We are a nation of house-buyers, with Brits desperate to put their money in bricks and mortar.

However with mortgages harder to come by people are seeking out alternative options. If you have some collateral, that doesn’t mean you shouldn’t invest.

I may have a solution for you – dealing in modern art and vintage late twentieth-century furniture.

You may think this is the reserve of the posh and rich. But, as a one-time working-class lad from East London, I can tell you it absolutely is not.

Starting off as a clerk at Sotheby’s at the age of 17, I left at 24 to start my own business, and now own a large gallery called Decoratum in London’s trendy Marylebone.

I live in the prettiest square in a very fashionable part of North London, and count Kate Moss, George Michael and Jude Law among my neighbours.

Now I’m going to let you in on the secret of how you can do the same….

*YOU WILL NEED SOME MONEY

I’m not going to kid you – it’s tricky for somebody without a decent sum of money to get on the art-dealing ladder.

But it’s the same as buying a house. So, if you have £20,000 or more for a deposit, but can’t or don’t want to invest in property, read on…

*SEEK THE RIGHT ADVICE

Anyone can do very well buying and selling modern art and modern/vintage furniture if given good advice.

It’s vital you get to know the main players, and one way is to regularly visit dealers.

I don’t know any major dealer who wouldn’t be delighted to give advice to a potential customer. Their advice is invaluable in getting onto the first rung of the dealing ladder. However, stick to galleries with a reputation…

*EXPERIENCE BIG EVENTS 

If you want to get into dealing, go to as many exhibitions and auctions as you can and take in the atmosphere.

The best are at Sotheby’s Christie’s, Bonhams and Phillips, and their main glitzy evening sales are held a couple of times a year. You will see some pieces sell for £100 million or more and you’ll be hooked.

*DON’T RUSH INTO ANYTHING

Very few people buy on the first night of exhibitions. In my experience, serious punters have often already been. So ask for a preview of the exhibition, instead.

*BUY FROM BIG NAME GALLERIES

If it’s serious investment you want, buy from galleries that have been around years – such as Gimpel Fils, or Marlborough Fine Art – who used to look after Freud, and now look after Anthony Gormley, and other huge names.

They are run by serious academics, which museums latch onto quickly, and promote their artists – unlike high-street galleries, where the artists on sale are the celebrity equivalent of Z-listers.

*LOOK ABROAD

Check out art from other countries, not just England. Chinese art is going to get bigger and bigger. Also, art from the Middle East is a good buy.

*REMEMBER THE RISK OF ‘CONTEMPORARY’ ART

While you can make a fortune dealing modern art, you can lose it in an instant if you don’t buy at the right price.

Remember, the word ‘contemporary’ is made up of two words…
Con: Art dealers will hype something – but if there’s too much hype… keep away.
Temporary: Today’s flavour of the month is very quickly tomorrow’s garbage.

*AVOID POP-UP GALLERIES/EXHIBITIONS

The stuff may look nice on the wall, and be cheaper than wallpaper, but it very rarely goes up in value unless by a big name.

Better to have a poor painting by a well-known artist than a great painting by someone you never heard of. But make sure you like it…

*LIKE WHAT YOU BUY

Buying purely as an investment rarely turns into an investment. If you buy something that you 95 per cent love, and 5 per cent for investment, then more often than not you will be onto a winner.

*DO NOT BUY AT AUCTION THINKING YOU ARE CUTTING OUT THE MIDDLEMAN

Don’t be fooled into thinking you will buy art cheaper at auction than you will from a dealer. It’s a fallacy.

Dealers love auctions. We are very careful what we buy and need good stock in our galleries. But when we get bored with a great painting that hasn’t sold in ages, off to the auction it goes!

*IF YOU MUST BUY AT AUCTION, GET AN INDEPENDENT EXPERT 

If you do see something that interests you at auction, don’t be afraid to ask a dealer to buy for you. People get carried away at auction and it’s their job not to let you overpay. Yes, they charge 5 per cent, but their advice and knowledge pales this into insignificance.

*AND REMEMBER THE ADDED COSTS

It’s easy to forget that you have to pay a so-called ‘hammer premium’ (like a service charge) on top to the auctioneer of around 20 per cent. I have seen people forget… and get badly stung.

TO GIVE YOU A FLAVOUR OF THE POSSIBILITIES – HERE ARE MY FIVE BEST BUYS

1) A decanter I bought 40 years ago in a very expensive shop in the Burlington Arcade for £60 and sold at auction £460. I know this doesn’t seem a lot but shows it’s often more profitable to go to expensive shops where goods are already restored rather than buying something cheap and having to do the restorations yourself.

2) A 17th Century walnut “kneehole” desk that I bought 20 years ago for £60,000 from the most expensive shop in New Bond Street and sold at a London auction house for £310,000, including the ‘hammer premium’. It shows all my best bargains are purchased from the most expensive dealers.

3) A painting by American artist Roy Lichtenstein that I paid £28,000 for from a dealer 15 years ago and sold two years later for £180,000.

4) A painting by David Hockney that I paid £90,000 for eight years ago and sold after four years for £550,000.

5) Last year I bought a 1998 Damien Hirst ‘spin painting’ with butterflies for £22,000, and sold it at auction in the same year for £53,000.

Read more:
How to get rich dealing in modern art & vintage furniture

When I first launched Ultimo I had very little money to market my business; however, I knew that I had a unique proposition that would help me stand out from the crowd – patented silicone technology adding two whole bra cup sizes. What is special and different about my product? Who will buy it? Why is it better? These were the important questions I asked myself.

It’s amazing how many companies are doing interesting things and nobody knows about it. Over the past week alone, I’ve come across a handful of products and businesses that have blown me away – and that I’ve never heard of before.

Of course, processes and systems, great staff and service levels are all hugely important ingredients in your business – but if you want to stay ahead of the game, you need to stand out, differentiate yourself from the competitors and make your message clear.

Differentiation is about understanding where you fit best and can deliver the most value. Every business is very different and there is no “one size fits all” strategy. Also, trying to appeal to everyone is dangerous territory. Lots of businesses shy away from being “niche”, because they are afraid of alienating potential customers, but if you are really good at what you do, customers are far more likely to come to you for your unique expertise.

