FT SPECIAL REPORT The UK’s Entrepreneurs

Tuesday October 7 2014 www.ft.com/reports | @ftreports

Inside Creative Start them early A scheme to turn today’s primary school children into tomorrow’s champions of commerce clusters Page 2 Supporting start-ups New government legislation aims to encourage enterprise beyond Page 2 Meet the winners The talented the capital entrepreneurs nominated in this year’s EY awards Page 3

The UK’s regions are hotbeds of innovation and networking, says Jonathan Moules The future is bright: Steffan Aquarone (right) and Will Grant, the founders of mobile payment system Droplet

roplet, a fast-growing connections to one place and the ability San Francisco and an entertainment needtotakebetteradvantageofthese.” agencies to join together to rent houses, mobile payments business, tobuildnetworkswithothers. cluster in Los Angeles. The UK has gam- While British cities fight for recogni- tohelpmanagespirallinghotelcosts.” is a darling of Birmingham’s Itissomethingthatsuccessfulexport- ing companies in Birmingham, music tion as hotspots for start-ups, those Calum Brewster, northern director of tech start-up community. ers need to embrace by looking over- enterprises in Manchester, and fashion startingcompaniestendtoseethevalue Barclays Wealth & Investment Manage- That’s show business D Steffan Aquarone, who hit seas, but British start-ups are also find- and financial services businesses in inkeepingafootinseverallocations. ment, says: “Today’s UK entrepreneur- How Rosemary Squire on the idea over coffee with his co- ingavalueinnetworkingwithothercity London. Spencer Gallagher is a non-executive ial landscape is very different from that took the Ambassador founder, Will Grant, is a big advocate of clusters around the UK. The entrepre- Iain Moffatt, head of UK regions for director for several UK-based entrepre- of 10 years ago; successful start-ups can the West Midlands city as a venue to neurial map of Britain has become a KPMG, says: “London should not aspire neurs and runs networking events all be made anywhere, whether you’re in Theatre Group to buildbusiness. cluster of clusters, from Aberdeen to tobebetterthanSiliconValley.Ifitdoes, over the country through The Agency OldhamorOldStreet.” dramatic new success He believes Droplet has succeeded Bristol,fromLiverpooltoLondon. it will fail. Silicon Valley has a history Collective, which helps creative agen- For Mr Aquarone at Droplet, basing a Page 3 both because of where it is based and Travel between urban centres is rela- that is not replicable. What the UK does ciesconnect. company in multiple locations makes because of the connections it has with tively easy – London to Cambridge, for have is its own set of circumstances cov- “I have found that it’s easy for people sense.HisconnectionsgobeyondtheUK The wine seller other British cities. This includes hiring instance, can be completed in 45 min- ering the business environment; its role to network in London, Manchester and asheseekstomoveintomarketsaround staff from Edinburgh and Bourne- utes by train. It makes the UK not so as a centre of excellence in financial Edinburgh, but after that, cities have the world. “It is all about competitive Profile of Rowan mouth. Droplet has now opened a sec- much another Silicon Valley, based in services and in the creative, marketing mixedresults,”hesays. edge,” he says. “The argument about Gormley, who used ond office in Shoreditch, London’s tech and around one area, as an alternative and advertising industries; and its geo- “Some regions are deeply sceptical of whetheritisbettertobeinBirmingham, crowdfunding to seed a start-uphotspot. to California, where different cities pro- graphic position spanning east and each other. The biggest barrier for or London, or both, is a bit parochial Droplet illustrates the way successful videseparatecentresofexpertise. west. If we are to cement our status as a regionally based agencies is the cost of when we are building products that we €65m drinks company start-ups benefit from both strong The US state has its tech centre in European hub for entrepreneurs, we travel and hotels. We are looking for wantthewholeworldtouse.” Page 4 2 ★ FINANCIALTIMES Tuesday 7 October 2014 The UK’s Entrepreneurs

Children’s challenge A primary school scheme inspires pupils to build a business, says Liz Bolshaw

