10 Things Not To Get Wrong When Building A Technology Business...

At the i-techpartners academy event at Daresbury, Richard Veal from New Mind reflected on what he had learnt (the hard way!) in building his business, a lot of which resonated with my own experiences:

1. There isn't a shortage of work to go around - collaborate, build on the work of others and stop your techies insisting on reinventing the wheel.
2. Ideas are cheap and surprisingly plentiful, it's implementation that's hard. It also helps to focus on one idea, so select the right one!
3. Don't believe your own hype: success is not necessarily replicable and equally if you fail at first, try and try again.
4. Being an MD is a lonely place - you need advice, mentoring and an external perspective.
5. Generic business advice is useful, but specific advice is invaluable from someone who really understands your market/technology.
6. Get your organisational structure right as soon as you can. An average employee in the right structure (and motivation) is better than a good employee with the wrong one.
7. Build in scalability into your business model from day one; it's hard to retrofit.
8. You will need twice as much time and money as you thought you would!
9. Networks are important to long term development. External focus is needed to understand the wider picture and assess impact internally.
10. Success is specific, run your own business - it's your story, write it.

See also my top ten tips on raising investment!

£25 Million Entrepreneur Challenge

The Bank of Scotland Corporate have launched a £25 Million Entrepreneur Challenge with the aim of providing support for driven, well-established businesses that aim to continue growing and become dominant forces in their markets.

A maximum of five businesses will share up to £25 million of funding plus valuable business opportunities. With a funding package of up to £5 million entirely free of interest for three years, each of the successful businesses will also gain coverage for their business in the pages of The Sunday Times and exposure to local media, along with opportunities to network with some of the UK's top entrepreneurs.

Sounds like a serious way to gain both finance and profile.... The closing date for entries is 15 August 2007, Good Luck!

Fuelmyblog

If you are looking for a new blog to read or want to find out what others are reading online visit Fuelmyblog.com.

The website allows bloggers to publicise their own blogs for free and recommend other sites by voting on them. It also has useful forums were you can go to get top advice on how to market your blog and increase your readership - it's worth a visit!

Fuelmyblog is the the brainchild of a group of Yorkshire entrepreneurs who have teamed up with a British blogger in France to launch the new business venture. Kevin Dixie based in La Rochelle, Ian Green of Green Communications and Marcus Dyson of Eleventeenth.com have big plans for the site and will be introducing podcasts, compeitions, blog chat radio and a range of other features.

Girl Power

Library House reported some depressing statistics this week in their newsletter. Comparing the numbers of male to female business leaders, Library House demonstrated that women are not just lagging behind in the career stakes - they seem to have fallen off the scale all together.

The article left me wondering where all the girl power had gone.... The low lights of the article included that 95 per cent of the chief executives at venture-backed companies were men and even worse, in 2006, 97 per cent of newly appointed chief executives were men.

Despite being woefully out numbered the stats did point out that when a women was in the driving seat the company performed better. Female chief executives delivered higher revenues using less capital and the average company run by a woman had annual revenues of €12.5m last year compared to €11m for those run by men! Hooray - a ray of light.

So where has all the girl power gone? Since working for Connect Yorkshire I have often wondered why the technology business sector is so dominated by men. Very rarely do we come across a female entrepreneur and even less likely is a female investor. You only have to turn up to one of our Investment Forums to see just have out numbered the girls are.

Maybe it's because in the past there have been few role models. Women who have taken on the business world and really succeeded without being viewed as cold hearted (or of having an unhealthy obsession with shoulder pads) were few and far between.

I certainly do think that the generation of female 20 and 30 some things now coming have the positive role models needed and more critically have the confidence to know that they are just as likely to achieve as their male counterparts. Coupled with flexible working conditions that make it easier to achieve work/life balance I hope that when Library House repeats the stats in 5 - 10 years time it will show a completely different story.

BarCampSheffield

There is a BarCamp happening in Sheffield on the 26th / 27th May 2007 at PlusNet, Internet House, Sheffield, S1 4BY

For those who don't know what BarCamp is the following definition is on Wikipedia: BarCamp is an international network of unconferences — open, participatory workshop-events, whose content is provided by participants — focusing on early-stage web applications, and related open source technologies and social protocols.