Finally, when it comes to standing out, you just have to take that leap of faith – and it can be terrifying. When I first launched Ultimo on a shoestring budget, I pulled together a group of actors to play surgeons and “protest” outside Selfridges against Ultimo – as our silicone competed with breast augmentation! We gained global coverage that lead to massive deals with various companies, and the rest is history.

So, what does it take to stand out? By now, you get the idea – be different, be creative and know who you are. Strive to provide things that your competitors do not and don’t be afraid.

Image: Red Apple from Green Apple by Shutterstock

Read more:
Michelle Mone: Standing out from the crowd

After launching just three years ago, film Production Company Blonde to Black Pictures (www.blondetoblackpictures.com), has gone from strength to strength, and is already gaining noticeable interest from major international film festivals. Now, founders of the company, actress and designer Sadie Frost and her friend Emma Comley and are giving investors the chance to buy into the company with help from leading crowdfunding company, Angels Den (www.angelsden.com). 

One of the projects that investors will be helping to produce is the upcoming feature length film, ‘Set the Thames on Fire’. The plot follows two boys as they fall through the clockwork of a grotesque, nightmare London, endeavouring to survive and escape, and perhaps find hope. The film, set for release in 2015, stars Sadie Frost herself, Noel Fielding, Sally Phillips and ex-Skins actress Lily Loveless.

Blonde to Black were keen to team up with Angels Den to bring development finance into the company. Their business partner and investor Andrew Green introduced them and it seemed a great way to bring film lover investors into the mix.

Any investors looking to get involved and fund Blonde to Black productions will not only be investing in future productions, but also any existing feature length and short films. As well as this, all money invested to the pitch will receive EIS (Enterprise Investment Scheme) Tax Relief.

Sadie Frost, co-founder of Blonde to Black Pictures, made the following comment on the investment opportunity:

“The team at Angels offered us a great opportunity to bring the next wave of development funds into the company, it seemed very much a part of our ethos to get potential like-minded film fans and enthusiasts that spot a great investment opportunity, as part of the team.”

Bill Morrow, co-founder of Angels Den, said: “It’s fantastic that Sadie and the team over at Blonde to Black Pictures have chosen to work with Angels Den with their crowdfunding ambitions. We have already been lucky enough to preview a few snippets from the new movie ‘Set the Thames on Fire’ and it looks incredible, a definite hit.”

Read more:
Sadie Frost Partners with Angels Den to Crowdfund £150k For New Film Production Company

This may include something as intangible as a feeling about a business concept – maybe they are having a good day and are feeling generous, or a pitch taps into a childhood passion of theirs. Perhaps the person pitching to them comes across fantastically well, and despite not loving the business, they get a feeling that they could really work with the entrepreneur.

None of these, or a million other reasons why they might invest in your business, are within your control, but to help improve your chances of getting an investor on board, here are my top points to take note of that investors look for:

Your Commitment
How committed have you been to the venture so far? Investors will want to know how much you have personally invested into the business; this can be in financial terms but also blood, sweat and tears. This is a great opportunity to show your passion for the business and that you won’t just give up without a fight. You need to be able to show a genuine commitment and strength that proves to an investor that you’re determined to make this thing happen.

A Unique & Distinct USP
You may think your business is something special, but proving that to a potential investor could be a challenge. What differentiates you from the competition? You need to show that you either have something totally new or a new way of approaching an established and profitable business. Investors don’t want to hear the same old idea that they’ve already heard a million times before, so before you pitch, consider exactly what makes your business different and unique in the market, and why it’s a must-have service or product to potential customers.

Market & Competition
You might have a brand new and unique idea, but what’s stopping others doing the same, or established players expanding into your area? Patents, trademarks, specialised skills and the expense of setting up are all factors that can stop or at least slow competitors entering your market. Potential investors will be interested in hearing exactly why it would be difficult for someone else to simply come along and offer what you are doing better and more cheaply than you can.

Track Record
Do you have an experience or expertise in running this kind of business, or any kind of business? Investors will want to know what you’ve done previously, whether you have any relevant employment history and what your knowledge of the market you will be entering is. They will be well aware that there is more chance of success if you have the relevant skills and experience to launch, run and develop the business you are asking them to fund. This is not to say that if you have a fantastic business idea but no experience you won’t find another way of convincing them to part with their money, especially if they have expertise and knowledge in the field that they feel they could add to your venture.

Profit Potential
You might have a winning USP, tonnes of relevant experience and think you have the investor wrapped around your little finger, but will the business actually make any money? This is one thing investors will definitely want to know. Profitability has as much to do with pricing structure, production issues and delivery, as it does with demand so make sure you absolutely know your figures. If you’re stumbling over the numbers, potential investors could easily lose confidence in you so make sure you don’t lose them over this

Read more:
What are Investors looking for?

myBarrister.co.uk, the leading supplier of online access to the Bar, has exceeded its target of raising more than £150,000 through crowdfunding – boasting a final investment of 188,770.

myBarrister is the first barrister service to use crowdfunding to raise funds, marking a milestone in the legal industry.

myBarrister used the online crowd-funding platform Crowdcube to raise the £188,770 for a 3.75 per cent equity stake in the company. The fund raising was launched on 14 March 2014. The largest investment was £50,000 with 58 individual investors putting money into the venture.

The funds will be used specifically to expand the business, by growing the number of registered barristers and funding an increased marketing spend to deliver more potential clients direct to these barristers. The target is to have 1,000 barristers signed up to myBarrister in the next 12 months.

myBarrister was launched in June 2013 to take advantage of regulatory changes that allow barristers to accept instructions directly from businesses and individuals, rather than exclusively through a solicitor. More than 100 barristers have already signed up to myBarrister, including a number of leading QCs.

The myBarrister team consists of Ronald DeKoven as CEO (senior New York lawyer, English barrister, entrepreneur in the technology space), Bruce Webster, Director of Branding and Marketing, and Plamena Metodieva, Director of Operations. mybarrister has also partnered with Hewetson Shah, The Bar Council’s exclusive Service Partner for Legal Search & Recruitment, to further grow the established direct-access platform.