Ways to foster enterprise and ambition in young minds Smooth operators: pupils at Caldicott School in Buckinghamshire sold fresh juices and smoothies on sports day, with £5 seed funding from the Fiver Challenge

ike policemen, entrepreneurs He walked about 15 dogs and took Jasper is now enthusiastic about tak- London with an ambition to deliver 300 themandthenthey’dpayme,”hesays. “I used the money I got [from selling seem to be getting younger. photographsofhimselfwitheachoneas ing up entrepreneurship. “You can get mealsadayinitsfirst12months. Joe, then aged 12, soon became well myPSbusiness]tobuythefirstsheetsof No longer is entrepreneur- a memento, printing them off with his paidforsomethingyouenjoy,”hesays. “Wearetargetingyoungprofessionals known in his home town for his wiz- grip,” he says. Joe then moved into ship exclusively the domain pricelistontheback. Bar Segal and Daniel Kaplansky, Cass and young families who don’t have ardry, and sold his business “including T-shirts. “Skateboard brands all have L of MBA courses, but should His fellow pupil at Caldicott School, Business School alumni, are more con- enough time to cook themselves,” says someequipment”toafriend. diversified lines. They have their main “begin at an early age”, according to Freddie Lagesse, also took the Fiver ventional examples of youth enterprise. Mr Segal. “Our customers can order As a keen skateboarder, Joe’s next product, which is boards, but lots of Lord Young of Graffham, enterprise Challenge and sold home-made fruit They have known each other since they online up to 5pm for delivery on the venturewasmuchbetterresearched,he otherthingsontheside.” advisertoDavidCameron. smoothies at the school fete. He learnt a were 10 years old and growing up in same evening, and our meals cost says. “I knew I didn’t have the money to Vained products were sold via Insta- The Fiver Challenge, supported by useful lesson in price elasticity when his Budapest. And each has a father who is between£7and£15ahead.” gram, “because Instagram allows you to VirginMoney,hasinspiredsome20,000 team decided to drop their prices anentrepreneur. The founders raised £50,000 in seed find customers. You get recognition primaryschoolchildrentostartandrun toward the end of the day, in order to “We have this passion to bring really capitalfroma“networkofangels”inTel quickly.Wesoonhad400followers.” their own businesses for a month with shifttheirremainingstock. good food to the take-out model,” says Aviv. “Tel Aviv’s start-up scene is much ‘I like turning something I Joe used PayPal to take payments. just £5. Jasper Ewart-Smith, a 10-year- Chris Neesham, year five teacher at Mr Segal of their venture. OneFineMeal more developed than London’s. Every- enjoy into a money-making “My dad had to set up the account oldpupilatCaldicottSchoolinBucking- Caldicott School, says: “It’s a fantastic delivers a chilled gourmet meal, made one and their grandmother has a because I was too young,” he says, “but hamshire,sawoffcompetitionfrom500 thing for children to do at this age. from fresh ingredients, by moped to start-upthere,”saysMrSegal. scheme’ everythingelseIdidmyself.” participatingschoolstowintheprizefor Not all children have the confidence to yourdoor.Youjusthavetoheatitup. Joe Slater,14, a student at St Laurence Joe Slater, 14 years old This included researching suppliers, most inspiring individual at the recent set up a business and this challenge Thecompanyhasevolvedfromanini- School in Bradford-on-Avon, has not designing the product and the website, FiverChallengeawards. givesthemthat.Nowthewholeschoolis tial idea of delivering hot food involving been nudged by education or back- make actual boards, but I looked at the andusingsocialmedianetworkstopub- “I wanted to set up the dog-walking talkingaboutit.” multiple cooks in multiple kitchens ground into entrepreneurship, but by smaller,renewableelements.” liciseandsellthegriptapeandT-shirts. business because my dad never really The school made some £1,900 from acrossLondon,andwasoriginallycalled hisperceptionofmarketopportunities. His idea was to custom-design a Joe has been more inspired by watch- let me have a dog,” says Jasper. “I about 57 pupils’ various business initia- Eatro. “I took apart PlayStation controls and branded grip tape. “I researched it, did ing the BBC reality series Dragons’ Den decided to charge £1 for every 10 min- tives and with that bought a giant out- “Itwasjusttoocomplicatedandlogis- could modify them to look cooler or to the designs, found a supplier,” he says. than by anything he learnt in school, utes of dog walking. That was cheaper door chess set for the school play- ticallydifficult,”saysMrSegal. do something better. You alter the cir- Joe’s brand was called “Vained” to butinspiredhecertainlyis. than I really wanted, but I thought I ground, and made a substantial dona- OneFineMeal is much simpler, oper- cuit boards. People in my school would chime with leading skateboard brands “I like turning something I enjoy into wouldgetmorecustomers.” tiontoacharityinBrazil. ating in a five-mile radius across central give me their controllers, I’d improve FractureandBones. amoney-makingventure,”hesays. New regulations face Start-ups welcome progressive policies their first big test but want more clarity and less red tape

