A series of highlights written by students of the University of Oxford, from Emerge 2015.
By Talisa Jane Du Bois (Oxford MBA 2015-16)
Entrepreneurs list ‘limited access to capital’ as a key constraint to business growth more than any other indicator. While traditional finance mechanisms remain expensive and relatively unsupportive for new business, the rise of alternative funding mechanisms are changing this reality for many start-ups. The rise of the angel investor, venture capital firms, peer to peer lending platforms, and crowdfunding opportunities have reached unprecedented levels. Through alternative and traditional channels, UK tech companies have raised more venture capital in the first nine months of 2015 than the $2.1 billion raised in the whole of 2014.
However, as the options for start-up finance and venture capital broaden, entrepreneurs have to navigate an increasingly diverse capital application process. Long gone are the days of forms, credit checks, and simple cash flow forecasts. The rise of online platforms, pitch competitions, and funds expect more than the traditional institutions, looking for an exciting story, a compelling business idea, and an exceptional entrepreneur. Despite the fact that studies of business success show little or no correlation with business owner charisma, without this passion most entrepreneurs will struggle to attract the right finance. Data form Indiegogo (the largest global fundraising site) shows that enthusiastic entrepreneurs were three times as likely to meet their fundraising goals. Whereas, controversially, adequate displays of preparedness and expertise had little or no effect.
Greg Davies, behavioral finance guru of Barclays Bank, brought together a team of fundraising experts to discuss and deliberate this phenomenon. Advice revealed that while preparedness was a major contingency to securing capital, passion was more likely to get an entrepreneur through the door the first time. Online crowdfunding platform expert, Dawn Bebe revealed that a businesses ability to ‘articulate a moving and exciting story’ was key to attracting supporters. In contrast, VC director from Mustard Seed, Henry Wigan, asserted that preparedness, solid financial forecasts, and deep industry understanding were more crucial when it came to making a final venture decision. Nigel Kershaw, social entrepreneurship expert, echoed these points, but assured that his personal success was largely due to passion and persistence.
|Nigel Kershaw is Executive Chair of The Big Issue Group. Since 1974 Nigel has started, built and run social enterprises. He joined The Big Issue (TBI) in 1994, becoming its MD and then Executive Chairman.||Henry Wigan is co-founder of Mustard Seed Investments, where he is currently Director of Investments. He has extensive experience in portfolio management, as well as investments in early-stage ventures.|
|Greg Davies is Head of Behavioral-Quant Finance at Barclays, joining in 2006 to build the financial world’s first commercial behavioral finance team. His first book, Behavioral Investment Management, was published in 2012.||Dawn Bebe is s co-founder of Crowdfunder, Seachange and energyshare, and has 20 years senior experience at National level in media and communications, creating and developing some of the UK’s most innovative media brands.|