Entrepreneurship and the gift of Dyslexia

Professor Julie Logan from the CASS Business School has completed a new study of entrepreneurs in the United States (The New York Times 06 Dec 07) which suggests that dyslexia is much more common among small-business owners than even the experts had thought, with 35% of entrepreneurs surveyed identifying themselves as dyslexic. These finding support an earlier study carried out in the U.K. by Logan [1] which found that the incidence of dyslexia in entrepreneurs was five times higher than that in the corporate manager population. This is due in part to dyslexics higher degree of creativity, increased need for achievement and enhanced communication skills.

The full extent of dyslexia among the general population is still being discovered, but it is reported to be between 4-10%, depending on its severity [2]. Public opinion of this condition, which is classified as a ‘learning disability’, may well need to be reassessed as a ‘gift’ to nascent entrepreneurs that potential investors should become more aware of. Famous entrepreneurs such as Bill Gates (Microsoft), Steve Jobs (Apple), Richard Branson (Virgin), Alan Sugar (Amstrad), John Cambers (Cisco) and the late Anita Roddick (Body Shop) are all reported to be dyslexic.

As a dyslexic entrepreneur myself I’m pleased to see that some of the more positive aspects of dyslexia are now being studied by academics and covered in leading international business journals such as BusinessWeek (12 Dec 07, Why Dyslexics make Great Entrepreneurs).  Hopefully this will encourage many more successful ’closet dyslexics’ in the business community to openly admit their situation, and become positive role models for young dyslexics who might be struggling to decide on the future direction of their careers?

References
[1] Logan, J. (2002). The incidence of dyslexia in business managers and its relationship with entrepreneurial success. The Small Business and Entrepreneurship Development Conference. Nottingham
[2] Harris, A. and Ross, C. (2005). Dyslexia in the workplace. Occupational Health, 57, (3) pp25-32

Living with the “Living Dead”

You could be forgiven for thinking that the title of this article referred to a horror movie, a 70’s rock band or an adolescent teenager recovering from a night on the town. However, in this context the phenomenon of “living dead” investments [1] represents the middle ground of venture capital investing outcomes, lying between “winners” that produce adequate multiples of return on investment and “losers” that result in loss of invested funds. Living dead investments are typically mid- to later-stage ventures that are economically self-sustaining, but fail to achieve levels of sales growth or profitability necessary to produce attractive final rates of return or exit opportunities for their venture capital investors. 

Whilst living dead problems caused by internal management and operational issues can potentially be fixed by VC managers, those caused by too small or too slow markets, industry oversupply, or cut throat competition are largely out of their control or influence. Of the various actions taken by VC managers in dealing with living dead companies, the most common response is to sell or merge the investee firm so they can devote their time to star performers.

References
[1] Ruhnka, J. Feldman, H. D. and Dean, T.J. (1992). The “Living Dead” Phenomenon in Venture Capital Investments, Journal of Business Venturing, 7,pp 137-155.

Raising Venture Capital Finance in Europe

For the entrepreneur with a well-developed business proposition, a team which has previous experience of running a successful business and a properly researched market, where the product or service has the potential to capture a leading stake in the market or a carefully targeted segment of the market, the time has never been better to seek venture capital financing. Knowing how to approach venture capital firms is key and it is also essential to have at least a basic understanding how they go about appraising an investment proposition.

A new book Raising Venture Capital Finance in Europe focuses on the entire venture capital process from how to select and approach a venture capital firm, how the venture capitalist goes about appraising the entrepreneur’s proposition, how he or she negotiates the terms of the deal, through the due dilligence process, dealing with warranties and indemnities, post-investment monitoring by the venture capital firm and, to exit routes including trade sales and stock market floatations.

The book is written in layman’s terms, with terminology clearly explained. Practical advise on preparing a business plan in a form suitable for submitting to a venture capitalist, including the key areas of the quality and experience of the entrepreneur and his or her management team. Alternative sources of finance to venture capital are also covered, including government sources, business angel finance anf loan and asset-backed finance.

Are you a Gazelle, Mouse or Bullfrog?

There are a number of different types of venture that could be considered when discussing entrepreneurship in general. However, like most venture capitalists and business angels, my particular area of interest is in high growth ventures that are capable of achieving at least a 20% increase in revenue for each of five consecutive years. These ventures are sometimes referred to as Gazelles and account for only about 3% of businesses, whereas slow and steady competitors in the market are referred to as Mice.

In comparison Mice are companies that have learnt how to survive, establishing a market presence in the long run and usually growing at less than 10% annually. Mice seek to provide personal income without working for someone else, whereas Gazelles seek to create wealth in the marketplace often foregoing their own immediate income. A Mouse can however transform itself into a Bullfrog [1] by retaining the Gazelle mindset, but taking strong leaps forward for limited spurts of growth. By taking this approach the Bullfrog gathers itself, poised on a lily pad to reassess, plan, and time the next leap forward allowing more control of the growth process.

References
[1] McGrath, L. (2002) Growth, Bullfrogs, and Small Businesses. www.coastal.edu/business/cbj/pdfs/growth.pdf

Sorting out the Heffalumps

Ask ten people to describe the characteristics of an entrepreneur and you’ll probably end up with at least ten different answers. Apart from perhaps the stereotypical response of “someone driven by money”, which is actually not true. Quite suprisingly, most of the venture capitalists and seasoned entrepreneurs that I have posed this question to over the years seem to think that entrepreneurs are a special breed of people, more akin to mongrels whose makeup can’t be easily identified. The thought of trying to sort these animals into different sub species seems by many to be an absolute waste of time. Even academic researchers initially found the task problematic when they first embarked on this exercise back in late 70’s. One academic attempted to define the entrepreneur by using the analogy of Winnie the Pooh’s favourite animal the Heffalump, which “comes in every shape and size and colour”.

“The entrepreneurial Heffalump is a variegated sort of animal, which appears in different habitats and in different forms. It also appears to have undergone some evolutionary changes or mutations since the first reports of its existence were made public by Heffalump hunters in the past. So it is not surprising that there is disagreement about the nature of the beast”[1].

Fortunately things have moved on for Heffalump hunters and academic researchers alike, who are now in a much better position to define the characteristics of entrepreneurs in their various forms.

Reference
[1] Wilken, P. (1979) Entrepreneurship: A Comparative and Historical Study. Ablex Publishing

Useful information for nacent entrepreneurs

The Internet is a rich source of knowledge for nacent entrepreneurs eager to make a success of their new ventures. I therefore don’t propose to use this column to duplicate the excellent online guides available such as the Practical Advice for Business provided by Business Link. The Business Link website now provides 50 free online tools to help cut through the mounds of documentation normally provided for SMEs, which is probably a good starting point for entrepreneurs looking to find quick solutions to the operational issues facing new ventures.

Topics covered in this Blog will focus more on growth entrepreneurship and the leadership skills required to build a successful high growth venture. Although I will be drawing on my own practicle experience as a high growth entrepreneur and my academic research into the characteristics of entrepreneurial teams, I hope to make this column both informative and in easy reading bit sized chunks. Links to useful websites and/or references to relevant publications for further reading will also be provided.

Anyone interested in learning more about the fundermentals of starting a business could enrol on one of Vision2learn’s FREE! online courses, which cover subjects such as: Starting your own business; Web entrepreneur, and many other general business skills.