has matured. “This isn’t a 50 quid punt Government Alternative finance any more,” says Julia Groves, chair- womanoftheUKCrowdfundingAssoci- The state woos entrepreneurs Fighting fit Exercise on a budget pays off The UK has led a revolution in ation,atradebodysetuplastyear.“This with support programmes, lending, with a crowdfunding is a real alternative for your savings, trade initiatives and tax Jon Wright’s first foray into running something different. It was then that which aren’t getting much in the way of fitness centres was, by his own he visited The Gym Group, a budget market worth £1bn last year. interestpaymentsatthemoment.” relief, writes Jonathan Moules confession, a series of failures. gym that had just opened its first site Will the FCA rules pop the By far the largest and best-known Julia Groves of UK Crowdfunding The day he was due to sign the in Hounslow, West London. bubble, asks Andrew Sharman form of crowdfunding is peer-to-peer lease on his first health club his co- It was an epiphany and Mr Wright lending, popularised by platforms such Supporters of the new rules say the Ronald Reagan once quipped that the founder, who had come in as a 50:50 decided to copy the idea, halving the as Zopa, RateSetter and Funding Circle. FCA has given the UK a distinct advan- nine most terrifying words in the Eng- partner, pulled out of the company to monthly membership fee at his club to When the UK’s financial watchdog P2P, whether donation-based, lending tage over the US, where the concept of lish language were: “I’m from the gov- deal with problems in another of his £15. In three months, Xercise4Less had introduced new rules governing crowd- between individuals or business loans, debt-based P2P lending was invented, ernment and I’m here to help.”If that is businesses. generated its first profit. funding in April, there were fears that accounted for almost 85 per cent of the but where equity crowdfunding true, British start-ups have a lot to Then the builder employed to fit out Having aped the competition, the the fledgling industry would be regu- UKalternativefinancemarketin2013. remainsillegalforretailinvestors. worryabout. the club went bust, owing Mr Wright next challenge is to outperform them. latedoutofexistence. Much of the controversy over the “I certainly think that’s allowed the This summer the Queen’s Speech, a £230,000. Xercise4Less now has 170,000 As the new regime comes into force FCA rules relates to the regulation of UK to steal a march and really pioneer piece of Westminster theatre in which By the time the club, on the members across 24 sites, the latest this month, the alternative finance sec- securities-based crowdfunding, which the industry,” says Luke Lang, co- thenationalgovernmentsetsoutitsleg- outskirts of Leeds, opened in 2006, opening in Wolverhampton last month. tor is still debating whether the Finan- is a small portion of the total – about founder of Crowdcube, the leading islative agenda, included a pledge to it was four months behind schedule Mr Wright’s other focus has cialConductAuthorityhaslegitimiseda £28m last year – but is growing at sev- equity crowdfunding platform by “help make the United Kingdom the and half the first tranche of members been on managing cash carefully to market worth almost £1bn last year, or eral times the rate of the wider industry amountsraisedanddealsdone. best place to start, finance and grow a had quit. fund expansion, something he claims takenthecrowdoutofcrowdfunding. and has been used by companies from However, there are concerns that the business”.The helping hand of the Brit- “We were dealt some pretty bum was a key lesson from those early, While the industry has broadly wel- beer maker BrewDog to Kent winery new self-certification process for inves- ishstateisabouttobeextendedfurther. cards,” Mr Wright recalls. “What could difficult years. comed the new rules, fears remain ChapelDown. tors might deter some. Dan Hird, head David Cameron’s policy wonks have have gone wrong did.” “When you have not had any about their potential to deter investors. This year, the FCA introduced a “10 of corporate finance at ethical bank Tri- been wooing the entrepreneur vote Two years after the launch, Mr [cash], it teaches you how to manage Meanwhile, questions have been raised per cent” rule, whereby retail investors odos, agrees that online investors might since his coalition government gained Wright reached crunch time. The it, and that is a great discipline to over whether traditional regulatory who are neither “sophisticated” nor be susceptible to “fatigue”, as they go power in 2010, creating tax reliefs such business was still not working and he have,” he says. oversight is suited to an industry using “high net worth” must certify that they through the process of asserting that as the Seed Enterprise Investment felt he either had to close or do JM social media to change the fundamental arenotcommittingmorethanatenthof theyareawareoftherisksinvolved. Scheme (SEIS), which reduces the natureofbanking. their net investable assets, excluding This month, Triodos Renewables, a downside for those backing risky early Crowdfunding’s rise to prominence theirhome,pensionsandlifeinsurance. UK subsidiary of the Dutch lender, is stage ventures, and creating Tech City, recently, initiatives such as Innovate Street, having co-founded government- hasbeenremarkable.Inlittlemorethan ThisruledoesnotapplytoP2Ploans. launchinganequitycrowdfundingcam- aninitiativetopromoteandsupportthe Finance, a government trade body to backed StartUp Britain, a group that a decade, it has become a recognised “If we’re talking about a start-up in paign on Trillion Fund – a platform