Mixing Ingredients For Success

I think it’s important to appreciate the relationship between three key ingredients in any business: enterprise, innovation and finance. An entrepreneur is a person who operates and assumes the risk for a business venture. Innovation which is the process of making improvements by introducing something new. Every successful company needs combination of these two ingredients, plus a healthy dollop of money. And they need to be mixed!

Getting these three ingredients to work together is the key to success. Each needs better understand each other’s language, motivations and values. This is doubly important in the UK where VCs and equity funders traditionally have an accountancy background compared to their more tech savvy USA counterparts.

Initiatives like the Enterprise Fellowship Scheme funded by Yorkshire Forward is a sterling example of how researchers can get some entrepreneurial DNA spiced into them without compromising their academic integrity. Having a potential commercial outcome in mind from the outset can inform the research as much as that all important journal publication. At Connect, we are increasingly involving academics on our company assessment panels to help assess technical innovations coming from the private sector.

Great companies are built by teams that bringing together money, management and ideas. You need a critical mass of these components and the infrastructure to connect them. People are the ultimate technology transfer agent and commercialisation is a ‘Contact’ sport. And organisations like Connect can provide an important mechanism for catalyzing and promoting this reaction, linking entrepreneurs and innovators with the resources they need to succeed.

Our upcoming Connect Investment Forum provides a key platform for promoting this interaction. We also provide online introductions through MyDealMaker and publish a periodic Investor Bulletin to bring companies on our radar screen to the attention of potential investors.

Reflections On The Enterprise Show

Having spent a day at the Enterprise Show it reminds me of the need to have an alignment from encouraging entrepreneurs to providing the right start up advice, access to finance, and networks to inspire enterprise and growth ambition. The right business support made available at the right time, especially so at the early stage, is essential for innovation to flourish. Most importantly, innovation requires strong and effective business networks. The evidence is that building a successful business is a contact sport and partnerships, teamwork and community are essential.

Physical closeness is undoubtedly important. Silicon Valley and the Cambridge cluster, the rise of the high-tech community around Boston and San Diego all have things in common, not least the active involvement a dominant research-led university. Yorkshire is blessed with not one but at least five world class academic institutions which not surprisingly tend to vie with each other for superiority which with this catalysing focus in mind is not necessarily entirely a good thing. Good networks and geographic focus can help to foster commercialisation and growth.

The Enterprise show is a good example of a key element that fills one of the gaping holes in provision - which is help for the general public to get their business idea off the ground. This is also the space where Connect primarily operates. It will be interesting to see whether the new innovation voucher scheme leads to more engagement between the general public and the universities in pursuing enterprise and innovation. They have thirteen in the region to choose from...

It's Good To Be A Little Bad or Mad

Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great."

- Mark Twain

A lot of entrepreneurs worry about people stealing their bright ideas. In my experience, ideas are easy - its execution that's hard. And even if your idea is brilliant, the best ones aren't necessarily so. Any really good new idea will seem either bad or mad to most people; otherwise someone in China will already be doing it. Your idea needs to be almost good and it helps if the world around you helps turn your fad into a fashion. Look at all the money going into green energy - its even got its own name 'CleanTech'. Most funders are driven by consensus, not just within their firms, but within their community. Surely that's exactly how the credit bubble happened - everyone was doing it, so it must be a good idea. Not.

And being too clever ain't necessarily a good idea either. My claim to fame is that my Ph.D was part of a research project that won E.J. Corey his Nobel Prize. That research itself never generated anything that was directly commercial. However, the spin-offs that were successful were infinitely less ambitious in their goals, but solved real-world problems in an explainable way. It’s a great case study of how a small change of perspective and focus on an addressable market opened up a commercial opportunity – and why trying to be too smart is not always a good idea in the real world!

So when the next small-minded person tells you what you are trying to do is bad or mad, breath a sigh of relief that maybe you on the path to greatness! Someone right now is probably telling the next Google why what they are doing isn't such a bright idea. And he probably works for a bank!

