Helping young businesses to create partnerships

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Helping young businesses to create partnerships

Finding a partner can provide a big step forward for a Scaleup, but in a disruptive world it is like looking you-know-not-where for you-know-not-what. Mediators are few and far between, but Nesta has shown a way forward; and Accenture has been a pioneer. Incubators and their ilk need a wide range of contacts on hand if they are to help with partnering.

For a young business with the potential for high growth, a ride on a partner can clearly generate a big step forward. A defining feature of SMEs is their lack of resources, says the recent Barclays ScaleUp Report: they need to leverage external resources, for example by alliances with established companies – which can:

  • help you develop your product
  • introduce you to markets
  • support you with funds and funding, and
  • enhance the value of your business.

Unilever’s European Open Innovation Manager’s search for new supply chains for example, starts with entrepreneurs and IP, for which he then looks for development grants, and partners – like Siemens, Akzo Nobel, Croda or Syngenta, who will adopt and use the new technology in order to deliver product to Unilever.

Nesta, some time ago in an open innovation pilot, acted as intermediary for P&G by eliciting and selecting relevant ideas and then providing a period of support and development with the help of a VC and enabling the best to be pitched to P&G, one of which looked like a winner – a process of building up communication channels and developing trust, now run regularly by its creaters ‘100% Open’.

Nesta’s recent ‘Scaling Together’ Report (March 2016) contains 37 ‘tips for corporates’ on how to develop relationships with such young businesses, but not a single one for the latter – on how to find and work with a corporate. Except perhaps the briefest of stories about the good luck Bill Clee of Asset Mapping had when his endless networking efforts eventually led to his being offered a place by Cisco in incubator IdeaLondon.

The current tide of disruption suggests that potential partners are increasingly likely to be found in surprising places; and, unsurprisingly, intermediaries have played a part in recent examples – such as:

*         Accenture’s Fintech Labs at Level39 (http://wp.me/p3beJt-3), where 8 to 10 young businesses are invited from all over the world to participate in an Accelerator development programme, sponsored by a dozen major banks, each of which provides a chaperone to introduce them to key individuals in their bank.

*         Accenture’s latest version of the Accelerator Lab, (millenial20-20.com) launched with a razzmattaz of a major conference on the future of retailing, complete with a store of the future, where some eight innovative businesses were selected for eight weeks together at The Trampery co-working space in Shoreditch; and the dozen major retailers (Argos, Sainsbury’s, Kingfisher, Specsavers, Dixons/Carphone – among others) were invited to presentations and discussions with them over the period of their residency.

For Accenture these were experiments in creating processes that would support major changes in sectors, whether disruptions or major challenges.

Often a mentor with wide experience and a big address book is a valuable mediator (one mentor was able to suggest ten possible customers for the technology of a business he was mentoring!)

These stories highlight the importance for incubators of having well oiled contacts with corporates that are on the look-out for entrepreneurs and IP, where partnerships might generate highly productive alliances for growth.

Dreamstake (http://wp.me/p3beJt-6H), online home to more than 15,000 young businesses of which 2,000 are technology based, now offers access to 50 VCs, 800 technology angel investors and to top influencers in the London technology scene as well as to successful founders in Silicon Valley – through its DreamLab Ventures initiative. But most incubators offer little more than office or desk space.

John Whatmore, October 2016

 

 

 

 

 

 

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Finance for small businesses – problems

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Better financial support for hi-growth ventures In identifying finance issues faced by hi-growth young businesses, new research has set a number of targets for the British Business Bank, for which it faces immense difficulties.

 The government’s British Business Bank, established in 2014, is focused on smaller businesses, and its main remit is by working with and through private sector delivery partners to increase the supply of finance available in areas where markets do not work effectively.

It reports that over 10,000 smaller businesses are now benefitting from finance supported by the bank compared with a year ago, and from a wide range of sources, but with no specific focus on hi-growth businesses, where there are evidently significant problems.

The recent Scale-up Report, sponsored by Barclays and the work of the Judge Institute in Cambridge and the Said Business School in Oxford has identified six major needs for smaller businesses with hi-growth potential:

*         increasing the number of large VC funds

*         growing the number of experienced investors with sector experience and         international networks

*         developing a venture debt market

*         establishing the LSE as the leading stock market for scale-ups

*        developing new approaches for creating liquidity in private company shares, and

*         collecting systematic data about financing scale-ups.

Many of these fall into the lap of the Bank.

Its CEO feels that London is now well supplied and the bank has recently started to focus on the less well supplied areas of the country such as the ‘Northern Powerhouse’. It is currently aiming to set up funds there for which it is seeking tenders for fund managers, who will bring with them their own local ecosystems of supporters (on the lines typically found in Cambridge.)

Secondly it has sought to bring together under a single head the dozen or so sources of financial information that growing businesses need (in a publication entitled the Business Finance Guide).

And it is now giving growing attention to the complementary need for mentors/advisers to give specific help and advice on finance to early-stage ventures. At present experienced finance mentors for hi-growth businesses are not easily found. The source booklet, just published, is very different to good advice being on tap just when it is needed; small businesses have neither time nor inclination for research.

The bank already seeks to ensure that its startup loans are also accompanied by the appointment of mentors (as it does loans made by the Angel Co-investment Fund – which it funded.) It is seeking to do this on a national basis and in an enduring way – with organisations like the UK Business Angels Association and the Institute of Chartered Accountants.

