The world is full of after-the-event wisdom about how entrepreneurs fail. There is an avalanche of advice out there about what not to do, rather than what you should do to increase the odds of your baby becoming the next Amazon or Uber.
Nine out of ten new businesses do manage to celebrate their first birthday. The big challenge is the crucial next five years, when you start turning that big idea into commercial reality. According to Companies House, that is the acid test with an attrition rate of up to 50%.
These statistics, of course, do not really measure success in terms of scale. How many of those survivors are small cottage companies, just about managing, or Unicorns set for global domination?
Our in-house deal flow team see thousands of potential investees from across the globe. Clearly it is not in our interests, or those of our investors, for the fintechs, biotechs and femtechs we support to fail to deliver on that promise of commercialisation.
It is at this very first stage that we start mitigating the ever-present risk of failure: our extremely stringent deal-flow selection process permits only 0.07% of the potential investees to be selected to join our portfolio; they are the ‘best of the best’, all with a fighting chance of making it to the next stage of their incredible journey.
We focus exclusively on impact investing: seeking to deliver that fusion of genuine positive societal change with strong commercial returns to our investors. To achieve this, in addition to their significant potential in their own right, our investees must satisfy a set of demanding criteria.
These apply to any entrepreneur at any stage of their journey. So here are four key ingredients to consider if you want to make an impact on the world.
Demonstrate a solution with the potential to change the lives of millions of people across the globe. Start with the identification of a global problem worth solving.
Impact investing is about the outcome, the effect - the fusion of real, measurable, positive societal change along with great investor returns.
Innovation and technology
Though disruptive for many, the lockdown period associated with Covid-19 has seen huge advances and acceleration in technological progress.
In our portfolio, we have stellar innovators addressing real-life problems through the power of technology and science. Our fintech Borofree aims to take millions of people out of poverty through interest-free loans, and our femtech Clementine is transforming women’s lives through the power of hypnotherapy.
None of them are involved in property portfolios or extractives. They all owe their progress to date, and their huge potential, to innovative technology; to being first-movers; to being unique; and applying this all to global problems worth solving.
Scalable and commercially viable
Great ideas do not always mean great businesses. A robust business plan, outlining vision, objectives and goals (or KPIs) is essential, as is an understanding of the size of the market and the competition. We hear a lot about exploiting gaps in the market. But the real question should be: is there a market in the gap?
Scalability is key. Borofree trialled in the UK with the support of both the UK and Scottish governments; but the vicious cycle of payday loans debt is a problem not unique to this country. Borofree is as relevant to a family in Birmingham, USA as it is to a family in Birmingham, UK.
A brilliant team
At the end of the day, you need a brilliant team with founders who are passionate about their business and are prepared to give 100%.
A team with purpose, vision and values: the desire to create a better world while delivering great returns. A team who understand that these two principles are not mutually exclusive.
The UK has a proud record of exporting innovation to the rest of the world. We need not be afraid of importing innovation either. Fresh ideas, and yes even competition, is key to the growth of the economy as we emerge from any post-Covid recession.
Through our sponsorship of the Great British Entrepreneur Awards’ Foreign Innovation Award, our role as a Home Office Endorsing Body, and our partnership with the DiT, we fully echo the UK Government in their message that the UK is open for business; to showcase to the world that we are a nation where great entrepreneurs from all walks of life can grow and prosper.
By the team at Fortunis Capital