Nothing Ventured...

Deirdre Bounds gave a passionate talk at the Venturefest Yorkshire 2008 dinner. As a former stand up comic I expected a few more laughs, but she mainly focused on her journey from 'bedsit to boardroom'.

What was her take home message? Well mainly that if you have got an idea just do it, even if no one around you gets it: if you believe in yourself you can succeed in realising your vision. This was rather at odds with Ajaz Ahmed's talk earlier in the day where he was lamblasting government support agencies for backing 'lame duck' ideas that were destined to fail and that people shouldn't be given 'false hope' that they can become 'supermodels'

I must admit to being more with Deirdre on this one. Sure, we need to screen out the ideas and people that are just plain daft and applaud the ones that are sure fire winners (because they, like Deirdre, will fly without any outside help or an outside investor getting a slice of the action). But in the beauty contest that is innovation and enterprise, the winners and losers will sort themselves out in the marketplace (think dancefloor, not stage). Out there it's execution and the audience vote that counts: the wisdom of crowds, not the opinion of experts. In my experience, most good ideas start off looking pretty ugly or just plain daft to conventional eyes. As Deirdre says 'We need to encourage weird'.

Building An Innovation Ecosystem: Rainforests vs Plantations

Prof. Mary Walshok the founder of Connect in San Diego gave an inspiring talk at the Knowledge Capital Annual Lecture in Manchester focusing on the elements that led to their region to develop beyond tourism, real estate and agriculture into a powerhouse of technical innovation. She emphasised the need for regions to recognise and develop the assets they have but also to address the gaps then connect things together. As she note: "Like in Particle Physics when things collide you get reactions". The Connect program was that catalyst that brought people together. She emphasised the importance of community over company, shared purpose and a "sense of place".

Another interesting observation was that an innovation ecosystem should be more like a rainforest than a plantation. In this environment there is more uncertainty, density and diversity where the hybrid ideas arise from cross fertilisation and serendipity more than any organised linear process. Once a new idea has formed and proved itself to have something new and beneficial to offer to the market that's where cultivation and organisation become important.

Beating A Path To Your Door

Interesting post on TechCrunch on the top ten tips for startups. Not so sure about tip 9: "Don’t plan a big marketing effort. It’s much more important and powerful that your community loves the product."

The biggest mistake a startup can make is to believe if you create a better mousetrap, customers will beat a path to your door. Yes, if it’s a totally great or revolutionary idea maybe word of mouth will out, but the reality is that for us mere morals, we need to find a balance between developing an even better product and selling what we have.

Remember: out of 10 people, one will buy your product just for the hell of it (or they thought it was something it wasn’t); one will never buy it no matter how good it is; and the other eight could generally take it or leave it. How many of those eight you convert into customers, and at what cost, will dictate how successful you ultimately are.

Our FastInvest loan scheme is designed to give young technologies that push needed to get out there marketing and selling their product. Yes, make it better, but it's never too soon to start validating market demand and selling!

New Year Predictions

OK here goes:

Connect Yorkshire helps even more companies get investment ready and pitch for investment through its flagship investment forums, investment challenges and business plan competitions.

The rest of the Northern Way embrace the Connect model and it is rolled out in the North East and North West.

An online community of best practise, participation and support develops that brings together entrepreneurs with the resources to they need to help them succeed that extends beyond our traditional geographic boundary and the Web 2.0 community.

Yorkshire Forward announces a region-wide investment fund as a follow on for Partnership Investment Finance and the South Yorkshire Investment Fund that incorporates a much needed seedcorn element.

Component-based, service-oriented applications finally take centre stage with Web Mashups and loosely-coupled applications 'Web 2.0' increasingly replacing the monoliths of the past.

Connect launches its 'Springboard' initiative to help early stage propositions get their business plans into shape.

I finally access and use a Web site in a meaningful way through my mobile phone.

One can but dream...Happy New Year!