28 education & business roundtable
business. The pricing of funding has changed too. Since the credit crunch the cost of money has skyrocketed and the covenants that now have to be put on funding terms can be prohibitive too.”
Heathcock: ”It is very difficult for ’angels’ to pick out the stars. By definition such businesses have got a very limited track record, limited information and are vey unsophisticated in business acumen. It comes down to more of an old-fashioned punt than anything else.”
Guy Whitaker
Armstrong: ”Isn’t it about Darwinian natural selection – the fittest will survive? If Alan Sugar was sitting in this room he would say: ’Nobody ever lent me any money, but I made it happen.’ If you have got a good product or business idea, then find the person who needs that solution and they will fund it for you.”
Whitaker: ”There are good businesses around with robust business plans, capable people who are pitching for funds and, whether it is because of risk profile or not, it still doesn’t happen.”
Norman Armstrong
He exampled a business that for 18 months sought to get a £4m loan in the UK; eventually went to Germany and got it straight away. And another company with a £20m turnover and a full export order book, which was still struggling to get a high-street bank loan.
Donaldson: ”There is a clear need to fill this gap because there are a huge number of businesses who are looking for traditional funding. I agree that there are a more people out there now willing to invest in business rather than the markets generally. We have to guide them accordingly.”
Armstrong: ”Speed to market is really key to funding, and if you are in the long game then you are not going to get funding. Also we operate in global markets now and India, China, the Middle East are all sources for funding.”
Peter Birkett ... continued from previous page
now there more than ever. Individuals with wealth are now more distrusting of institutional fund management etc and are more inclined to invest in something close or personal, a market they can understand.”
Birkett was surprised at this comment. ”Since the credit crunch the appetite for risk has declined to a considerable degree which actually means that companies with readily bankable business plans are really struggling to get funding to take their businesses forward, which would not have been the case a few years ago.
”For small companies on the ground trying to raise money to take perfectly good businesses forward, it’s just a nightmare.”
He also decried the banking shift of funding decision-making from local level to ”head office credit committees”.
”That does make it difficult for us too, said banker Donaldson, ”but it’s not just the credit risk in the
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Heathcock: ”The key to funding is getting with the right people. It is all about picking those with the business acumen who can take the product forward and be successful.”
We need to shrug off the fear of failure
Stark: ”In America that entrepreneurial culture of ’making a million but losing two’ is regarded as good because it is seen as a valuable learning experience. When we try to encourage our students to consider business formation as a route to employment rather than looking in the recruitment pages, they say: ’No, I don’t want to fail’.”
Whitaker compared this UK culture by mentioning that the University of San Diego, California created 380 spinout businesses last year. ”That’s real effervescence and fizz, compared to UK spinout activity.”
So how does San Diego do it?
Greg Collier: ”They have a different psyche. They accept failure. To be entrepreneurs out there
is a big thing. Here, most children want to do as little as possible, get home and get on their PlayStations, so we have a small percentage that achieve. Abroad, being studious and getting on in business is something they are proud of. We have a different culture and shy away from it.”
Whitaker agreed that the UK work culture was different to the US and also the Far East, but said good role models, parental support, family pride, a structured education system and strategic industry and employment schemes, also helped to create ”the right blend of youth and discovery mixed with solid learning.”
Stark: ”We can’t force students to set up a business after graduation, but we can instil in them the skills, knowledge and confidence that if an opportunity arises then they know exactly how to go about capturing it.
”We have been mapping our students before and after our entrepreneurial interaction and training support, and the result is that students are now showing more confidence.
”What we have identified at Bournemouth is that students want to be on Dragons Den and The Apprentice, but they lack the confidence to make it happen, and if you give them that confidence they will do fantastic things.”
Are the bridges actually being built?
Pike: ”We are starting to look down that route. We have a variety of requirements and are currently consulting with Portsmouth University over the involvement of their IT engineering MBA students. From what has been said today I can see that we will have to think about what academia wants too.”
Collier: ”We are working with Bath University, testing our bikes and batteries, and they are doing a much better job than we would get commercially.
”A lot of innovation is still coming from the UK but students don’t always have the drive or tools to market their knowledge. A blend of different skills and awareness is often required.”
Heathcock: ”The secret is in getting the better students, probably post-grads, who are in the position to take their knowledge to the next stage.”
Ramsden: ”A lot of students are faced with a dilemma. They would like to stay in academia if they could, but the reality is that they are not going to be able to do so. Where else can they use their research and creative skills other than in business? But, I agree that they should be the target group for businesses.”
Leigh-Sara Timberlake: ”There does seem to be gap between the students and the workplace. Business is probably not using students as much as they could. It’s a lack of understanding rather than not wanting to.” Many companies didn’t have the resources to employ a dedicated ’bridge- builder’ she added.
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JUNE 2011
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