run growing community of tech start-ups in promote the UK’s leading position in campaigns to make the UK a more way for companies, both young and Shoreditch, nobody should invest more by Ms Groves – to raise money for wind London’sEastEnd. digitalfinancialservicescompanies. entrepreneurialnation. established,toraisefinancefromawide than 10 per cent of their assets anyway,” turbines in what will be one of the first The Financial Conduct Authority has RegulationintheUKfinanceindustry He says the government has, on bal- body of investors using the power of the says Ms Groves, who backs the rules. bigtestsforthenewregulations. also been busy, earning praise from the is far more progressive than in the US, ance, been helpful to entrepreneurs, internet. Over 12 months, the alterna- Investors can self-certify as “sophisti- There are concerns that this tech- founders of online crowdfunding for its says Mr Hungerford. “We’re seeing picking out SEIS as a particular advan- tive finance market grew by 91 per cent cated”afterjusttwoinvestments. savvy industry might be hindered by quick adoption of rules to oversee this more and more agile, disruptive busi- tage. But, he adds, the devil is in the to reach £939m in 2013, according to a TheFCAsaysconsumersneedprotec- the FCA’s rules on financial promotion. fledgling market. This mark of legiti- nessesenterthesector,”hesays. detail and companies often face frustra- report by Nesta. It is expected to top tion if they are to have confidence in Any company inviting investment must macy has helped London to become a However, there are limits to this tion when trying to obtain information £1.6bn this year,the think-tank reports, backing start-ups. Early-stage investors make any communication complete – world centre for a fast-growing form of praise of government as a benefactor. aboutspecificrulesonissuessuchastax. though this represents a tiny fraction of are more likely to be diluted as a com- including the small print, such as a risk alternativefinance. Duncan Cheatle, founder of Prelude, a He cites the example of a business conventionalbanklending. pany grows and attracts capital from warning. This presents problems when Nick Hungerford, co-founder of Nut- networking body for ambitious entre- ownerwhowaslookingforclarityabout The process, in which online plat- new backers. Seed investments offer trying to spread the word to the crowd meg, an online wealth management preneurs running established busi- a competitor’s decision to use a base in forms match a wide crowd of investors limited liquidity; the only exit, the dis- via Google adverts or tweets, which are business, welcomes these moves. Mr nesses, hears a mixture of opinions on Amsterdamthatenabledittoavoidpay- to projects, has risen on the back of two tantchanceofanIPOorsale. limitedto140characters. Hungerfordcameupwithhisdisruptive the government’s effectiveness. He also ing VAT. HMRC took weeks to confirm trends: the advance of the internet and Much worse, investors could suffer “Thelackofclarityisabigissue,”says business model while completing an has first-hand experience of Downing whether this was indeed acceptable, by social media, and the retreat of the the same fate as the backers of Bubble & BarryJames,founderoftheCrowdfund- MBA at California’sStanford University which time the business had paid thou- banks, which scaled back lending in the Balm, a fair trade soap manufacturer ing Centre research group and a critic of and gained his first round of funding sands of pounds more in tax than it wake of the financial crisis with tighter that raised £75,000 via equity crowd- the new rules. “No one’s quite sure. If I fromalocalinvestorintheUS. mighthavedone,MrCheatlesays. regulationandhigherriskaversion. funding platform Crowdcube in 2011, tweet or retweet, is that financial pro- But he moved back to the UK to “People often look for clarity on a tax As an investment case, crowdfunding andceasedtradingtwoyearslater. motionandbanned?” launch his business after UK Trade & issue,” he explains. “There are conse- Investment, the government’s inward quencesifdecisionmakingisslow.” investment agency,flew to California to MariaPinelli,globalvice-chairofstra- persuadehimtosetupaBritishbase. tegic growth markets at EY, says that Contributors “I saw there was a genuine desire and while entrepreneurs like tax reliefs and a real push from the UK government to support programmes, what they would Liz Bolshaw Gill Plimmer Chris Lawson support innovative digital businesses prefer is less bureaucracy and a civil Freelance journalist FT reporter Picture editor like ours,”he recalls, noting that British servicethatbetterunderstandsSMEs. tax reliefs for entrepreneurs have “Allentrepreneurswantsupportfrom Andrew Bounds Andy Sharman For advertising details, contact: helped him raise further rounds of their governments, but they also want Northern correspondent and FT reporter Stephanie Collier, +44 (0)20 7873 4597 fundingintheUK. themtostepoutofthewayandletthem enterprise editor and [email protected], or your He also cites progressive immigration runtheirbusinesses,”shesays. Hugo Greenhalgh usual FT representative. policies for young entrepreneur- The one reassurance for the Jonathan Moules Commissioning editor ial businesses, and more UK government is that this is Business education correspondent All FT reports are available on FT.com at a balance that every state Steven Bird ft.com/reports. Follow us on Twitter at: Duncan Cheatle calls for struggles to perfect, Ms Designer @ftreports swifter decision making Pinelliadds. Tuesday 7 October 2014 ★ FINANCIALTIMES 3 The UK’s Entrepreneurs From the West End to international beginnings

