05/01/2011

By Gavin Littlejohn, CEO and Founder of The One Place Capital

In an exclusive new series for Entrepreneur Country www.entrepreneurcountry.net , Gavin Littlejohn, CEO and Founder of The One Place Capital (owner of Money Dashboard and miiCard) gives us his insights and observations on the journey from first concept through multiple funding rounds and product launch.

For Sale - Tickets for the world's first passenger flight!

I have heard it said that the key initial skill of the early stage ‘high growth' tech entrepreneur is to suspend disbelief. In other words, to sell tickets for the first passenger flight - and convince others that it will be safe to take off.

Many technology or otherwise high growth businesses never quite get to take-off, and circle the runway for a few years, neither taking off nor crashing. There could be several reasons for this behaviour. It might be to do with a lack of ambition or low scalability of the business idea but is often simply a failure to attract the resources, reduce the risks and build the momentum. Let's skip forward a period in time. We are now cruising down the runway towards take-off. Investors on board - check; colleagues on board - check; suppliers on board - check; early customers on board - check; new brand on board - check; family on board - check; emotions fully on board - absolutely.

The first flight is never smooth. High drama is to be expected. But when the dramas have unfolded, there are really two typical outcomes of this attempted take-off; the business flies and is ultimately able to build a sustainable business model and build value, or it crashes, destroying the value of stakeholders and the dreams of founders.

If we characterise a Series ‘A' venture capital round as the round taken as the business is hurtling down the runway, a Series ‘B' as the capital taken when airborne and gaining altitude and a Series ‘C' or ‘D' as the capital taken when you are able to quantify the level of fuel required to get to a particular happy destination before landing. Each investment comes with less risk. But you can't ‘bootstrap' a passenger plane: there is no revenue before the plane is safe to fly. So the business will require external capital in various rounds even before the Series ‘A.'

Let's assume we have the primary attributes of ambition and a potentially scalable business model that would characterise a high growth business. I often hear about entrepreneurs as risk takers, which is undoubtedly true, but it is truer still to think of successful entrepreneurs as risk managers. The most challenging section of the process is getting the risks reduced and acquiring capital before you even get the plane near the runway.

I managed to get various rounds of capital into the business long before the plane was built. This is the story of how I convinced the stakeholders to suspend their disbelief and buy tickets for the first flight.
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