Plot your company’s Equity Fingureprint

July 21, 2008

The idea of plotting a company’s Equity Fingerprint was devised by Philip Baddeley, a Cambridge based entrepreneur, Business Angel and mentor. An Equity Fingerprint encapsulates the equity structure and valuation of a business, which is essentially an equity map that plots the effect of shareholder dilution overtime as additional rounds of funding are closed.

Apart from being a useful tool for entrepreneurs, the Equity Fingerprint Methodology is also now being used as a research tool and a means of teaching the role of external equity finance in the growth of new ventures. To find out how to plot your own company’s Equity Fingerprint and see examples of other successful high-growth businesses such as Google and Cambridge Silicon Radio download The Essential Guide to Equity for Entrepreneurs.

When considering the possibility of dilution in order to raise additional finance, just remember that in the long run, it’s better to have a small piece of a large pie than a large piece of a small pie!

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The UK’s Hidden Innovators

May 25, 2008

New research conducted by Cass Business School’s Centre for New Technologies, Innovation and Entrepreneurship (CENTIVE) sponsored by Microsoft, has revealed that a latent pool of hidden innovators could potentially add a staggering £15 Billion to the UK economy by 2012 if the right conditions were created according to the latest government figures.

The report, Unlocking the potential of UK’s Hidden Innovators, which combined in depth statistical research with qualitative case study analysis, was conducted over a six month period. It examined how we might unlock the barriers and pathways to entrepreneurial innovation in three important groups, recognised for their entrepreneurial potential:

  • “Olderpreneurs” (those aged over 50)
  • Black Minority and Ethnic (BME)
  • People with a disability (including dyslexia)

Older entrepreneurs, ‘olderpreneurs’ could contribute an increased 17% of the potential uplift to the UK economy by 2012 and will be key to capitalising on this innovation opportunity as the size of this group expands over the next four years. With a wealth of experience and insight built up over their careers, this group has the highest rate of business success and longevity, with over 70% of start-ups lasting more than three years, compared with 28% for younger entrepreneurs. Moreover, with those over 55 set to account for a third of the UK population by 2025, older entrepreneurs are well placed to tap into the fast-growing potential marketplace through their shared experiences and understanding, the report reveals.

One of the report’s key findings is that entrepreneurial self-confidence is a critical issue for all the hidden innovator groups and a major barrier in pursuing an entrepreneurial path. However, it also reveals that this self-confidence can be nurtured if there is a culture of entrepreneurship to support it.


Develop your network

May 16, 2008

Developing a network is an important activity for entrepreneurs who will all require information, capital, skills, and labour to start a new venture. These networks comprise of people who are known to the entrepreneur, or who are known by the entrepreneur’s contacts and who can help to complement the entrepreneur’s resources, particularly at the early stages of a new venture. The larger the network, or social capital as it is known, the greater the chances that the entrepreneur will be able to tap into the right knowledge source, at minimal transaction costs. The venture’s ability to attract and retain clients depends not only on its ability to produce high-quality products or services, but also on its connection to potential clients, which a network can provide.

Sierra Navada College have developed an “Entrepreneur Network Experiential Exercise”, which provides an opportunity for entrepreneurs to diagnose their own network of relationships. Follow the link and complete the questionnaire to determine the density of your own network.


New biological factors found to influence entrepreneurship

April 14, 2008

A new avenue of exploratory research has set out to understand more fully the long running nature versus nurture debate on whether entrepreneurs are born or can be taught the appropriate skills. The high growth in entrepreneurship education over recent years in schools, further education colleges and universities would suggest the latter. However, a UK exploratory study [1], which compared the self-employment activity of 609 pairs of identical twins and 657 pairs of same sex non-identical twins, found that identical twins had a much higher incidence of self-employment activity. This seems to suggest a genetic link to entrepreneurial orientation, although the specific genes have yet to be identified.

A second exploratory study on the same theme based on evolutionary biology [2] found the level of testosterone in individuals with entrepreneurial experience to be measurably higher than those with no entrepreneurial experience, suggesting a possible link between testosterone and venture success.

Should this line of exploratory research prove fruitful, what might be the potential implications for private or institutional investors wanting to incorporate tests of this nature within their investment due diligence process? Would it be socially acceptable to deny someone access to financial resources based upon biological factors that they can’t control?

References
[1] Niclaou, N. et al., (2006). Is the tendancy to engage in self-employment genetic? http://wsomfaculty.cwru.edu/shane/ge/GE1.pdf
[2] White, R. E., et al. (2006). Entrepreneurs and Evolutionary Biology: the relationship between testosterone and new venture creation. Organisation Behaviour and Human Decision Processes


High-Growth Entrepreneurship

March 15, 2008

Europe remains challenged to develop its high-growth entrepreneurs. According to the recent GEM Global report on High Growth Entrepreneurship, Europe in the main lags behind North America, Oceania, and China in terms of high-expectation entrepreneurship (defined as the prevalence of nascent and new entrepreneurs who expect to create 20 or more jobs in 5 years’ time). Broadly speaking, high-growth entrepreneurs are only half as numerous in Europe as they are in the US and in China.

Subsequently a select group of leaders in European academia, industry and policy met to discuss the fundamental problem: How to encourage more high-growth entrepreneurs in Europe? These are men and women driven, not merely to seek self-employment, but to create world-class companies in technology, biopharma and other R&D intensive fields. Read more in the report on this roundtable discussion, which outlines the dilemma facing policy-makers.


Get some help from a Venture Navigator

March 1, 2008

Want to find out for free if your business is viable? Then visit www.venturenavigator.co.uk where you’ll find a series of assessments on key aspects of a business. The assessments are based on acknowledged best practice and include the general viability of a business, fitness for a particular business sector as well as guidance on important factors such as intellectual property and investment readiness. VentureNavigator has been created to make valuable resources in higher education institutions available to the UK’s business community in order to encourage innovation and successful business creation.


How to recieve £5million in funding at 0% interest!

February 10, 2008

Raising additional funding for your new venture might not be quite as expensive as you might think. Building on the huge success of its 2007 Entrepreneur Challenge, Bank of Scotland Corporate is maintaining its reputation for being the Bank for Entrepreneurs by launching the Bank of Scotland Corporate £35 Million Entrepreneur Challenge.

In 2008, BoS are looking for established and growing businesses with a minimum turnover of £2 million to impress the judges with their creativity and vision. Each winner will receive up to £5m funding entirely free of interest for 3 years and free of arrangement fees.