Village Capital identifies issues and then builds teams to attack them

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Let’s try Village Capital’s proven model for tackling big problems in local areas

Since 2009, New York-based Village Capital has sought to tackle real-world problems in local areas, by using the principle of peer-selection, and investing and leveraging capital. It has sought to focus on big problems, and to tap directly into sources of expertise and of funding that relate to them.

Village Capital’s mission is to find, train and invest in entrepreneurs solving real problems. If MIT’s REAP works for entrepreneurship on a national scale (see www.johnwhatmore.com October 2016), VilCap works for it on a more local scale (see also my website Nov 2013).

It has concentrated on certain sectors, namely those that are about the essence of our future:

* access to opportunity for all communities (health, education and financial inclusion), and

* resource sustainability (energy and agriculture); and it has operated mainly in the US, sub-Saharan Africa, South Asia and Latin America,

It has several unique features:

  • it operates entirely by peer selection – of projects, methods and funding;
  • its projects have a sector specific theme that fits with local/regional strengths; and
  • it partners with any organisation that is committed to the same objectives.

Aside from the contributions to life in the places where it works, (which are effectively incalculable), it has supported over 500 ventures in 45 programmes, made 72 investments with a survival rate of over 90%, leveraged over $200mn of additional capital and created almost 10,000 jobs.

Examples include a company in Cincinnati which focused its programme on innovation in water; a company in Guatemala which focused on the future of its agriculture-based economy; and Philadelphia launched a financial technology programme building on its history of financial services R&D.

It is oriented towards social and public enterprise and its underpinnings, and bears little resemblance to the venture capital based model of the commercial startup world (with its idea-lite pop up entrepreneurs). And its methods run counter to the accepted wisdom of that world, in that it relies on expert entrepreneurs and collaborative working.

How do you find and train entrepreneurs are topics that currently concern Vilcap. The parallel here is: is the pool of lead investors/serial entrepreneurs big enough and/or sufficiently widespread; and how can the pool be grown. My work, supported by the then Department of Trade and Industry was clear but not easy to implement: they are essentially learners by experience! (Is failure a useful stepping stone?)

What better model could there be for the Scaleup Institute to espouse, and enable it to work with LEPs to revive the fortunes of run-down areas such as Grimsby, Toxteth or Tottenham?

John Whatmore, October 2017

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A uniquely comprehensive development arena

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A UNIQUELY COMPREHENSIVE DEVELOPMENT ARENA Quite unlike most startup or scaleup programmes such as Techstars or Startupbootcamp (which tend to be short term injections), the programmes at Goldsmiths Centre are unique in that they aim to cover comprehensively all the stages and aspects of development for people in its field. The startup world needs something of this sort. 

The essence of the Goldsmith Centre is the professional training of goldsmiths. While these people are charmingly depicted as bespectacled, white-haired, elderly craftspeople, the skills and talents of the next generation are clearly an important target.

This training takes the form of a ‘community that works and learns together’ – a community of trainees, working goldsmiths and other interested parties – to help them grow and thrive; funded substantially by the Goldsmiths Company, and overseen by a Board of Trustees.

The Centre which opened in 2012, runs for budding goldsmiths a progressive series of programmes that are aimed at developing their future – for what will mostly be small craft businesses. Here are six of them:

* a one week programme of intensive workshops, seminars and talks called ‘Getting Started’ – for recent graduates in precious metals, which introduces its 30 participants to the basics of business.

* a one-year programme called ‘Setting Out’, which is currently home to 8 young goldsmiths, carefully chosen (this year from 30 applicants), who take part in a curated programme that aims to equip them with business, creative and product development skills.

* a one-year Foundation Programme in which 10 young goldsmiths are attached to the Centre and enabled to use its excellent working facilities.

* an appenticeship scheme, under which some 40 young goldsmiths are attached to ‘Masters’ and meet regularly at the Centre for further training.

* a membership scheme called ‘Creative Links’ for people with aspiring or established businesses to attend events and make and meet contacts at the Centre and a special membership scheme for craftspeople requiring ad hoc access to benches, hotdesking or a meeting room.

* and the Centre houses some 80 resident makers and businesses on the premises – on special terms as providing work collaborations for the goldsmiths who are connected with the Centre.

