly receive more proposals for investment than you are ever likely to back. More to the point, most seed stage and early stage opportunities aren’t very good. They tend to be bad either because the entrepreneur isn’t ready for investment or the idea will never be ready for investment. The latter case is easy. Like Nancy Reagan used to say, just say no. In the former case, when the entrepreneur or the startup needs help, the issue is much more difficult.

My first temptation is always to just wade in and sort the problem but of course this is simply not practical. And it’s a stereotypically entrepreneurial response. More to the point, I am supposed to be the investor not the CEO. If I’m solving the problems before the investment, what’s going to happen afterwards?

Having said that, all young entrepreneurs need help and guidance. There are always issues with young businesses. And when I began angel investing again this year I made sure that if a company wanted my money then they could at least sit through one of my School for Startups events. I reasoned that they would know my philosophy of starting a company and they would get an eight hour dose of what I am like. If they weren’t tired of my voice at the end of eight hours then maybe they wouldn’t be tired after eight months.

Of course, everything went differently than that. The few companies I was interested in I began to help right away. And for most of them I’ve continued to help them for months. In the process, though, we have gotten to know each other. And inevitably the amount of capital they have needed has changed and how it was going to be deployed has changed as well.

I of course have benefited enormously.

I have gotten to know them in a way that no amount of due diligence would ever reveal and it has helped me decide whether I really wanted to invest, and I have a much more finely tuned sense of whether the investment is likely to deliver a return.

In short, it is in my self-interest as an angel investor to mentor a start-up before I invest, sometimes for months. The startup also values me far more at the end of the process than at the beginning. When I tell them at the beginning that my real value is in the advice I can give, in helping them avoid making silly mistakes, and in my list of contacts they always pay lip service to me but I can tell that they think that it’s my money that will really make the difference.

Six months on their views invariably have changed. This is great for both parties. And in those instances where at the end of a mentoring period I haven’t invested, we usually leave on fine terms. They feel like I have been generous with my time and I feel like either I missed a bullet or I have come to realize that the investment just isn’t for me.

So to answer my friend’s question the long way around . . .

I suggest she look for angels that are willing to spend some time mentoring beforehand. It’s pretty much like dating before falling in bed. There’s nothing wrong with a one night stand, but it’s not the most likely way to get to a lasting relationship.

In my next post I am going to move on…After all the price of money isn’t merely expensive at the angel level.

If you need to raise money for your business, I hope you join us soon at a School for Startups event.  The best way to gain investment for an enterprise is to have revenues and a solid business model that makes money.  Investment is not usually used to start businesses . . . it is used to expand them.

Related posts:

1. Sex, Lies and the Bottom Feeders of the Angel Community
2. The Insanity of Angel Investors
3. UK Startups are Prey for Rip Off Artists Disguised as Angel Groups & Financiers, says Doug Richard