BarCamps are organized (and evangelized) largely through the web, harnessing what might be called a Web 2.0 communications toolkit. By "open-sourcing" the organizational process of a Foo Camp unconference, that is, codifying it in a wiki and making that publicly available, BarCamp seems to have struck a chord. It has since been implemented in 31 cities around the world and is serving as a reference for unconferences in other fields.

The organisers of BarCampSheffield rightly point out that the UK is at the forefront of innovation within the areas of Web 2.0, OpenID, Social Networking etc.. They feel that the north of England is full of enterprising and innovative individuals / businesses who want a event outside of London where they can talk to kindred spirits. Everyone is welcome - click here for more information.

Hot science, cold commerce

We spotted an interesting article - this weeks Science Business Viewpoint . In it Domenico Valerio talks about the lessons he learned whilst starting-up a gene therapy company. Domenico is now a general partner in a new Dutch venture capital fund, Aescap Venture and also gives insight into the kind of entrepreneurs he’s now looking to fund.

The top tips we picked up on are:

Know the strengths and weaknesses of your technology
Don't be a scientific entrepreneur with your heart lost on the technology, be more of an entrepreneur than a scientist

Work with the best
That includes investors, as well pulling together a top management team and passionate staff

Say no to the second best
Even when there is pressure for the business to grow, don't take on second rate employees

Create a culture in the company that is business-like
Understand your customer from an early stage. Licensing activity may be a difficult strategy to adopt but the benefits are not just about generating cash. It can give you an insight into your customer's perspective that you may not other wise get until it is too late.

Accessing the right finance

We take calls every day from entrepreneurs wanting to know what funds they can access for their growing businesses. Sometimes they might be able to get their hands on a grant but mainly its bank finance, loans or equity investment that are their better options.

Our workshop next week with deal with this subject and help will be on hand to explain exactly which options you should be going after.

Accessing Support and Funding and Due Diligence by Investors starts at 4pm on the 16th May and will be held in Leeds.

Log your blog

We have just added MyBlogLog to our blog - its a way of finding out more about the people who are reading your blog.

For all this talk of a global conversation throughout the blogosphere, there's a lot to be desired. It's a two-tiered system, with bloggers talking amongst each other and the majority of the readers looking on from the fringes. You may get to call out something from the sidelines by leaving a comment, but things could be so much better. For everyone.

MyBlogLog enables you to take advantage of your existing presence on the Web and ties it into communities of like-minded readers and authors to add context to the conversations in which you take part.

So if you have a blog on your company website make sure you add MyBlogLog - that way your readers will be able to see each other and you will have better visability of your potential customer base.

Is the World Flat or Spikey?

Jonathan Kestenbaum, Chief Executive of NESTA, spoke at the Leeds University Innovation & Enterprise Gala Dinner about what factors enable innovation to flourish. He focused on one main theme: The world of innovation is 'spikey' and regions need to develop the support infrastructure and conditions to make them more likely to be where ideas 'happen'.

Moving from a linear process to a richer/broader model, bringing together cross functional teams with innovation occurring at the interfaces of disciplines. Ecology/systems of innovation and the view that innovation occurs in pockets, rather than it being able to thrive anywhere i.e. the world of innovation is not flat! Going against Thomas Friedman's thesis The World is Flat: a Brief History of the 21st Century, he argued Atlantic Monthly's view that the "The World is Spikey" is more to the point.

The trick is to leverage tacit knowledge, that shared uncodified stuff and deploy key strengths, rather than simply try to replicate what was done elsewhere: you can't simply clone silicon valley. The emphasis on networking, serendipidy and common purpose resonated with the Connect model.

DIY Social Networks

Whilst surfing the internet we came across Ning.com a website that allows you to create, customize, and share your own Social Network for free in seconds.

Started in 2004 Ning powers over 46,000 social networks and counting. We discovered some useful networks for the budding entreprneurs inlcuding My Start UP Network and SmallBizPod .