In addition to short courses on specialised subjects, the Centre has also created a number of videos and runs taster workshops; and there is a substantial programme of all sorts of events.

Some 50 craftspeople are linked to the Centre as providers of skill, tutoring, information etc; as are some 15 business people as contributors to the Centre’s business programmes.

The Centre houses the latest equipment and facilities into a meticulously crafted old building, and provides an atmosphere of spare elegance in which design, skill and beauty meld.

It includes spaces of all kinds: there are 24 professional workshops and 4 educational workspaces; tool rooms (one containing over 150 different kinds of hammer!); a CAD room with terminals; a conference room; a snug; a high quality café cum meeting space (depicted as ‘coffee, kitchen and craft’); and an area for exhibitions, conferences, product launches, receptions etc.

*

In the startup world, training and development do not have a place: that world relies instead on ‘entrepreneurs’ to emerge spiritually. There is an urgent need for some organisation in the startup world to take up these roles.

John Whatmore, October 2017

Organising your venture’s supporters

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Organising your venture’s supporters Priscila Bala of Octopus Venture Capital, (formerly Mentor Director at the Yale Entrepreneurial Institute) has emphasised the value of advisers, and suggested how to set up and make good use of them.

Savvy enterprise start-ups understand the power of relationships. When it comes to entering new markets, gaining the support and endorsement of well-connected or local industry players can make all the difference. Advisory board members can fill knowledge and network gaps within your company or your own background – to help with product development or sales strategy or to introduce them to valuable clients, suppliers and investors.

An advisory board can be a bounty when you find the people who are experts at solving a set of problems you have, engage them with clear expectations and rewards, and turn to them whenever you have issues related to that problem. To find the right people, you have to be clear on what problems you want them to help you solve.

For example, Steve Blank [of I-Corps] suggests (1) that there are five primary types of advisory board members:

  1. Technical advisor: for product development advice
  2. Business advisor: for business strategy and guidance
  3. Customer advisor: for value proposition and positioning advice
  4. Industry advisor: for domain expertise
  5. Sales advisor: for market tactics and demand creation

Beyond these, it’s important that you identify the crucial challenges in your scaling up roadmap, to determine what kinds of advisors will be strategic to you, and which will complement your team’s skillset.

Go for ‘stars’! Advisory member relationships can work particularly well if the candidates you are courting are well-connected leaders in their space

Clarifying your objectives will also enable you to have you targeted conversations. For example, if your goal is to grow a base of customers in a particular vertical, try the following:

  1. Ask your customers or prospect customers who they respect.
  2. Ask your Board of Directors and industry connections for referrals.
  3. Have a point-of-view related to the industry, and build a profile and relationships based on your expertise.

If you are a first-time entrepreneur or an early-stage entrepreneur, there are often many apparent candidates but who won’t be valuable advisors for your business. Ask for referrals within the industry and spend time getting to know the advisor. Before formalizing any advisor relationship, ask for their input on a few demonstrative issues — how would they approach them? Who might they reach out to? What strategies have they seen in the past? What were the outcomes? Which risks do they anticipate?

Compared with Board members, you can focus the work and input of those advisors much more narrowly to their expertise, there is more flexibility on the time and level of engagement the advisor can offer and you can successfully engage a larger group of advisors within this mandate.

Most companies don’t engage their advisory board in meetings as a group; instead they reach out to specific advisors as needed, and set different frequency for those interactions.

Strong advisors are busy people. Since you likely will only have a limited amount of their time each week or month, be rigorous about setting agendas for each meeting or call, be explicit about actionable items between conversations (your action items and theirs), and send follow-up summary emails after every meeting. Some entrepreneurs find it helpful to use a running Google Doc shared with the advisor to keep track of ongoing notes together.

Ongoing feedback is another helpful tactic to successful advisor relationships. Mention to the advisor up front that you will want to spend 15–20 minutes in your third or fourth meeting talking through how the relationship is going to-date, and how you can improve your collaboration. Advisors are professionals, and should be receptive to feedback. Some relationships will work better with a set schedule of interactions; others might require more flexibility and unfold in “bursts” of support. Work with the advisor to find the style and cadence that works best for your partnership.