Ronald DeKoven, CEO of myBarrister, commenting on the funding milestone, said: “The support provided by the investors on Crowdcube has been overwhelming. To exceed our target is fantastic news and shows that investors believe in the myBarrister business model as much as we do.

Read more:
myBarrister.co.uk exceeds £150,000 crowdfunding target

The Crowdcube Mini-Bond has been created to take the pain and cost out of raising finance for established businesses. It brings retail bonds to the online investor universe by tapping into the rapidly evolving crowdfunding audience, at the same time as enabling issuers to access finance from a crowd of registered investors, as well as their own customer base and the general public.

The first company to use this new service is the London-based, Mexican restaurant chain Chilango. Founded by two ex-Skype executives in 2007, Chilango’s Burrito Bond TM aims to raise up to £1 million to fund expansion and offers investors 8% interest per annum over the four year term of the mini-bond. A variety of benefits are also in store for bondholders, including: two free burrito vouchers to all those that invest, a VIP bondholder party to the first 100 to purchase a Burrito Bond, and those that invest £10,000 or more will be entitled to free food for the duration of the bond.

A mini, or retail bond is an unlisted bond usually issued by companies directly to their customers and the general public. John Lewis, The Jockey Club, Hotel Chocolat, Ecotricity and Good Energy are some of the well-known UK brands that have successfully issued mini-bonds. Capita Registrars estimate that the value of the mini-bond industry will rise to £8 billion by 2017 (from just under £90 million in 2012). Crowdcube’s Bond team have advised on many of these mini-bonds and are responsible for over half of the total funds generated by mini-bonds in the UK.

Until now launching a mini-bond has been a time-consuming and expensive process where each bond was created bespoke for every issuer. Issuers had to contract financial advisers, lawyers, tax advisers, FCA authorised compliance advisers, receiving agents, registrars and marketing partners to help to distribute the bond and could easily rack up upfront advisory fees well in excess of £100,000, making this fundraising route prohibitive for most SMEs.

Crowdcube’s mini-bond simplifies the process, reducing these high upfront cash costs with a percentage success-based fee and it is already authorised by the FCA. This unique new approach takes a lot of the pain, cost and time out of the process, helping more SMEs to bring their fundraising to market much faster.

Crowdcube’s 73,000 registered members provide a ready-made investor audience in addition to the issuers’ own customer bases and the general public. Investors in bonds receive a regular fixed rate of cash interest. Bondholders may also receive additional benefits (dependent on the issuer) such as discount vouchers, access to loyalty and other privilege schemes.

Luke Lang, co-founder of Crowdcube says: “Just as we revolutionised equity investment, we are now turning the mini-bond market on its head by taking away the complexity and costs for businesses who want to raise growth capital and cut out the banks, at the same time as presenting a unique way to engage with their customers, encouraging loyalty from existing customers and attracting new people to their brand. For customers and investors, the opportunity to invest in companies they already know, and want to support, as well as receive a regular financial return on their investment, is appealing.”

Chilango’s co-founder, Eric Partaker is enthusiastic about the offer: “Our Burrito Bond is the perfect way for us to engage with our loyal following as well as Crowdcube’s investor base and accelerate our expansion plans with additional growth capital. As big fans of Mexican food we love everything that is vibrant, fresh and fun and Crowdcube is all of these. Its mini-bond platform is a breath of fresh air amongst the complexity and expense of existing solutions.”

Read more:
Crowdcube Mini-Bond cuts cost and complexity for Business Bond offers

LOVESPACE, which was named one of the UK’s top-50 most disruptive companies, is the first storage-by-the-box company in the UK, helping customers to ‘live a bigger life, one box at a time’.

Raising an additional £1m over its original target of £600,000 in just 12 days, the company saw its largest single investment of £250K come from one of Europe’s leading venture capital firms and major Shazam investor, DN Capital.

“This is the clearest indication yet that VCs are helping fund companies looking for alternative finance via crowdfunding,” according to Luke Lang, co-founder of Crowdcube. “It shows that VCs as well as other institutional investors can invest alongside the crowd and reinforces the fact that crowdfunding is now a seriously credible and viable funding platform.”

Brett Akker joins a growing list of proven and high profile entrepreneurs using Crowdcube to raise money, including Steve Smith, founder of Poundland who raised half a million pounds last month for his latest venture, online estate agency EstatesDirect.com. Other high-calibre entrepreneurs include Mark Henderson of Gieves & Hawkes fame who also recently funded on Crowdcube with his latest venture, The New Craftsman, offering high quality handcrafted products made in Britain.

“When hugely successful and respected industry figures like the founders of Streetcar, Poundland and Gieves & Hawkes turn to crowdfunding, you know that this is not just a one-off – long may it continue,” adds Luke Lang.

Tom Bradley, Partner at DN Capital, comments: “LOVESPACE is a company we could not miss out on investing in. We have invested a total of £250,000 into the business because we believe it is a simple but brilliant idea, which is clearly providing an excellent alternative to traditional storage businesses. We look forward to being part of the company as it continues to go from strength to strength in the coming months.”

LOVESPACE, which has stored a total of 10,000 boxes for nearly 2,000 customers, raised additional funding to increase their warehouse space to over 20,000 square feet and invest in additional marketing activities and technology to increase the efficiency of the business. The company will be expanding its fleet and increasing the number of drivers, customer service experts and developers in its workforce.

LOVESPACE Managing Director, Steve Folwell, who led the latest funding round adds: “I am thrilled we have had such a successful round of funding using Crowdcube. We have been steadily growing customer numbers and developing our services since launch last November, and this additional funding will allow even further expansion of our customer offering and importantly storage space. We are very grateful to all the support shown in this round of funding and are delighted to welcome the new investors. We are excited about building LOVESPACE into a bigger business, one box at a time with all of our investors.”

Read more:
LOVESPACE hits £1.6m on Crowdcube

As the Bank’s purse strings look set to remain tightly closed for business loans, many small businesses are left struggling to find the funding they so desperately need to expand and grow their business.

So what is the answer? Many businesses have turned to angel finance and found it ready, willing and able to help them.

