Home| Seeking finance to launch a new enterprise? Then double the amount you first thought of! |
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2nd February 2006 Start-up specialist Mike Powell has advised Midland entrepreneurs who are seeking finance to establish new enterprises to “double the amount of money they first thought of.” Mr Powell, who was raised £80 million of early-stage risk finance over the last 15 years, said: “To start with, you need an honest and well-thought out business plan. But when it comes to finance, double the amount of money suggested by your plan. It won’t be enough – but it will be enough to get you started.” Mr Powell, who has just secured a further £5 million of institutional funding for Pelikon Ltd, of which he is chief executive, made his comments at a business finance seminar at Aston Science Park, Birmingham, when more than 120 delegates were given specialist advice on funding and issues surrounding possible Stock Market flotations. He said it was not unusual for new enterprises to realise some of their early finance by principals mortgaging their homes, selling the “family jewels” or being backed by friends, family and even existing employees. However, he added: “Only invest what you and your loved ones can tolerate losing.” Mr Powell, whose Cambridge and Cardiff-based company is considering a flotation on AIM within the next year, said there were other avenues such as grants, banks and customers and suppliers, who were sometimes prepared to invest in funding development programmes. In addition, there was the venture capital market. But Mr Powell warned: “Sometimes VCs have a failure of vision – and attacks of contagious pessimism. And they can’t bring themselves to believe high value businesses are possible.” However, he told delegates at the seminar: “Venture capitalists most likely know more about your market and running business than you do!” Mr Powell, who in his career has raised finance to launch three technology design and manufacturing start-ups, added: “If you are talking to VCs, then your proposition must be high risk, high reward, otherwise you would find another way of financing it. So they need a high rate of return – 40 percent per annum compound. They have also seen more ways to make an investment fail than you can ever think of.”
Mr Powell, whose company Pelikon Ltd, is a world leader in the development and commercial application of wafer-thin, flexible, plastic display technology used in the production of home appliances, consumer electronics and industrial applications, was guest speaker at the first of Aston Science Park’s latest series of seminars targeted at identifying critical elements necessary to help drive a business’ growth. Other presentations were made by Andy Moss, senior business development manager, Lloyds TSB, Richard Blood, of accountancy firm Moore Stephens and Adam Hart of stockbrokers KBC Peel Hunt, which introduced new institutional investors to Pelikon Ltd in its latest funding round. The seminar was chaired by Jeremy Parkin, of law firm The Wilkes Partnership.
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