Compensate your advisors. In addition to aligning incentives and recognizing that expert time is valuable, compensation will make you more disciplined about the calibre of advice and support you are seeking and getting. It formalizes the professional relationship you expect from advisors, as it does your commitment to receiving their open and honest expert feedback, rather than having them tell you what you want to hear.

Advisory boards can be a powerful asset, accelerating your access to people and solutions that are key to your company’s success. Advisors can make strategic introductions, help you secure contracts or fundraise, attend strategic meetings with you, help you secure press coverage for your company or serve as a reference for your product or your work, and help you recruit other members of the advisory board or your team.

(1) My work at IdeaLondon came up with exactly the same analysis.

See the full article at: https://medium/octopus Ventures/how-advisory-boards…

John Whatmore, September 2017

 

 

Imperial’s vast new incubator

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Imperial White City to house vastly more space for young businesses

With four times more startups and scaleups than on its South Kensilngton site and on ten floors, managing collaboration among a wide spectrum of parties and across big spaces will be a new and hugely challenging task.

Imperial White City in West London consists in the development of a wholesale new university campus. Imperial, very much a leading university, long constrained by the shortage of space in its part of London, took an opportunity offered by property developments in White City to rethink the complete structure of university education.

The gap that has emerged between students and staff could be bridged, the thinking went, if it were possible to bring together – into a community – students, staff, alumni, local businesses and the local community.

One of the dozen or more buildings on the new site is, rather enigmatically, called the Translation and I-Hub; (another is the big new ‘maker’ space, about which I will write next). The aim is to create a ‘dynamic, enterprising environment that enables the translation of research outcomes into internationally significant technologies’, co-locating research capabilities with ‘allied [commercial] enterprises’.

The building will offer ‘spinouts, startups, SMEs, scaleups, established industry leaders’ about seven times more space than was previously available on the South Kensington campus (1) (ie it will house perhaps 250-350 businesses,) for incubation, grow-on and collaboration with corporates.

Of the 13 floors, three are already kitted out as wet labs/office spaces devoted to incubator grow-on use – with coffee/community areas, that will house around two dozen bioscience businesses (one floor will be for businesses in synthetic biology). And the other ten floors are open plan office space, (initial plans show no coffee/community areas), each of which could make an ideal incubator for a community of carefully matched young businesses. While access to experts in departments still at Kensington will of course be harder, the bioscience incubator has recruited its first alumnus (‘who has done it before’ ie built a big business from the ground) to work with its occupants. (2)

The new facilities, all shipshape, will be impressively modern, not least with all the latest communication facilities. In so far as more of the accommodation than in the past is oriented towards more mature startups, the offices anticipate a greater focus on the individual company and less on the centre as an innovation community; yet the essence of the new thinking lies in the unity of the community.

If cross-fertilisation is of increasing value, the proactive management of support will be vitally important. But it will be unusually challenging by virtue of the wide spectrum of the parties involved and the very large area of the accommodation.

John Whatmore, June 2017

  • The South Kensington Incubator was home in all to around 80 young businesses – 20 core SMEs plus 10 in cleantech and 10 in synthetic biology; some 30 were virtual/hot desk businesses, and around 10 were brand new startups.
  • Wayra Lab, Startupbootcamp and MassChallenge inter alia average 5 mentors per startup, some closely attached, others called up as their businesses evolve.

See also: New support for startups and scaleups in East London ENTIQ’s new innovation centre in the old Olympic Park will be a great new signpost but the peloton needs more than that: a new network is needed to spur incubators and co-working spaces to develop support services like this one – for the growing number of young businesses. (http://wp.me/p3beJt-gu)

STOP PRESS Imperial has just announced that it is seeking to recruit a Director of Entrepreneurship to lead its new Enterprise Lab.

John Whatmore, May 2017

 

Team building for startups

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Team building for startups Entrepreneur First pushes people to partner up and encourages them to base their search for an idea with potential on their special expertise and experience – which flies in the face of the Centre for Entrepreneurship’s suggestion (which I decried last week) that universities should simply run courses in entrepreneurship for graduates.

Many of the well-known startups have begun with a couple of people happening together upon an idea. The details of these meetings differ, but the story is the same: a tech-fuelled version of romantic love. AppleGoogle and Airbnb all began that way. So in Silicon Valley – and across the startup universe – it is assumed this is the only way to do it. “There’s this assumption that the easy parts are building a team and finding an idea, so the accelerators say ‘Come back to me when you’ve got those bits’,” Alice Bentinck, COO of Entrepreneur First says. “Why do we leave this to chance? Why can’t we help people learn what is a good team?”

