25th July 2019

 

Starting a new business can be both exciting and terrifying in equal measure. You may appear to have a product or service which ‘can’t fail’ but that doesn’t mean you’ll have a successful business.

How many businesses have you come across which appeared to have it all, only to falter from poor management, or a complete inability to monetize or grasp what is required to take the firm forward?

As investment managers seeking to act in the best interest of our investors, one of our major focuses is effectively sorting the start-up wheat from the chaff. The UK is very much at the forefront of global academia and research, which means we have an abundance of extremely clever people having great ideas. However, it may take a different skill-set to develop ‘great ideas’ into marketable products and services, and ensure business stability and growth.

Let’s also be frank here, simply having an inexhaustible array of ideas is not necessarily going to mean you have a business. It’s often said that such individuals do not always make the best business people, because there’s a certain skill set that might be lacking or an inability to look at what’s required to bridge that gap. We are fortunate to see 100s of highly-innovative early-stage companies but in reality, the ones that have the best chance of growth are those that have a management team that understands the rigors and practicalities of growing a business.

And in that sense, while the money we provide to firms is clearly important – indeed, that’s often one of the reasons why firms fail, because they don’t have enough cash in the bank to keep going – there’s also a lot to be said for working with experienced investors who don’t just bring the money but who are also immersed in the sector, can see the potential pitfalls, but also have a sense of the bigger picture and the opportunities that are available to those who get their business functions right.

In a way, many businesses are set up to fail from the start, which is sad but that’s often the way of the world. Good ideas will only get you so far, and particularly in sectors which change on a daily basis, your good idea can soon be out of favour or fashion, or simply overtaken by the next big thing. For us, it’s about spotting those who have the legs to go far, who not only have the idea but something that isn’t just likely to last the course, but will appeal to the right people in the right places, often in many territories right across the world.

So, for us, it’s a fully-rounded approach to choosing our investments. It’s not just predicated on the product or service, which is obviously hugely important, but it’s also about the people behind the business, and their ability to accept the resource and support we offer. Indeed, that tends to be exactly what they want anyway; it’s not begrudgingly accepted but embraced wholeheartedly because they know what we can bring to a firm, and they know our track record of success in taking firms onto bigger and better things.

It’s why we’re not an investment manager that will simply deliver the investment and walk away. Far from it. That doesn’t interest us, and it certainly doesn’t help the firms we are investing in.

If advisers are seeking to find out more about how we work with investor companies and what we can offer both them and their clients then I would urge you to attend one of our events or speak to our sales team.

Andrew Aldridge is Partner, Head of Marketing at Deepbridge Capital