I am passionate that every business looking to grow, in any part of the world, should have the opportunity to access funding and am regularly asked how to win angel finance for a business, so here are my top 10 tips:

Financial Forecasts

All financial information needs to be expertly produced, easily understood, realistic and justifiable. Mistakes here will cause a loss of credibility and interest so you must know your figures inside and out. Investors are looking to see a return on their investment, and need to be sure that you have a cast iron grip on the finances of the business and know exactly how you are going to turn their funding into profits.

The Presentation

Those offering angel finance aren’t just investing in your business; they are also investing in you. You need to be passionate and likeable, as well as precise and persuasive. This is your opportunity to sell yourself and build up a rapport with the Angels.

Passion

How passionate are you about your business? Make your zeal for your venture irresistibly contagious and you’ll stand a far better chance of winning over your business angel audience. If you believe in your product or service, are committed to its success and convey this in your pitch, you are one step closer to funding.

Expertise

The relevance of your background will play its part in determining whether a business angel decides to invest in your venture. What skills do you have? Where did you previously work? Have you ever run a business before? Investors will want to know whether you have the ability to launch, develop and grow a business.

Research, research, research

Find out all there is to know about your customers, competition and the potential of the business. You need to become an undisputed expert, and to be able to convey this knowledge to those around you.

Competitors

Are there other firms developing the same idea? How flooded is the market currently? Angels are interested in protecting their investments so you should aim to prove that your business model is strong enough to fend off competition and that you have the relevant patents or legal protections to ensure that you will have no direct competitors.

Differentiation

A pitch must convey the uniqueness of the opportunity you are offering the Angels in front of you. By the end of your pitch, you must have convinced them that there is something special about your business, something that differentiates it, if only marginally, from what exists in the market today.

Questions

A full and complete understanding of your business, its market, finances and strategy are essential as Angels will expect those presenting to them to be able to answer any question thrown at them.

Talk to people in the know

Getting as much impartial advice about your business or start up idea as possible can be invaluable when looking to start or expand your business. Angels Den provides free Business Funding Clinics which are a great opportunity for you to get free advice on your business and ask any questions you may have about the funding process.

Sacrifice

What sacrifices have you made for your business? How much time and effort have you committed to your venture? How much have you personally invested in getting the business to where it is today? Business angels are looking for individuals who are 100% committed to their business, so present your sacrifices with pride and you’ll be sure to gain their respect.

Read more:
How to find funding & grow your business in 2014

A former Oxford University student who used his zoology research to create computer games has sold his company to Zynga, the US gaming giant, for $527m.

Torsten Reil, 41, studied animal movement before setting up NaturalMotion, the company behind hit mobile games such as Clumsy Ninja. The business, which also made motor racing game CSR Racing, now employs 260 people in Oxford, London, Brighton and San Francisco.

Zynga, which is known as much for its struggles as a public company as for its hits such as Farmville, will acquire the business in a mix of cash and Zynga shares. Some 11.6m of those will be subject to vesting conditions, reports The Telegraph.

The company did not disclose the size of Mr Reil’s stake, or that of Balderton Capital, the London-based investment firm that also has a stake in the business.

Zynga confirmed the acquisition in its fourth-quarter results last night, and also announced plans to slash 15pc of its workforce.

The job losses are the latest in a string of cost-cutting measures at the company, as it tries to recover from a turbulent few years.

The business floated at $10 a share in November 2011, but has since lost two-thirds of its value amid concerns over its spiralling costs. Investors were also rattled by the cooling of its relationship with Facebook – which was once responsible for all of Zynga’s traffic – and its apparent difficulty in creating new hit games.

Last summer, the business hired former Microsoft executive Don Mattrick as CEO, replacing the company’s founder Mark Pincus. Mr Pincus remains chairman of Zynga.

Mr Mattrick said the business is “regaining some of its swagger” under his leadership. “What we have now is the right base to build upon. We’ve got five key brands, and five key areas we know consumers care about,” he said in a recent interview.

The company’s sales fell 43pc in the fourth quarter to $176.4m, but it nearly halved its losses from $48.6m to $25.2m.

Read more:
Zynga buys British game maker NaturalMotion for $527m

Solarmass, founded by a design engineer has now become one of the fastest fundings ever on Crowdcube.

The Solarmass pitch raised money from 96 investors with an equity of 11.96 per cent and brings Crowdcube’s total funding since launch to over £16 million for more than 80 businesses.

Set up by Paul Cropper and his co-founder, David Stirling, Solarmass delivers an alternative to the large and often ugly glass and metal solar panels that adorn the roofs of houses and other buildings across the country. Highly efficient, easy to fit and stylish, the Ergosun solar roof tile was developed to provide a low cost alternative for the construction of new domestic and commercial properties, as well as refits. It has the same weight as thin film photovoltaic (PV), but with 16% efficiency, making it the lightest and most powerful solar panel available for mass production.

Made from patented technology, the tiles once they have gone into full production will have a manufacturing carbon footprint 136 times lower than traditional solar panels, saving money, resources and the environment.

The funds raised will enable the company to complete product testing and certification to meet the standards of the UK Microgeneration Certification Scheme, purchase machinery and set up a production facility in Sheffield. Once manufactured, the panels can be shipped anywhere in the world for local assembly.

Paul Cropper, co-founder of Solarmass, says: “We were very impressed but a little surprised that our pitch reached its funding target in less than 10 days and that it overfunded by 20 per cent. It shows that the renewable energy sector is strong and that a simple idea, like a low cost, lightweight solar panel can make people sit up and take notice. Our plan now is to take the tile into production and roll it out across the world where interest has been extremely positive.”

Luke Lang, co-founder of Crowdcube, adds: “Solarmass not only hit and overachieved on it targets but in record time. It’s a fascinating product and one that will go global as the demand for solar energy increases year on year, both domestically and in the commercial sector. The renewables market is a great opportunity and we’re delighted to support a new entrant into the market.”

In just two years solar power-generating capacity has gone from almost zero to around 2.5GW, with government targets for 20GW of photovoltaic generating capacity by 2020.

Read more:
Revolutionary solar panel firm raises £120K in less than 10 days on Crowdcube

I met former TV Dragon James Caan when he came to speak at Saïd Business School, Oxford. I was an MBA student with a couple of businesses already under my belt. I knew the right backing could make a vision reality.