EF is an accelerator for individuals, which since it opened its doors in 2011 has launched 143 companies with a collective value of more than £400 million. New recruits come in, meet a co-founder, develop an idea and build a startup from scratch. If YCombinator is getting together with friends, EF is speed dating and Tinder. “People want entrepreneurship to be romantic,” Matt Clifford, CEO, says. “We’re trying to find a way for people rapidly to speed up and increase their likelihood of finding love.” Speed is critical – because, at EF, participants have to pair up in just three months; spending time getting to know people isn’t an option. Anyone who can’t find a partner and a commercially feasible idea by the halfway point of the six-month process is asked to leave immediately.

Step 1 Partner up. Only 16 per cent of VC-backed startups have one founder, so if you want venture backing you’ll need a co-founder.

Step 2 Don’t commit too soon. Co-founding isn’t like marriage. The wrong partner can sink a startup – so if it’s not going to work, leave before you get stuck.

Few people thought that Clifford and Bentinck would succeed; investors would say: “‘There’s no way you could build teams from scratch.” But so far it appears to work. The first definitive piece of evidence arrived on June 20, 2016, when Twitter announced the acquisition of EF graduate Magic Pony Technology for a reported $150 million (£120m). Magic Pony’s founders, Rob Bishop and Zehan Wang, both studied together at Imperial College. Even when they arrived, they didn’t start working together until eight weeks into the programme. Then Bishop, one of the first engineers at Raspberry Pi, suggested using Wang’s artificial intelligence PhD work to speed up image processing. Three weeks later, they had a prototype; eighteen months later, they were tech millionaires. So too were Bentinck and Clifford. EF’s eight per cent share of Magic Pony, purchased for $16,000, was now worth $6.5 million.

To its founders, EF’s success suggests a revolutionary conclusion: entrepreneurs, long presumed to be born, can in fact be made. “It’s basically saying we no longer have to wait organically for these guys to meet at Harvard or Stanford; you can actually take that process and do it at scale,” Clifford says.

The first instruction from EF is simple: get into a pair by the end of the week. “Everyone hates it,” says Bentinck. “But you can’t understand whether someone’s good to work with until you’ve worked together.” There’s another reason: by tracking teams on previous courses, EF observed that about half of successful teams form within the first two weeks.

To help participants get together, EF tells them to focus on their “edge” – their strongest point. Over ultra-competitive board games and cooking challenges at a pre-weekend, the group were given advice on how to meet people. First tip: pitch yourself, not your project. “What I learned from the talks was, if you come in with a fully fledged idea, it’s quite difficult to find a co-founder, because they feel like you own the idea,” says Johnnie Ball, a former trader who left a job at an energy startup to go to EF.

Focusing on what you know may sound obvious, but it runs counter to the dominant school of startup ideation: solve a problem you’ve experienced. EF turns that process on its head. Rather than thinking of problems, it advises, start with what you know, then go in search of ways to apply it.

EF is a business, not a research institute, so to stay in the programme the teams have to build things people actually want. To make sure they’re moving in the right direction, the teams need to locate, contact and, eventually, sell to customers. “We say to them all the time, go talk to your customers,” Clifford says. More broadly, they need to become businesspeople. This is EF’s bet: that it can teach technical founders to think about commerce. That’s one purpose of the weekly pitches. It forces the group to learn how to sell. (Every Friday at 11am, each team presents their work to the rest of the group.) This is their chance to make comparisons, impress EF and show off to potential partners.

Step 3 Find your edge. No matter how tempting it is to expand your horizons, it’s what you already know that’s going to give you a competitive advantage.

Step 4 Stay in school. EF started out taking graduates, but found that they weren’t experienced enough. If you’re still in school, you might want to stay there.

 To its critics, Entrepreneur First is little more than a glorified meetup. “They put people in a room and that’s it,” says Nathan Benaich, a partner at Playfair Capital. “There are many ways that young entrepreneurs can get the benefits of the process without giving away a relatively large chunk of long-term equity for limited short-term value.” It’s a familiar complaint: EF is being accused of not having an edge.

