That Original Idea

As we embark on our InvestorQuest Challenge, we ask are you like John Nash in A Beautiful Mind (looking for that original idea that will be the basis of your business, rather than just delusional). Surprisingly, good ideas for a business are often less than original and are often pretty simple. In 1978 (yes, nearly thirty years ago) I wrote a program to play blackjack, so you could blame my 'idea' for all those Internet betting sites out there today. Simon Nixon, the founder of moneysupermarket.com, had a brilliantly simple idea to provide consumers with independent comparison of insurance products that he took from inception through to a £1B stock market flotation.

What differentiates those that succeed is often not the idea for the business, but their single minded focus to exploit an idea and find an addressable market for it. Turning a fledgling idea into a marketable product is the key and so is avoiding the pitfalls along the way. That's why when asked whether an investor is more interested in the idea or the management, often the answer is the latter. Good ideas are surprisingly plentiful, it's the ability to execute that maketh the business. That said, you need an idea!

Don't Trash The Competition

Marketing is all about differentiating yourself from the competition, but what's with the current spate of adverts that lead on what's wrong with your competitors, rather than what's right with you? I was always told never to speak badly of the competition when in the company of customers. "I couldn't possibly comment" says eons more than any direct insult ever could.

This seems to be a bank thing. Nat West and Nationwide are both running TV adverts parodying a fictitious bank that doesn't listen to its customers and employs morons. Maybe it's just me, but I can't help thinking the only association created is precisely the unintended one.

Has anyone done any studies on this? Put viewers in a room and show them the employees in the advert and ask who they work for. My guess is that there will be a significant correlation that isn't the desired one. Surely, a marketing agency is spending millions of pounds on this without thinking this one through (surely, it doesn't work like that?). Or just maybe mud does stick to the slinger...

Work On The Business, Not In It...

The Prime Minister, Gordon Brown, has curtailed his holiday in sunny Dorset to rush back to Downing Street following the outbreak of foot and mouth disease on a British farm. Is this driven by a need to be seen to be doing something from a PR perspective or does the CEO of UK Plc need to work on his delegation skills more?

Any good CEO has to balance involvement (interference?) in operational matters against taking a more strategic view. Delegate to little and too much weight lands directly on his/her shoulders. Delegate to much and risk the fate of Metropolitan Police Commissioner Sir Ian Blair by being accused of not being in control.

A key stage in any business is when the CEO can focus on working on the business, rather than in it. This requires that a management team is assembled that can take primary responsibility for operational matters. Sure the CEO might be the best person to do everything and make every decision (which he probably had to do to in the early days), but he or she has to sleep sometime (and even take the odd holiday).

Suck IT and See

Do visionary/successful companies try lots of things consistent with their goals and and keep the stuff that works. Or do they know exactly how to get to where they want to be and home in on perfection like a wasp buzzing towards your pint of beer?

The ultimate suck it and see company has to be 3M. All things big start off small, but who knows for sure what will grow? They recognised that you need to develop a pipeline of little things and keep nurturing those that work. Time to market is also key. In the 1970's Glaxo was one of many drug companies climbing the greasy pole. Then their researchers discovered a potential wonder drug, ranitidine. Instead of doing toxicology testing sequentially, they decided to save time by running the toxicity studies in different species in parallel. By taking a calculated risk Glaxo were first to market and the rest, as they say, is history.

So one could conclude that if you want to make a bee line for success, you need to take a leaf out of Charles Darwin's book and try lots of things and keep the ones that work, and if you are going succeed, make it snappy!

Connect Yorkshire on FlickR

We have set up a Connet Yorkshire Group on FlickR and posted some of the photos from our recent Investment Forum there.

If you would like to join this group and view the photos, click on the following link

http://www.flickr.com/groups/connectyorkshire/

Death Of Animal Testing

An interesting article in June 18th issue of C&E News predicting reduced animal testing in favour of experiments utilising human cells and components by the USA National Research Council. They say advances in systems biology and methods to test cells in vitro is reaching the stage where it will provide more information on human toxicity than high-dose in vivo testing on animals.

This may cheer our Venturefest Yorkshire Business Plan winner, Kirkstall Ltd. who are developing a multi-chamber bioreactor that utilises human cells. To read the NRC report, click here.

Those Who Can Do

I have been involved in developing software applications for more years than I care to remember and here are a few thoughts:

1. You are only a naive user once. Watch a new person try to use your software application and learn from what they can't easily do. Once you are trained, anything is intuitive.
2. You don't build new software the way you build a house - those that try to make it into a linear process with prescriptive completed outputs at every stage are doomed to failure - even if the project plan looks pretty. There is always a non-deterministic aspect to any complex system. Agile approaches, adaptive planning and iterative development is needed.
3. That said, you should always seek to reuse building blocks and design the components of the system with this in mind. If you have to reinvent the wheel each time, you are doing something wrong.
4. Don't expose too many end users to pre-alpha software (apart from those sacrificial virgins mentioned in 1) - they will not be able to see past the first bug/crash/wobbly and will not thank you for an early look at anything short of perfection.
5. So don't let core developers design a user interface. Their perspective is clouded by what is going on deep in the bowels of the system. A business analyst that has empathy with and understanding of the user requirements should always be part of the team and in small projects is more important than a 'project manager'. They can fein selective amnesia to immitate 1 and 4.
6. Everyone is qualified to criticize and say what’s wrong with a system; it’s a lot harder to contribute innovative ideas and define what’s right!

TechTalk 2007

TechTalk 2007, held in conjunction with the Connect Yorkshire Investment Forum, saw speakers focus on what is the recipe for high-tech success. Gwyn Humphreys emphasised that customers can often be your cheapest source of money and if you can cut a deal with early adopters where they help fund development of the technology, then that is a great way to avoid giving away too much equity too early on. At the other end of the spectrum, Stephen Allott emphasised that if you have a developed product, the secret to world domination is a motivated and well incentivised sales force. Steve Garnet from Salesforce.com evangelised about software as a service and the rise of utility software. This goes hand-in hand with a 'pay as you go' subscription model, rather than upfront licencing. My experience is that this is a win-win if software companies can adapt to this model from a cash-flow perspective as it is a lot easier sell product and the revenue stream is annuitised, which is highly valued by an investor. Graham Bowland from Surgical Innovations spoke about the challenges and rewards of entering the US market. Overall a great afternoon of inspirational talks!

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.