Experience and experiences
Venture capitalists want people with a strong track record who are recognised in their sector. When I gauge experience, I look at a combination of things. I’ll start off general and home in on the specifics. I need to form an opinion on the soft aspects as well as the hard aspects. I want to know who is the entrepreneur is, what motivates them, and what their strengths and weaknesses are.

I’ll want around seven to 10 references. I need to talk with everyone; an investor that might have invested with them before, former clients – both a happy client and unhappy client, colleagues who reported to them and bosses that they reported to, service providers, and any legal or financial advisors.

I try to form a 360 degree view on them. I’ll even speak to friend so I can find out what they’re like personally. There’s no better way of finding this out than through references yet a lot of VCs don’t pay enough attention to them, probably because they don’t know how to go about it.

It’s only then that I look at what they’ve done. I look at the level of transactions and the deals they’ve closed over the last 24 months. I talk to them about it in detail. It helps me to understand the role they played, the challenges faced, and how they overcame them.

Work in a team
The most successful entrepreneurs work in a team. If they can get another person to join them – it’s another layer of vetting for me – because they’ve demonstrated that they can attract people. Also, I can look at that person and see if they’re a ‘heavy hitter’ in the industry. It shows they can attract talent, what type of talent they attract and who they will continue to attract.

Moreover, two or three people can scale up a lot faster and they can work together to attract new people. Because I invest in start-ups and need to see fast results, I’m usually disinclined to back a lone entrepreneur. In business you also want someone to bounce ideas off, someone that’s going through the exact same thing as you. When you’re lying awake late at night thinking about the challenges facing the business, having somebody else that’s going through the same thing gives you that emotional and psychological support. It can be a lonely place for one person.

Be realistic
Entrepreneurs need to be practical about their earnings. If they expect the same level of guaranteed payment that they had working for someone, it’s going to affect their mind-set. They’re coming in with an employee mind-set which is completely contrary to the concept of entrepreneurialism. Entrepreneurs need to realise that their earnings are linked to how the business performs.

Use your contacts
The ‘heavy hitters’ tend to flock together, so being well connected is important to VCs. Being introduced through a mutual contact certainly helps. I’m always keen to meet somebody if I rate the referrer. You can form a view on someone through those they associate with. Someone that’s well connected will be able to win clients and recruit top talent – two essentials for developing a successful business.

Persistence pays
I don’t take offense from persistent people. It’s a good entrepreneurial quality to have. I myself never take no for an answer. It shows me they’re going to go out and win business. There’s nothing wrong with a few follow ups. I don’t see it as desperate; I see it as knowing what you want and going for it.

There’ve been occasions where I’ve said no to an entrepreneur and their persistency brought me round to it. One person I said no to kept me in touch with their progress. They updated me on their monthly figures without me asking for it. And because the figures were encouraging, I’ve warmed to it. They could have moved on but chose not to. It showed character, professionalism and business smarts. They knew if they could demonstrate a ‘hockey stick’ growth curve, it’s going to make me interested.

Good pitchers are good for business
Most of the people I’ve backed are sales orientated. If they can’t pitch their business, it makes me think that they can’t sell. Sales people will always be good pitchers whether it’s to sell products or win investment for their business. Other skills can be brought in as the business grows, but the initial team has to be sales orientated because there isn’t business without sales.

The business plan
Once the entrepreneur has come up with a headline business plan based on their own commercial assumptions, one of my business planning experts will sit down with them and break the plan down to its building blocks. This process helps us to learn more about their business, and gives them the chance to work closely with us on something and establish a relationship with us. It provides useful insight into how we’re likely to work together as partners.

Unlike many VCs, my approach isn’t all empirical. It involves a lot of emotional intelligence work. I judge the person as well as the business idea. As an investor in start-ups, I know that success is down to the people within the business and the people joining it. And – of course – the right backing helps too.

Read more:
How to tame a Dragon

The capital gains tax relief applied to gains realised in 2012/13 and invested in the same tax year or 2013/14 and ‘carried back’. The Chancellor confirmed that the relief on half of the capital gains money reinvested in a start-up will now also apply to gains made in 2013/14.

Launched last year, the Seed Enterprise Investment Scheme (SEIS), like a number of government schemes, has taken some time to gain traction, in spite of the highly attractive tax incentives on offer to angel investors. Combined with income tax relief business angels can gain a tax relief of up to 78% on an investment of £100,000.

The changes were universally welcomed, Derek Uittenbroek, co-founder and CEO of FundTheGap said: “We are delighted to find out that the Seed Enterprise Investment Scheme (SEIS) capital gains tax holiday has been extended – offering investors a further 28% tax relief on their investments in seed and start-up stage businesses.  This will continue to ensure that innovative start-ups in Britain have access to the private funding they need to get off the ground.

Katharine Arthur, Tax Partner at MHA MacIntyre Hudson, agreed, and also welcomed the extension by saying: “we have seen a great deal of interest in SEIS and the broader Enterprise Investment Scheme, encouraging investment in smaller businesses. Extending the timeframe in which gains can be reinvested and still be exempt from capital gains tax gives added flexibility and encourages further reinvestment in young businesses.”

The Cnahcellor also confirmed the removal of a clause relating to the control of an SEIS investee company by another company, which was intended to protect but confused matters as a defect in the SEIS drafting meant that this restriction applied from the date of incorporation.

This meant that if a company was formed by a formation agent that was itself a company, and which then owned the subscriber shares, SEIS relief was precluded forever. This change applies to shares issued on or after 6 April 2013 and its removal manages an awkward defect in the legislation that has given the business angel community a few practical difficulties.

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Budget 2013: Seed Enterprise Investment Scheme (SEIS) changes a boost to investors

High-net-worth individuals seeking sizeable returns on their capital might wish to ponder the multiple advantages to the EIS as outlined below. Embryonic companies seeking to accelerate their growth, meanwhile, may find the section below, about attracting investment, useful.

Adam Bannister, Managing Editor of BusinessesForSale.com gives us five reasons to use EIS

1. Income tax relief
Under the IES investors can claim up to 30% relief on their income tax up to a maximum of £1m per tax year.

