Originally featured on Fresh Business Thinking
“When I first became an entrepreneur, I think a lot of my friends felt sorry for me,” says Ian Merricks. “Poor Ian, he can’t get a job, he is having to go self-employed.” Not that they are feeling sorry for him now. Ian is the Managing Partner of White Horse Capital, which is an investment and advisory firm focussed on VC investment. He also chairs The Accelerator Network and is a judge at this year’s NatWest Great British Entrepreneur Awards.
Once they felt sorry for him – I think he was being a little tongue in cheek – but back then, being an entrepreneur was not your normal career path. “My journey, as an entrepreneur was much more difficult 21 years ago, because entrepreneurism was not something that people did,” explains Ian. “If you can only name a few famous entrepreneurs in the country with any profile then it was unlikely, in a country of 60 million people, that you were going to become the latest famous entrepreneur.”
It is not like that now, but he warns: “It is not for everybody and making a success of being an entrepreneur is a long hard slog.”
It is just that more people are doing it. Name entrepreneurs now, and you will soon run out of fingers with which to count them.
Why is that?
“There is more entrepreneurial inspiration, due to popular portrayals of entrepreneurs in the media, like Dragons Den and the Apprentice which never used to exist.” He explained: “This makes it more understandable and accessible.”
Then there is technology – the “digital revolution, particularly over the past 10 years has drastically reduced the cost of creating a start-up – not needing to pay thousands for fixed servers and the option to move to cloud based services, for example, has cut the cost.”
There is a third element, suggests Ian and that is support: “There is big growth in business support activity to improve the survival and success rate . . . through both government initiatives and private sector initiatives.” He gives as an example, government programmes developed in the last five years including start-up loans for inspiring entrepreneurs, the Enterprise Investment Scheme tax breaks and the emergence and expansion of accelerators/incubators like the Accelerator Academy, and seed funds such as Startup Funding Club, both of which he helped to found.
They used to say that that it was just darn difficult to set up a business in the UK. If you needed to raise money they used to say: “Go to America.” But Ian, like many other entrepreneurs, and those who work with them, doesn’t think it is like that now.
“There is no difficulty for good companies to raise money in the UK right now. There are a number of strong, positive interventions that make the UK the best place on the planet to do this.”
So that’s the best place on the planet, you have to travel far to beat that. He cites “start-up loans or the seed enterprise investment scheme that makes up the first £150,000 easy to raise, plus a strong angel community, and access to enthusiastic VCs for Series A & B funding. . . Anything under £20 million is not that difficult to raise, that is my bold assessment!” His business, White Horse Capital has overseen £200m invested into high growth tech businesses since launching nearly a decade ago.
In fact, Ian is no fan of the fashionable idea going around at the moment that failure is good. He says that the UK has got so much going for it. “It has never been easier to start up a business, to grow a business, to scale a business, to access seed funding and to access business support, and follow on funding from VCs” so for a business to fail, “lack of resource and lack of structural support” can’t be the reason. “Maybe it is the wrong people, the entrepreneurs in the business – are not right, perhaps there is an arrogance that they are not attempting to access the level of support and mentoring experience that is readily available now.”
He wonders if we have seen “contamination from the American model, where there is a perception that you have to fail first, and whilst it might be fashionable with entrepreneurs high fiving each other in Starbucks, celebrating their failures, I think it can have a real negative impact on investors that have backed those entrepreneurs.”
“I would be fearful of celebrating failure too much in case that adds additional concerns or fears into the investment market.”
So, there’s plenty of opportunity, lots of support, but what do you need to succeed?
“I would say team, team, team. . . build an amazing team around you, build the best team that you can possibly build to make the business more likely to succeed, have a very clear defined view of your potential customers and test, test, test those potential customers to make sure that they are likely to become real customers.”
He also says focus on finding ways to make the customer say yes rather than chase investment. “Absolutely have an eye on where the business might get to in three, four or five years’ time, but find one customer that says that this business is great and is willing to pay for it, and once you’ve found one, then focus on how you are going to find a second, third, fourth and fifth…. and focus on customer relations, customer communication, rather than think that ‘I will line up a lot of coffees with a bunch of VC’s who will pour in loads of cash into my idea,’ that is not reality.”
So, that’s team, test and customers (traction).
And what qualities must a successful entrepreneur have? “Tenacity and humility – in equal measures. They will have to keep going even when things are not going their way. They need the humility to listen to other people with a different take and more experience and with their own ‘war stories’ and applying that to the mix.”
Ian has done well for himself, no reason to feel sorry for him, but then these days there is no reason to feel sorry for anyone starting a business. But for the people concerned, remember: build a team, test, focus on customers with tenacity and humility.
The UK is emerging an entrepreneurial success story – but more needs to be done, and one way to achieve this is to shine the media spotlight on entrepreneurs, their challenges, their failures and of course their successes.
The NatWestGreat British Entrepreneur Awards are currently open for applications, and entrants can apply here.