Drama queen As she is recognised for her business acumen, Rosemary Squire of the Ambassador Theatre Group talks global expansion with Liz Bolshaw

he Ambassador Theatre “By 2009, we had a much bigger can- Group is the country’s larg- vas to work on. We were the first to do est theatre operator and, databasemarketing;wewerethefirstto having conquered the UK, develop an integrated model with pro- T is now setting its sights on duction companies of our own. When global expansion. The group also com- we bought our biggest competitor and prises its own production companies, Exponent Private Equity came in, that’s First Family Entertainment and Sonia whenthecompanybegantorocket.” Friedman Productions, and a successful Ms Squire grew up in Nottingham ticketingoperation.Itisaone-stopshop and says she was “particularly lucky” forliveentertainment. to have had the Nottingham Playhouse “Howard Panter, my husband and on her doorstep at a time when Richard businesspartner,whohasledonthecre- Eyrewasitsartisticdirector.Shesays,“I ativeandcontentside,wasknightedlast remember standing on the steps of the year,” says Rosemary Squire, founder theatre with my best friend and think- and joint chief executive of ATG. “It’s ing: ‘This is what I want to do. I want to thecontentthatistheshowy,blingyside beatheatremanager’.” but underpinning that is a solid busi- At university in Southampton, where ness. With my chief financial officer, we she was awarded a first-class degree in have created an extraordinarily secure modern languages, she worked part- company that is growing, is stable and time in a theatre “making up the pay resilient,”shesays. packets”, as she recalls. Ms Squire While her husband’s knighthood rec- countsherself“luckytohavecomefrom ognises ATG’s creative successes, win- a family of strong women, where my ning the 2014 UK Ernst & Young Entre- Get the show on the road: Rosemary Squire and Howard Panter, joint chief executives of ATG, plan to acquire further theatres in the US and Asia — Charlie Bibby/FT mother and my aunt both went to uni- preneur of the Year award is a reflection versityduringthewar”. of Ms Squire’s business acumen and its Winners EY UK Entrepreneur of the Year Awards 2014 From the very first day at ATG, Ms contribution to the company’s out- Squire explains, she and her team standinggrowth. “established the integrated model, and She credits her team with what she this is what really distinguishes us from says are particularly feminine Private equity backed and UK overall winner Technology Consumer products and services all the other theatre operators; having strengths. “We’ve built this company Rosemary Squire Hamid Guedroudj Holly Tucker the buildings, the whole operational quietly and thoroughly,” she says. Ambassador Theatre Group Petroleum Experts notonthehighstreet.com side, what we do in the buildings – the “Whereas a lot of men are secretive and content – and the ticketing”. The group openly driven, my style of management Health products and services International Social enterprise sells11mticketsayear. is collegiate, consensual, working with Deborah O’Neil Steven Gray John Niland Running the business with her co- theteam,nothavingsecrets.” NovaBiotics ROVOP Provide chief executive husband is “tricky”,she The company grew out of Carmen says. “I don’t think our kids like it and Jones, an award-winning show directed Manufacturing Emerging Family Business Award of Excellence it’s hard to leave at the front door.” On by Simon Callow in 1991. “We funded Robin MacGeachy Nitin Passi Michael Bibby the plus side, “you can make decisions the business in the beginning as we Peak Scientific Holdings Missguided Bibby Line Group really quickly over the muesli at break- would have funded a show,” says Ms fast. You completely trust each other, Squire. “In fact, Carmen Jones provided you can use a shorthand, which is great. the nucleus of friend and family share- Business products and services The downside is you never get away holdersforATG.” Bill Holmes fromitanditdoesrathertakeover.” Last year, Providence Equity Part- Radius Payment Solutions For Ms Squire, her legacy, what gives ners, the Rhode Island-based investor, her“thebiggestbuzz”,iscreatingacom- bought a majority stake in ATG which pany that will outlive her and her hus- valued the company at about £350m. we can be in the UK,” Ms Squire says. market is very developed,” says Ms wages; Howard remortgaged his flat to theatre we were already managing, and band. “A great force in world theatre,” Ms Squire, her husband and manage- She is now looking beyond national Squire,“soitwasimportanttoputdown keep the business going,” she says. “It’s we brought in a new financial partner. shesays. mentteamretainsome20percentown- shores towards expansion in the US, a big flag.”Further international expan- verytoughinthebeginning.” We went from being a cottage industry But most of all, “you need that vision ership while an original private equity AustraliaandAsia-Pacific. sion is also planned. “Theatre is an A pivotal date in the company’s toacompanyonthatday,”shesays. and belief. You need to focus on what investor, the UK-based Exponent, also The first of a number of forthcoming increasinglyglobalbusiness,”sheadds. history was 1 December 1995, says There followed two major acquisi- you can do rather than moaning about retainsasmallstake. acquisitionsbyATGhasbeenFoxwoods The early years were hard, however. Ms Squire. “We acquired our second tions in 2000 and 2009 that were the things you can’t,” she says. “Then “We have grown probably as large as – now the Lyric – on Broadway.“The US “I remember selling my car to pay the London theatre, we bought a regional “game-changers”,shecontinues. youstarttomakeyourownluck.” Sweet smells of homegrown success