The minimum investment required is just £500, the maximum £500,000. This allowance can be offset against income tax owed for the previous tax year.

To lock investors in for the long haul, however, shares must be held for at least three years from their time of issue.

2. CGT relief
Capital gains tax is not payable on the disposal of qualifying shares once they have been held for three years, providing the investor qualified for the income tax relief provision and had not withdrawn on those shares.

3. Inheritance tax relief (IHT)
Qualifying EIS shares are also liberated from inheritance tax after two years. This potentially reduces IHT liability to zero.

4. CGT deferral relief
CGT deferral relief allows investors to roll over CGT that is up to three years’ old into EIS companies and defer it indefinitely. Payment of a chargeable capital gain can be deferred if invested in EIS qualifying shares within four years of the capital gain being made.

So long as EIS shares are held, CGT deferral is potentially limitless.

5. Loss relief
Should EIS shares be disposed of for a loss – accounting for the effect of income tax relief – the loss can be offset against the investor’s income tax, in the year the loss occurred or the year before, or against their CGT liability.

In other words, the impact of any loss sustained through the EIS is blunted.
Attracting investment

Small businesses must do appropriate groundwork to give themselves the best chance of securing significant investment. Making prospective business angels aware of the aforementioned, multiple benefits of the EIS is certainly a good start – but there’s more you must do to secure funding.

1. Personal relationships
Securing funding will really test your people skills – and indeed those of your professional advisers. A well-connected accountant can be invaluable.

While it can be challenging to secure a first tranche of funding, using your initial investors’ clout to find others can quickly build momentum. It’s a herd mentality: an investment naturally seems safer if other investors are always on board.

Harness every relevant social connection you can think of. Recommendations from friends or trusted business professionals are obvious paths to funding, but you’d be surprised how an exchange of business cards months, or even years, before might yield a promising lead.

Many small-business owners underestimate the power of their existing networks, with trusted suppliers, customers, and even service providers such as accountants and lawyers providing potential routes to influential investors.

The pitch
When it comes to pitching your idea, your opening gambit is vital – so begin with the most compelling part of your proposal. And final impressions arguably count as much as first impressions, so aim to finish as strongly as you began.

Pitchers should rehearse more than just the initial presentation outlining the concept and its merits; they should also arrive armed with the detail they didn’t have time to cover in the presentation. Should the investor ask further questions at the end – as they probably will – then you need to be prepared.

Your team
A sound business plan is one thing, but investors will also want proof that there’s a team in place capable of delivering on your promises. Proving that your staff are accomplished, with the skills and experience to make good on your vision forms another pillar of your bid for funding.

Against a background of continuing scarcity where credit is concerned, the Enterprise Investment Scheme regularly delivers vital funding to small firms with the potential to reap large returns rapidly.

Providing you cast your net wide for investment and put forward a compelling case for backing your company, the Enterprise Investment Scheme provides a powerful incentive for business-angel funding.

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EIS: tips for investors and start-ups

Similar to angel investment, crowdfunding is a way of raising finances by selling part of your equity. The main difference between the two being, that instead of there being just one investor, you sell your investment idea to a crowd.

For those considering this alternative way of investment, based on my experience and knowledge, I have compiled my top three tips to help you get the most from crowdfunding:

Compliance
Currently the Financial Services Authority (FSA) perceives crowdfunding as a derivative of raising money for funding from the public, which in the UK is currently illegalunless approved by the FSA. The FSA only recognises and approves of one crowdfunding model within the UK – Seedrs.com.

It’s absolutely essential that you investigate your chosen crowdfunding platform and/or website that complies with the Collective Investment Scheme rules set out by the Financial Services Authority (FSA).

It is imperative that the letter of the law is followed, if not then you could be putting your business idea and indeed yourself in danger.

Plagiarism
By its nature, crowdfunding is ideally suited for political campaigns, musicians and charities as this can be supported by fans. However, the exposure of your business idea to a collective group of individuals or investors without any form of NDA (non-disclosure agreement), can leave you and your idea vulnerable and open to being plagiarised.

When drafting your business pitch to present to potential investors, make sure to provide enough information to attract interest, without giving any vital information away. Then, when potential investor(s) step forward, ask them to sign a NDA before you divulge any further information, so you’re protected from the outset. Only then will you be able to fully explain the idea without running the risk of it being stolen.

Ask for more than you need
When an entrepreneur is seeking additional investment, they often try and ‘window-dress’ their opportunity, making their potential investment seem a lot more attractive by asking for less. Yet, when the finance is agreed and provided, the entrepreneur may find that they need more capital, not only will this leave the entrepreneur short of funds, it will also affect the relationship with the investor as they may be reluctant to offering additional finance.

My advice is to always ask for more than you actually need and always have a reserve to avoid the awkward and potentially damaging conversation of asking for more.

If implemented correctly, crowdfunding can be more successful than attempting to source the full investment required from a single individual or organization. But before crowdfunding becomes your prefered channel of finance, make sure you have done your research and carried out the necessary precautions to protect your business and yourself.

Good luck!

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Top three tips on getting the most from Crowdfunding

Stephen Fear, self-made multi-millionaire and entrepreneur in residence at the British Library, discusses the top five factors other than return on investment (ROI), that global investors, look for before investing into a new business.

When looking for an investor, half of the challenge is putting yourself into the investor’s position and anticipating exactly what they are looking for when it comes to an investment.

In most scenarios, many entrepreneurs have financially stable business propositions, but often do not know how to sell their investment opportunity. Besides the business’s financial stability, investors often look at things beyond the numbers and desire additional tangible elements before choosing to invest in them, not to mention the excitement and levels of involvement that come with any proposed business idea.

Based on over 40 years experience and knowledge of both sides of the fence, starting and growing businesses and investing in and mentoring businesses, below are five factors, other than the ROI that entrepreneurs look for in potential investments.

1. Golden Vote

As existing owners may retain the majority of the shareholding within a business, a serious investor who has invested Capital into a venture would insist on a golden vote until their money has been repaid.

It is this golden vote which, regardless of shareholding, would make sure that any investor had the power of veto during the life of the loan, giving the investor the opportunity to cancel or postpone any decisions put forward by existing owners during this period.