Their first programme began on September 1, 2012 – in spartan surroundings. More significantly, the focus was unclear: there was a mix of technical and non-technical founders, and no mention of concepts such as edge. But, to everyone’s surprise, it produced 11 companies, including four that eventually sold (although EF didn’t raise a fund until the second group, so it didn’t make any money from the deals). Delighted, Clifford and Bentinck forged ahead with a second programme. They felt they had startup-building cracked, but things soon started to go wrong. First to fall apart was the team-building process.

At the beginning, Clifford and Bentinck believed that founders would come together and stay attached. Over the summer of 2012, they organised a series of hackathons to help participants decide on their final partners. Then the course started – and, one by one, the pairs started breaking up. The situation came to a head at with a mass breakup at the end of October. They called it ‘the Halloween massacre’. “This was a crisis moment,” Bentinck says. “We weren’t sure how to fix it. And then people suddenly started saying, ‘Oh, well, why don’t we work on that idea together?’ That kept on happening. We were like, ‘Hang on a minute, maybe there’s something in it.'” As new pairs kept forming, a method was born: instead of pushing co-founders together, EF would pull them apart.

One way to do this is to help people with their breakups. If a team is struggling and won’t break up, EF will step in and do it for them. One participant found this out on the Friday of week six, when she and her partner were approached and told that they could not work on this any more and had to split.

Three months is a long time at EF. Of the 100 people who start, 30 fail to make it to the halfway point. Some never find a partner; some do but can’t make it stick; others drop out for different reasons entirely, such as the AI entrepreneur who leaves because he’s been given €50,000 (£42,000) by Google to build an automated fact-checker for fake news. But in the final weeks there is a last-minute rush to form partnerships, so 35 teams present themselves for consideration. Some succeed; some don’t.

Like its startups, EF’s process works less well if you don’t have an edge. Someone may be a skilled coder with a bachelors degree in graphic design and another in computer science, but among the PhD graduates and data scientists of EF, he or she is a jack-of-all-trades coder. That would be fine if she was content to take the lead from someone else for she has the traditional entrepreneurial qualities of drive, ambition and an appetite for risk. But at EF, these can sometimes be a hindrance.

The same difficulty occurred in 2011, when the second group formed new teams. As they came together, one type of person was excluded: with all but one exception, the businesspeople dropped out, and the startups were created by founders with technical backgrounds. Yet this failure, too, suggested a solution.

Step 5 Test your idea. If you want it to work in the real world, ask customers what they think. Then ask them again.

Step 6 Pivot – but not too much. If things go wrong, make a change, but build on your experience and contacts.

 When the second course ended, Clifford and Bentinck decided to change their approach. From now on, EF would ignore businesspeople and look exclusively for technical founders. The decision was controversial. When Clifford and Bentinck announced it in 2014 at its third Demo Day – the showcase graduation event held at the end of each course – Bentinck remembers the assembled investors gasping in shock.

But whether consciously or not, Clifford and Bentinck had timed their move to perfection. Technology is shifting away from general software and towards mathematical algorithms. In this world, business savvy is no match for a PhD in computer science. That same year, Google bought London AI startup DeepMind for £400 million, creating an instant pool of local machine-learning millionaires. Among investors and entrepreneurs alike, AI is in hot demand. And EF – the creator of Magic Pony, now taking applications from one in three Cambridge computer science graduates – is the place to find it.

EF is growing geographically and financially. In September 2016, it launched its first international branch, a 100-strong programme in Singapore. The same month, it announced that it would be funding companies for two years, thanks to a new £40 million fund run by Moonfruit co-founders Joe White and Wendy Tan White. Eventually, Clifford hopes, EF could even displace YC. “What they’ve managed to achieve is fantastic and inspiring,” he says. “But I fundamentally think that they’re still an old-world institution. They’re basically just investing, and they do so little for their companies.” The question is: can EF can do more?

Clifford and Bentinck believe EF will change the world. “People still don’t get how profoundly radical it is,” Clifford says, “to be able to take people as individuals and turn them, with some probability of success and massive creation of value, into companies. The EF process is certainly not infallible. It’s not the place entrepreneurs are made. It helps certain kinds of people – focused, technical, experienced – build certain types of companies. If it succeeds, it will be because those companies have become much more necessary.