Profile Grace Cole products now sell in 80 first, one reason why she was nomi- countries and more are added all the nated as EY North of England Entrepre- The owner of a thriving bath time. More than 65 per cent of sales neur of the Year. Judges of the awards comefromoverseas.Turnoverhit£10m praised her “passion for new product and beauty brand says her in 2012-13 and Ms Mort says it is grow- development” and her “impressive ‘Made in England’ label is key ing35percentayear. expansionintointernationalmarkets”. She founded the business after being But as the business grows, Ms Mort to sales, writes Andrew Bounds made redundant when the company for mustlearntohandoversomecontrol.“I which she worked as a buyer went into am on the verge of appointing a finance administration. David Gerrard, a direc- director, something I said I would never Notwithstanding all the design and tor of Elizabeth French, her previous do. I am a perfectionist. Letting some- product expertise that goes into the employer, backed her vision and took one else take control frightens me to Grace Cole bath and beauty range, 80percentofGraceCole. death. But we need him and the other owner Tracy Mort says that three words She achieved early success with gift directorsforthenextgrowthphase.” on the packet are the most important: toiletry sets, but that led to lumpy reve- Grace Cole now has 29 employees and “MadeinEngland”. nues. “Our business was very seasonal, Ms Mort wants to concentrate on strat- The brand she founded in 2007 used with 90 per cent over Christmas, Valen- egy rather than day-to-day operations, Chinesesuppliers,buttoday,everything tine’s Day and Mother’s Day. We lost including looking for acquisitions. is sourced in the UK. Ms Mort took this moneyeightmonthsoftheyearandhad She has ruled out manufacturing in- decision in 2009, as the effects of the fabulousprofitsforfourmonths.” house because even with increased vol- recessionhithome.Havinggrownupon So she developed more ranges and umes it would not be cost-effective. But a council estate, she knew what life was brands. Last year, Ms Mort was able to Ms Mort has been testing out the men’s like for those in austerity. “I thought: buy a majority stake from Mr Gerrard market with gift pack products. This ‘We’reinthebiggestrecessiontheworld with bank funding; her goal is to buy line is fast expanding but from a very haseverseen.WhyamIgivingmoneyto himoutcompletely. smallbase.“Itisstillaniche,”shesays. Chinawhenourcountryneedsit?’” Her Greater Manchester business has She is considering boosting the tiny ShegraduallyfoundBritishproducers made a profit every year apart from the marketing spend, having relied up to and, although her overall costs were now on personal contacts and trade higher, she was able to charge more for shows to attract retailers. However, she her toiletry gift sets, shower gels and knows that she cannot outspend giants body creams. “The business changed suchasProcter&GambleandUnilever. overnight,” she says. “With ‘Made in “We are different. We don’t sell China’, we had no competitive edge, shower gel for £1, ours is £4 or £5. The becauseeveryonehasthat. design is great, formulation is great. “The sales team told me I was mad, Thereisextraattentiontodetail.” but the products are now in great At 39, Ms Mort says that she has demand [and] we have access to far not yet fulfilled all her ambitions. “The more countries. British manufacturing sky is the limit. I want this to be a is held in high esteem. International household brand, everywhere you customersloveit.” go, and sold in every country. When I started, I never thought Business scents: Tracy Mort’s I’dbethisbig.I’dliketofloatasa products now sell globally £200mcompany.”