Successful investors prefer to be involved in the overall strategic decisions of their investments as well as offer their knowledge and experience, ultimately playing a key role in the direction of the business. So to an investor, having the option of a Golden Vote is a big tick in the box.

2. Hands-on

Some business owners are only interested in trading their equity for money, however, this is not the sole aim of most investors. Many investors want to have a real hands-on role in the strategic aspects of their investment.

They often want to be visible to the board and to be seen as an active member of the strategic team, involved in the decision making of senior executives. Most investors have an abundance of contacts and knowledge that they are ready and willing to use within the businesses they invest in. Serious investors will rarely want to be known as a passive investor, so be prepared to have that level of hands-on involvement.

3. Transparency

Investors need to be kept up-to-date with the majority of activity within a businesses that they have invested in. Good communication and a constant flow of information is the lifeblood of any successful business and the more transparent a business model the easier it is to see what is going on.

Having an investor knowing the outputs and results of the various elements of a business isn’t a power trip, it’s to give them confidence in their investment and the opportunity to step in at any instance and use the experience that they have gained over the years to provide advice and support when needed. If investors are not aware of what is going on, they cannot help you or the business out. Knowledge is power.

4. Brand Potential

When investors are looking at a product or service to determine if it has a long-term potential gain, one key factor is assessing the investment’s brand potential. Almost every single successful product that is out on the market has a strong brand.

Investors like to associate themselves with brands or businesses that can be encompassed under their brand umbrella. The chances of securing an investment are significantly increased if an investor feels that it has brand potential.

5. Innovation

This is one of the most important factors that will drive a successful business on, innovation keeps a business evolving, developing and growing.

To grab the attention of any potential investor, your business needs to be fluid enough to open to innovation. Static business models tend to fall by the wayside as they fail to embrace new trends, technology or ideas.

It’s rare when it comes to investments to come across something truly groundbreaking and revolutionary. However, if a gem is found then investors will jump on the opportunity to put money behind something they believe is exciting and new. In many cases investors will take a risk on innovation over sound financial predictions.

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It isn’t just ROI that potential investors look for… The top 5 factors angels look for

Andrew Burton, YABA Chairman, said: “Our membership has grown rapidly in recent years, and we’ve reached a size that allows us to introduce a more sophisticated offer to both our membership and to those companies looking for finance. YABA is evolving, and these are exciting times.”

For investors, the new membership packages include a robust screening system to ensure the quality of investment opportunities, opportunities can be matched to individual investment preferences and new-style angel group meetings which allow a more in-depth introduction to entrepreneurs and companies seeking finance.

Expert guidance to enhanced tax breaks offered by EIS and SEIS  is available, and a wide range of focused ‘Master Classes’ in key investment strategy areas will be hosted by experts to develop  and refresh members’ knowledge and skills. New or less experienced investors will have access to peer support from more experienced colleagues.

YABA now has 130 members with a combined total of some £34 million risk capital available to invest.

In the last 10 years YABA members have been involved in 114 deals in the region, with investment totalling over £15.5 million in early stage businesses across all sectors. Individual members’ investment levels range from £30,000 to £300,000.

YABA Manager, Barbara Greaves says: “YABA is already a vibrant investor network, and the services and support on offer are aimed at further enabling a successful deal flow and return on investment. We’re actively promoting a greater emphasis on syndicated investment (where individual angels invest in groups) to build wider portfolios and spread overall risk. We’d love all our angel members to achieve investment returns that research shows can be as high as 22 per cent over a 4-year period. ”

For entrepreneurs and companies seeking finance, YABA will offer guidance as to which new service level best meets their needs based on an appraisal of their business opportunity.  Opportunities can be posted on YABA’s website for all angel members to view, presented to small groups of angels at the new-style Investor Meetings, and companies with a larger funding requirements may be invited to present to investors through the exclusive Viking Club.

The network is particularly keen to dispel the common misconceptions surrounding business angel investment which can put companies off from considering this as a finance option.

Says Greaves: “Angel finance is only repaid when the company achieves success: there are no payment deadlines, interest payments, or personal guarantees – it’s risk free capital. And despite TV programmes such as Dragons’ Den showing entrepreneurs being aggressively interrogated and demands for very high equity stakes in the company, the reality is very different!  YABA members are business professionals with a wealth of experience and knowledge of the sector in which they’ve achieved success. Many of our members tell us that their motivation in becoming an angel investor is not just financial – they get to ‘give back’ to the business community and help others unlock potential to achieve success through their expertise, which is extremely rewarding in itself.”

If you’re interested in becoming an angel investor, or are looking for equity funding, please contact Barbara Greaves on 01423 810149.

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Angels of the North: YABA launches new investment services for angels and entrepreneurs

The e-commerce market is becoming increasingly competitive, and while many factors influence a customer’s loyalty, the returns process is particularly important. It has been proven that implementing a good returns process drives repeat orders and improves customer satisfaction. Research by Harris Interactive shows that 85 per cent of customers say they will stop buying from a retailer if the returns process is a hassle and, conversely, 95 per cent will return to the same catalogue or internet retailer if the process is convenient.

Despite this, some e-commerce businesses fail to even consider the returns process, with many leaving it to the customer to make their own arrangements to send items back. In order to encourage customers to make repeat purchases and promote growth, the principle of offering a returns service is important to e-commerce businesses of all sizes.

Getting it right
There are three key points that companies need to consider to ensure their function will meet customer expectations and at the same time be workable for the business.

First, the system needs to be easy to implement. This involves being scaleable so that as the business grows the system can keep pace with increased traffic. Ideally, if the business is operating in different countries, the system will be rolled out under a single platform.

Secondly, it is important that the process is cost effective – whether the service is offered free of charge or at a cost. There can be import and duty considerations for customers located outside the EU, so it’s important that the system is set up correctly in the first place to ensure that the company is complying with regulations and that these costs are considered from the outset.

Lastly, it’s important to step back and view the process from a customer perspective, to ensure that it’s easy to use and reliable.