For all those who are keen to give their business the web 2.0 makeover they have private label options for businesses. Perphaps this could be the perfect way to communicate with your customers and for them to chat to each other???

mentoring + money = success

A winning formulae for early-stage technology companies includes mentoring says NESTA mentor, Alan Edwards.

In his recent article on the NESTA website, Alan very wisely talks about how entrepreneurs (and those who investment in them) should make sure they have mentors who are able to provide advice on the basic elements of running a business but who also have sector specific knowledge.

He goes on to explain that given seed funding, early stage businesses have a limited time before that money runs out. To get another round of funding, they have to prove that they have achieved their year-one objectives and are capable of managing any resources awarded to them. All of this on top of coping with the fundamental issues of starting a business. Mentors can help with making judgement calls - helping to ensure that the business remains focused and on track.

But where do you find a mentor? Hopefully the below links will be a starting point in your search...

NESTA have a network of over 200 mentors to provide expert business advice

The Unit is a business incubator centre in Leeds that provides it client businesses with a pool of mentors

Forward Ladies is a business Womens' network and support group with a mentoring scheme

Mentor Bank run by South Yorkshire Investment Fund and has over 450 mentors

Wisdombank

Top ten tips on how to attract investment

Needless to say you’ve come up with a great idea and all you need is some money to make it happen. Here are my ten top tips on how to attract an investor:

1) Come up with a persuasive elevator pitch that captures the essence of what your idea is and what problem it solves.

2) Demonstrate passion and commitment: an investor wants to know you are going to put all your energies into making your idea a success.

3) Research your market. Make sure you have validated that there is a demand for your product or service and can quantify the market opportunity.

4) Know your competition. You are out to steal their lunch, so make sure you can articulate the benefits of your solution over theirs - and remember no competitors equals no market!

5) Start selling as soon as you can. The quicker you prove your value proposition and can start generating revenues the better – real customers are you best friend when it comes to raising finance.

6) Write a business plan. Your financials projections should be based on realistic assumptions and don’t forget to say what you will use the money you are looking to raise for.

7) Acknowledge your limitations and explain how you intend to overcome them. You may not be the finished item and be honest about the challenges you face.

8) Practice makes perfect, so in developing your investment pitch rehearse, rehearse, rehearse.

9) Be persistent: You will have to kiss a number of frogs before you find your prince and typically the process of finding an investor can take six months.

10) Be choosy who you accept investment from. Do they bring anything other than money to the party? And remember you are going to have to work with them, so you need to be able to get along.

Hook a Business Angel

Do you know how to write a business plan and hone your executive summary in order to get the attention of an investor?

Find out how potential funders will view your business plan, what they look for, and how to ensure they get beyond the first page at the Connect Yorkshire’s next workshop.

Practical Business Plans and How to Hook an Angel

Wednesday 2nd May 2007
The Headingley Suite, Crowne Plaza Hotel, Wellington Street, Leeds, LS1 4DLN
4:00pm for 4:30pm start, finishing at approximately 6:45pm

This is the first workshop in Connect Yorkshire’s forthcoming Investor Readiness Programme in Leeds. Enrol on all or any of the free events and benefit from our unrivalled expertise in helping technology and knowledge-based companies, like yours, raise finance - whether bank, grant, loan, venture capital or business angel.

The programme is a series of six free-of-charge workshops, all to be held in the evening in Leeds with a buffet.

If you have a great business idea but face a funding gap these workshops will help you protect your idea, refine your business plan, hone your sales pitch and, generally, make the most of your proposition. Maximise your chances of raising finance and do all you can to ensure your business achieves its potential, register now for all or any of the workshops.

We look forward to seeing you there!

Listen in

We like the SmallBizPod, a podcast for small businesses, start-ups and entrepreneurs in the UK.

The latest podcast examines the European technology/web sector and the state of venture capital on the continent with Alex Vieux, publisher of technology business magazine Red Herring.

It's definitely worth a listen...

I'm blogging whilst on Myspace, YouTube, Facebook, Bebo, Linked In....

Victor Keegan of The Guardian wrote an interesting piece on blogging in yesterdays edition.
In it he discusses a survey by Technorati indicates that the expand of blogs and bloggers continues, with an estimated 70 million weblogs! However the uptake has been at a slower rate than antipicated and that blogs haven't taken off in the way that social networking site such as Myspace have.

