You have a killer business idea, a financial background and start knocking on doors in the City with your business plan. Several months and several thousand pounds later, you have achieved nothing. What to do now? This is a well-trodden track. Mr Honda’s original ambition was to make piston rings for Toyota, but they said his were not up to standard. Lech Walensa just wanted to be an electrician, not a politician – all changed when the Communist government started harassing him. And Tony Blair originally wanted to play his guitar in a band, but was put off by the corruption in the music business.
Venture Capitalists these days don’t want to see any deals smaller than £2 million, there are plenty of Angel networks, not to mention investment clubs of which we don’t hear much these days. The business word Angel originally meant people who invested in plays and musicals – people who were usually quite well off and whose music or theatrical heart probably ruled their head, as the failure rate has always been high.
So how to be different? Weakest link in the process has always been the entrepreneur, the guy with the idea. Most (including George) don’t know how to write a business plan and most don’t have a clue how to present. Bill Morrow’s Angels Den about which I have written previously I’m an investor, get me out of here! spends a lot of time on this, as many speakers are their own worst enemy. IT people are the worst offenders usually being unable to resist falling into a techno-babble that no one part from another geek, may understand.
The business plan has to be done of course, but most angels never read more than the first couple of pages. By far the most important is the rapport between the entrepreneur and angels, and is very easy to lose. One who did lose it recently, presented to a small panel of potential investors which included two ladies, one of whom had travelled a long way to see the entrepreneur. Seeing two ladies there, the guy thought he would turn on the charm with a big grin and ”Hallo ladies!” putting them right off and blowing his credibility in seconds.
Angels’ Den’s registration fee has recently gone up to £800 but no shortage of applicants - partly driven by low interest rates. Unlike many angel networks or venture capitalists, they do not take a stake in any businesses which gets funding through them. Many VC and angel groups will retain a minority stake of 1 – 5 per cent in businesses they back, taking the view that one of them eventually will be a Lottery ticket or extra pension.
Most angels don’t do it for the money either. Net worth is typically £3 million upwards and angel investing is treated sensibly as a sort of game. More than half of investors lose all their money and this proportion is increasing. The corollary of course is the fact that Most millionaires start their businesses in a recession.
Three years after the initial disappointment, Angels’ Den is now going global, with backing from Standard Chartered Bank and seminars in Singapore, Hong Kong and Kuala Lumpur. Closer to home, the next 3Cs Community meeting is 5.30 pm 14th September at the British Library or there is London Open Coffee 10-12 every Thursday.
For the record, start ups tend to be high risk investments which is why some VCs or angels will not invest in a pre-revenue business – one that hasn’t started trading yet. Putting it another way, even if you do your business as a hobby or sideline, the fact that you have paying customers puts you in a different league to some whizz kid who hasn’t got any. This of course is the flipside to “Don’t give up your day job”.
And as a last word here, a friend walked out of an angels meeting where he wanted £250,000 to develop his idea. Even though he had patent protection, the angels wanted 90 per cent of the business!
Never mind the recession
Easy to forget that there are people with serious money out there, some of whom are in London looking to invest in property. Most popular areas tend to be the West End, City and Docklands and for anyone investing, some research has already done for you by Hurford Salvi Carr
Supermarket trolleys and Men
Long-term readers of my blog will know my love of dancing where I have said many times that if you are a guy and can dance, then you don’t need a gym or dating agency. If you haven’t got the gumption to ask a lady for a dance where you make the occasional mistake (which is all part of the fun) then you may be in for a limited social life. No need to tell ladies this as the vast majority love dancing and guys who can do it too. More often than not, there is a shortage of guys on the dance floor. Dancing is pretty good for people in relationships too. My own favourite currently is with salsarhythm in Fulham Sunday evening.
But friends tell me that another place to find (daren’t say shop for) ladies is the supermarket, but not just any supermarket – something a bit up-market like Waitrose the foodie arm of the John Lewis department store. Seems some ladies will make helpful comments about the contents of your shopping basket and make the tedious (for men) drudge of shopping actually interesting – my own shopping attention span is about 20 minutes.
Oh! isn’t he lovely!
If none of the above are of interest, then my daughter informs me that there is always that steady and reliable woman magnet – a small dog. But perhaps I should finish on a note of caution with some advice from an old friend “Never marry a woman with a dog. You will always be second!”
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