Cross-border returns
As many companies seek to expand outside the UK, the subject of how to manage returns across borders is becoming more prevalent. Here are some key areas to look at when implementing a cross border returns process:

• How easy it is for the customer to return items, for example, where will the drop points be?
• How will the costs involved in returning the parcels to the UK be managed?
• How long will the process take – how long will the customer have to wait for a refund or replacement item?
• How can items in the system be tracked?
• How can the rate of returns by market be monitored?
• How can stock re-integration be managed?
• How easy it is to implement the system?
• Is the system scalable and can it grow with your business?
• Are there considerations surrounding re-importing items back to the UK from non-EU destinations?

Using a third party
There are lot of considerations here which is why many forward-thinking businesses are partnering with an expert third party to plan and/or administrate the returns solution.

A third-party provider should have a good handle on any tax and duty considerations for customers outside of the EU, and can advise on meeting these specific requirements.

The best providers will tailor the solution to the business, customising it to deal with national and regional differences where necessary. It should also be possible to integrate with existing IT systems and logistics providers to ensure minimal disruption and cost. Ideally, the returns process should be integrated into the website on a white label basis, so that as far as the customer is concerned, everything looks and feels the same.

Ultimately, the returns process needs to be tailor-made and carefully planned from the outset, to ensure that it works for the business and for the customer. Expert providers can help to ensure a smooth and efficient operation.

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Your business may be based on a hobby or skill, but to make it a success you need a market big enough to support it. Research potential markets thoroughly from the very beginning.

In addition, joining business forums will help you network and grow your customer base. Social networking sites, for example, are becoming an increasingly popular means of reaching out to new markets in order to find new clients.

It might sound obvious, but it is important to know what it is that you offer. There will be countless competitors around the globe eager to service your customers. You should also be thinking about positioning yourself in and around their territory. What is your unique selling point? What can you offer to make your business more attractive than your competitors? Put yourself in the shoes of a potential customer – why should your target audience buy from you? To grow smoothly and stand out from the crowd, you need to know what makes you different from the rest.
 
Base your prices on what people are prepared to pay, not your costs. Add value to what you provide wherever possible. Remember that, while everyone likes a bargain and customers want as much ‘bang for their buck’ as possible, few people associate bargain basement prices or free offerings with value. Equally, they are unlikely to want to buy in bulk at exorbitant prices.

Knowing the price your competitors charge and bettering them is key to you retaining existing customers, as well as attracting new ones. Charging more than what your market can afford will only mean what you provide will be harder to sell.

Taking your product or service to market is never a one-off task. In order to secure and successfully grow sales and orders you must continually approach potential customers without alienating them.
 
A famous quote has it that advertising “works 50% of the time – the trick is to work out which 50%”. It is crucial to adopt a strategic approach to advertising. Think of your target markets: which publications do they read? What television and radio programmes do they consume? Think laterally – where do they socialise? Who do they talk to? Work out the answers to these key questions – and of course decide on your budget – before planning an advertising campaign.

With PR, there is always the possibility of achieving publicity in local and even national newspapers and trade magazines. However, this is dependent on you having a good story. Understand what journalists (even business journalists) want. Don’t try and pass off a thinly concealed or obvious product promotion for your business as a story. Reporters are a savvy bunch. Your press release will be deleted or binned and you will quickly get a bad name.

Ask yourself: what is the real-world problem being solved or made better thanks to you and your company? What are the political, commercial and economic threats or barriers that get in the way?

The benefit of proactive PR over direct advertising is cost. It can be much less expensive, even if you employ a PR agency or consultant. The downside is that you do need to make more of an effort to be relevant. As well as general news stories, you can also consider writing expert columns. These may not be of interest to the print media at a time when paginations are well down, but there are many websites that will readily take well-written and credible articles.

With the emergence of the internet as a major force in new media, having a website is one of the cheapest, most cost effective ways to grow and promote your business. Even if you cannot afford a fancy website, a single page with your contact details is better than nothing. To repeat, social media and online networking are increasingly being seen as invaluable ingredients in the ‘marketing mix’.

It is never too late to make changes to your business model. Find out where you’re going wrong and you’ll be able to improve your business. For more information about business support offered by the Forum of Private Business (FPB), call 0845 612 6266 or visit www.fpb.org.

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Speedfunding is a revolutionary networking event designed to enable entrepreneurs to pitch their business ideas on a one-to-one basis to a number of interested Business Angels in one evening.

The idea is based around the idea of the ‘elevator pitch’ – the rapid individual pitch that all entrepreneurs seeking funding are advised to prepare. Online funding website, Angels Den created the concept because they recognised that achieving investment for a start-up business is a numbers game.

The more investors that entrepreneurs pitch to, the more likely they are to find a Business Angel that is willing to invest.The first event was well attended by both investors and entrepreneurs, with investors purportedly bringing with them millions to invest.

The night was hugely successful and a number of deals are progressing further. One such company that was successful from the first event was Chop’d, which is owned by Jasper Wight. Jasper is currently looking to expand his salad bar to up to nine outlets by the end of 2009.

Chop’d Managing Director, Jasper Wight, says: “Speedfunding is a fantastic way of meeting Business Angels in order to pitch my business plan to them in person. After all, a large part of a business deal is seeing whether you can work together. I spoke to each Angel on the night for three minutes and then moved onto the next.

This gave me enough time to pitch my plan and maximise how many Angels I spoke to. For me, the night was a huge success and I am currently in the final stages of talks with a Business Angel, securing investment for my salad bar business Chop’d.

”Speedfunding puts the entrepreneur in front of the investor, providing a unique opportunity to pitch their idea to the right person at the right time. If a deal is agreed the Business Angel and the entrepreneur discuss the finer details of return on investment and how much stake the Business Angel will have within the business.

Co-Founder of Angel’s Den, Bill Morrow, says: “We first mentioned the concept of Speedfunding to Entrepreneurs and Business Angels on the Angels Den website to see what they thought and it escalated from there.

“We filled the event capacity within several minutes of posting it on the site and it got to the stage where we could have had several Speedfunding events running at the same time and would still not have room for everyone who wanted to be involved.

We are planning to have a Speedfunding event each month so that more Business Angels and entrepreneurs can have the chance to pitch their business plans.”
Speedfunding is only available to entrepreneurs and Business Angels who are registered with Angels Den.

For further information visit www.angelsden.co.uk

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Angels fall in love with speedfunding