This is an abridged version of an article first published in the May 2017 issue of WIRED magazine.

John Whatmore, July 2017

 

Getting instant help from fellow startups

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Getting instant help from fellow startups The School for Social Entrepreneurs recently brought together a couple of cohorts of startups, each for half-a-day, to reflect together on the health of their business and on its future – with the help of a simple ‘game’.

 

I have just come across an intriguing approach to opening up discussions about startups’ problems and opportunities – with a touch of magic that gets beyond defences and is revelatory.

The test version of this process looked like a board game, but it simply provided hooks that encouraged the leaders of these startups to elaborate and then discuss the current state of their startup, and their thoughts about its future needs – in a reflective and highly supportive atmosphere. It met with rave feed-back (1).

In turn each participant was first asked to consider the current state of their business. They were invited to place a number of white counters on which were inscribed different but very common aspects of businesses (such as ‘Objectives’, ‘Talent management’, ‘Team spirit’) onto a board in one of seven interlocking spaces (a Venn diagram – of Customers, Employees and Strategy), and then to attach words to their actions and talk briefly about their reasons for so doing.

Each cohort was of around half-a-dozen startups; and the others round the room, who were on the same journey but with both similar and different backgrounds and experience, were then asked to help elucidate those issues and their future plans.

Next, the first exercise was repeated but placing the counters so as to illustrate where they would like their business to be in the future, then explain their reasons and elicit comments from other members of the group, as before.

Then they were asked to place red or green counters on top of key white counters (the green to indicate existing strengths for achieving one’s goal; and red to highlight those problems or weaknesses that must be resolved to achieve that goal); and finally each person identified the actions they would take to deal with the key issue confronting them; and was encouraged to state when they would do so.

In this particular event, most of the white counters tended to be placed in the ‘Customers’ section of the board, and most of the discussion was about finding customers and about customer wants and needs, but different circumstances elicit very different variations to these discussions.

Touching a counter seems somehow to turn its story magically into subjective reality; and the whole process enabled participants to get valuable input from fellow travelers in quick time.

Many are the recent support programmes that have been based on peer-to-peer group meetings: RBS’s Growth Builder, the Judge Institute Scaleup programme, the US-originated Vistage programme, the Belgian Plato programme and the very concept of the Accelerator.

They herald a great opportunity for sessions like this in co-working spaces and incubators, where they can provide not only valuable help from fellow travelers, but also links that will encourage them to meet again and continue to exchange valuable experience.

*

(1) SSB the authors of this programme can be contacted through me. SSB would be interested to run a trial in an incubator – if you are interested please contact me at john.whatmore@btinternet.com

See also: Support programmes for young ventures in incubators New support programmes for scaleups are of a design that could easily be replicated in incubators and their ilk, and could help generate big steps in growth. Oct 2016 http://wp.me/p3beJts-gB

 John Whatmore, June 2017

London Met’s Challenge Prize

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London Met runs a Challenge Prize in social enterprise for students in a number of FE Colleges across London

Recently three students were named the winners of the Big Idea Challenge, one of the UK’s fastest growing social enterprise competitions, run by London Metropolitan University. One an Italian and two Spanish – received a prestigious award from His Royal Highness The Duke of York in St James’s Palace.

Their idea? To modify an iconic London bus to create a mobile support centre, complete with showers, for the capital’s homeless. ‘Fresh Start: the bus that changes lives’ will now go forward to implementation – the prize for winning the Big Idea Challenge. Corporate sponsors are being sought to fund it, and the bus will soon be on London’s roads, making a real difference to real lives.

The recent Higher Education and Research Bill sought to challenge universities to work in new ways with schools and colleges, with closer relationships with business as part of the Industrial Strategy.

The Big Idea Challenge aims to get entrepreneurial spirits to come up with solutions to some of societies biggest problems. This year, London Met decided to extend its Big Idea Challenge to 17 colleges of Further Education across the capital.

The teams who progressed from the first round were brought to RBS’s headquarters in Liverpool Street and matched with inspirational mentors from the business world, such as Microsoft, RBS, Unilever and The Prince’s Trust, to develop their idea into a viable business.

John Whatmore, June 2017