It has a challenging task in that while its aim is to enhance the more entrepreneurial part of the economy, it seeks to do so through other organisations, and through a number of them.

In working with small businesses the bank also faces a disconnect: it exhibits all the trappings of a major financial institution, while its direct links with small business are tenuous.

The Barclays Scale-up Report has identified some very specific targets for the British Business Bank. They depend very much on the influence it can bring to bear. As a brand new organisation, it has a mountainous challenge.

John Whatmore, July 2016

Hi-growth ventures need close support

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Hi-growth ventures need close support

Backers, investors and partners are essential supporters for these businesses, says the Barclays Scale-up Report – and experienced new-business leaders, says another.

The Barclays Scale-up Report, just published, has focused on paths to success for early-stage hi-growth businesses. So what support will help them most to achieve successful growth?

A recent report conducted by Deloitte Denmark and Board Network – The Danish Professional Directors Association, called “Radical Innovation and Growth: Global Board Survey 2016 ” opens up concerns about the current boardroom and its great difficulty with managing more radical innovation.

It suggests that there is a need for greater insight into the area of innovative initiatives, grappling with organisational design, dealing with risk and failure, and for sheer experience in working in the huge discomfort zone driven by accelerating technology.

The Barclays Report portrays the problems of scaling up in terms of a series of challenges that businesses need to recognise and handle at the right moment – as they start up, take off, and accelerate into sustained growth, in particular:

  • aiming high – ambition
  • building a strong team
  • establishing partnerships
  • putting effective management systems into place
  • identifying core competences, and
  • articulating competitive strengths and new market opportunities.

While there may seem little new in these challenges, several of the recommendations emphasise the role of stakeholders in supporting scale-ups; and the research illustrates the importance of two factors: the timeliness and firmness with which the relevant issues are tackled; and the value of support in doing so.

The Report refers repeatedly to the functions of the Board, and implies a need for board members who are both involved and active, and for a board that meets frequently, with an eye more on the future than the past.

It underlines the importance of frequent and regular reviews of directions, resources and progress, including ‘strategic activities and partners’. (Telefonica’s Wayra Lab mandates a ‘board’ meeting once a month, as do many companies).

The Barclays Report emphasises the importance of including in this process backers, investors and partners (and the Deloitte Report would add: experienced new- business leaders) to bring to bear a range of perspectives on the issues under discussion – especially as regards technology and competition.

And a focus at board meetings on the future helps to underline the importance of ambition, progress, opportunity and the evolution of the business, but also on the imminence of change.

John Whatmore, May 2016

 

A board agenda (based on the recommendations in the Scale-up Report)

  • Are our current targets and plans based on ambitions that are high enough.
  • What do we now need to do to position the skills and abilities of our team for achieving the growth that we envisage.
  • Do we need to change our partners and suppliers so that they accord more closely with our strategic objectives.
  • Are we satisfied with the level of and plans for the standardisation of our systems and processes.
  • Have we identified and can we articulate our core competences – the unique knowledge that underlies our capability to compete.
  • Are our competitive strengths in the eyes of our customers related to our processes and knowledge; and are they the foundation of our strategy.

 

A variety of seed-beds is helping banks to confront change

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The internet has thrown transactions into a cauldron of change

In a world in which innovation is mandatory, corporates are using and creating opportunities to explore new technologies that could influence their business models and even change their culture. And banking is in the spotlight.

The financial world is facing an earthquake of disruption as mobiles begin to become managers of people’s money; and as they play an increasing part in almost all kinds of transactions. Walmart’s discovery that as many as half its customers who order goods online could be in its stores at the time has highlighted the role of mobiles in transactions; and the rapidly growing volume of peer-to-peer transactions on the internet has highlighted the way in which the internet can displace intermediaries.

The internet is already playing a rapidly increasing role in banking, and the banks are now busily exploring ways in which their online activities will develop; and they are readily looking at innovations that SMEs have to offer. Consequently London is the place to which to bring your ideas.

Fintech Lab London has just completed its second iteration – in which it brought five SMEs to Canary Wharf, each with a bit of wizardry for the financial industry that might be of interest to the banks – its aim, to help them introduce their products through a 13-week development programme in collaboration with the banks. Level39, its location, sits in the middle of one of the world’s most intensive clusters – in Canary Wharf, so not only can it host intensive development programmes like this one; but it can also provide incubation space for the best of them to grow on.

Now Startupbootcamp FinTech is bringing its development programme to London – in partnership with financial institutions including MasterCard and Lloyds Banking Group, which will provide access to a network of industry professionals, and is opening its doors to applicants in August. Innotribe is running the semi-finals of its Startup Challenge competition in London, in which 15 startups and growth-stage companies for the financial industry will pitch for a place in its Finale in Boston later in the year. And Barclays is going a step further in planning to run its own Accelerator – with Techstars later this year; while Banco Sabadell in Barcelona has already done so.

These approaches are about bringing emerging technologies to potential business users, such as 3D printing to the vehicle industry in the East Midlands, TSB grant winners to Life Science businesses in Nottingham, games innovators to Dundee, new playwrights to the National Theatre’s Studio etc. Long ago Mercedes Benz established a culture of encouraging innovative thinking among its suppliers: what is new is the formalisation of this approach, the wider world from which relevant innovations are being sought, and the intensive development programmes like Fintech Lab London and Startupbootcamp FinTech.

May 2014