With over 170 million members of Myspace and 5,000-plus videos uploaded to YouTube every day blogging is lagging behind. Victor sees this as a preference to communicate directly with others who have similar interests and opinions rather than just sticking a weblog out there in the internet universe for any man and his dog to read. We couldn't agree more.....

Connect Yorkshire has recognised that online networking is a powerful force and will soon been provide busy entrepreneurs with MyDealMaker. The portal will be an online networking space that will provide technologists and investors with a way to make contact and forge deals. It will have with all of the web2.0 facilities you could wish for! Watch this space.

Join the Club

Reducing your carbon footprint has become a priority for many people in the UK and it seems investors are as keen to pump cash into all things green.

We noted that Whizzgo, the pay-as-you-go car hire business has been in the news again this week - this time with the launch of the scheme in Sheffield.

Whizzgo's concept is to provide cars to hire by the hour, at short notice, within a few minutes walking distance of a drivers home and workplace. By offering a car club service that is convenient giving up your car is now becoming a real alterative.

Managing director Charlotte Morton pitched for funding at the Connect Yorkshire Investment Forum in November 2005 and since then, Whizzgo has netted quarter of a million pounds worth of funding from Yorkshire venture capital group Viking Fund.

It seems other investors have recongised the potential of the car club phenomenon and we noticed that Streetcar the UK-based self-service car rental company, raised £6.4m (€9.5m) from Smedvig Capital this week.

The closing gap

Good news! The funding gap is closing – well if you believe everything you read that is.

The equity gap, a financial market gap identified as €250.000 to €2.5 million across Europe, is being addressed and by the ever increasing activity of Business Angels. The number of business angel networks has more than doubled in the last ten years. Coupled with the training of entrepreneurs to receive such funding, such as our Investor Readiness Programme, research in both the US and Europe shows that business angels are the most important source of funding for the seed and start-up phases of enterprises.

However, The European Business Angels Network (EBAN) has issued a White Paper entitled “Stimulating the European informal venture capital market: The contribution of business angels to the EU strategy for growth and jobs” which calls for yet more action to plug the gap. The business angel market in Europe is estimated at €1,5 billion, ten times less than that in the US so we still have some catching up to do!

Here in Yorkshire, The Viking Fund has made a huge difference to technology companies looking for finance and is a good example of how business angels fill the gap.

Science Business has some interesting comments on the white paper and you can see the full report here

VCT Downdraft

The Budget 2007 has put a size limit of 50 employees and a total investment of £2M for Venture Capital Trust investments, which maybe will drive dealflow into our area of activity. I don't have any stats, but I would guess previously very few VCTs would have invested in this sector and most AIM flotations will be above the VCT investment limit going forwards - a number of established AIM VCTs have already pulled their 2007/8 offerings.

How about someone creating a VCT targeted specifically at smaller technology companies with significant growth potential?

Foolish angels rush in where the best angels fear to tread

We spotted a NESTA article discussing why VCs should invest in angel-backed deals. It makes for an interesting read and hails the smart business angel as the best way for a business to prepare for later stage investment.

Its true that the 'best of breed' angels bring far more to a business than just cash.

Surely VC's already know who the smart business angels are and are already montioring their every investment....

PwC Technology Round Table

Some interesting discussion, but mainly heated agreement on what the issues are surrounding early stage technology investment. Too few business plans are sufficiently un-sieve like, too much focus on the business plan and numbers rather than the idea and market opportunity. Too few corporate finance teams having the necessary technical appreciation to hone business plans. Lack of funding in the £500K to £1.5M range. Conservatism and fear of failure rather than embracing risk and accepting this as a necessary element of reward in the capital markets. When an investment is overwhelmingly obvious, its too late!

An interesting thought about trying to spot the next big thing might be to consider the psychology element and try to understand the needs and aspirations of people, rather than focusing on what the technology can do. Text messaging being a case in point - if anything this was a backward step in technology but everyone 'does' it and BT could have introduced it long before mobile phones appeared. Video phones have yet to hit that same sweet spot despite being infinitely neater technology...