EY awards contenders The need for skills and the power of teamwork

Along with general business sentiment, confidence among judging process for the EY Entrepreneur of the Year entrepreneurs is on the rise. A recent EY survey showed that Awards. Now in their 17th year, the awards celebrate 75 per cent of UK entrepreneurs have seen growth in their dynamic businesses across every UK region and offer turnover in the past 12 months. What is more, the vast unrivalled networking and mentoring opportunities to help majority (93 per cent) also expect their turnover to grow them overcome barriers to growth. significantly over the next three years. Each regional winner goes on to compete at a UK final At the same time, more than three-quarters of where they are re-evaluated by an independent judging entrepreneurs admit that they struggle to attract the teams panel, which is rotated annually. they need to drive their plans. The majority of these dynamic This year’s panel, chaired by John Spence, chairman of people either cannot find the skills they need, or competition Karma Royal Group, met the finalists for formal interviews from larger businesses keeps talent away. and at informal events to hear their stories. The panel then In a strengthening economy, this is a worrying challenge. rated each against several criteria: entrepreneurial spirit, In my conversations with entrepreneurs up and down the financial performance, strategic direction, global impact, country, it is striking to see the emphasis they put on having innovation, personal integrity, and influence. the right teams around them to help them realise their vision. The power of the team was a recurring theme during the Steve Varley is UK chairman and partner for UK & Ireland at EY 4 ★ FINANCIALTIMES Tuesday 7 October 2014 The UK’s Entrepreneurs

Naked Wines boss has the angels on his side Own boss More entrepreneurs – but few are looking to hire staff

Profile It was not his academic studies at the Mr Gormley and his brother worked cept in 2008, but I had a feeling we were University of Cape Town that were to “weekends and nights” on the fledgling on to something and that it was a game- Three years ago Jayne self-employed are taxi Rowan Gormley is the man lead to Naked Wines, says Mr Gormley, business that they named Orgasmic changer,”hesays.“Wehit£1mturnover Hynes, 38, gave up her job driving, carpentry and but rather “weekends sitting under oak Wines. When it was running, they re- inthefirstsixmonthsoftrading.” as a chartered surveyor to construction. Fifteen per who brought crowdfunding trees drinking delicious wines with my pitchedit,thistimewithmoresuccess. Angels invest an agreed sum every start a business selling cent of the total workforce to the wine business. He winefarmerfriends”. “The two biggest things I learnt from month (as little as £20) and this money frozen food for children. actually work for He saw up-close how winemakers Richard Branson were first, that any- supports winemakers whose wine is The launch is due next themselves, compared with tells Liz Bolshaw why the werepermanentlystuckinaviciouscir- thing is possible. The second is to trust soldexclusivelytoNakedWines.Angels January, when one of the 13 per cent in 2008, and 8.7 business model is powerful cle of squeezed margins and long credit your instincts,”recalls Mr Gormley.“He are then able to buy wine at discount. UK’s biggest supermarkets per cent in 1975. terms while supermarkets demanded would judge every business proposition “We have 135 winemakers and some will stock the sugar- and One reason behind this anever-largershareoftheprofits. on the basis of would he as a consumer would simply not be there without us,” salt-free ready meals in its increase is the rise in the “The world was a crazy place. Lehman’s Mr Gormley was working for the pri- want to buy this, rather than what is the says Mr Gormley. “If you can help your stores. “It just has to work,” number of long-term had just gone bust, it looked as though vate equity firm Elektra when he got a returnoninvestment?” supplierbyfinancingthem,youbecome says Ms Hynes. Like many unemployed and the end the world was about to end and it was callfromRichardBransonaskinghimto Virgin Wines had a rocky start, says theirnumberonedreamcustomer.” start-up owners, she has of the so-called job for life. spectacularly bad timing,” says Rowan join Virgin in 1994. There was no spe- Mr Gormley. “We made all the classic The model favours wines that mature remortgaged her house to But Ms Jones points to Gormley, co-founder and chief execu- cificroleonoffer. dotcom mistakes. I got seduced by Vir- andbottlequickly.So,twoyearsago,Mr raise the funds to launch increased support for tive of Naked Wines, of his decision to “ThedayIarrivedwewerealldiscuss- gin Online Wines – three sexy words – Gormleydecidedtoraise“a£5m,three- the business. those wanting to start their startthecompanyin2008. ing what we could do with the Virgin what could possibly go wrong?” A tough ‘If you can year bond from our customers to Ms Hynes is one of a own business. “People can Six years later, the company has sales name. Everyone was talking about period followed during which 80 per help your finance proper, old-fashioned fine growing number of self- see opportunity and act of €65m, a waiting list of 10,000 inves- space ships and nightclubs and I put up cent of staff lost their jobs and the office wines”withA-listwinemakers. employed people upon it. The infrastructure tors – or angels, as the company calls myhandasthenewboyandsaid,‘What moved back to Norwich, but by 2005, supplier by MrGormleyclaimsthecompany“has attempting to create their to support start-ups is in them – wanting to invest, and a disrup- about financial services?’ Richard just Mr Gormley had rebuilt the business financing probably got better insight into what own business in the UK. the early stages of tive business model that brings crowd- went, ‘Brilliant! Let’s do financial serv- and sold it to Laithwaites, the wine people like to drink than anyone else on According to StartUp development but moving fundingtothewinebusiness. ices.’”AndsoVirginMoneywasborn. retailer. Three years later a disagree- them, you the planet. We have over 3m customer Britain, a campaign group in the right direction. ” Mr Gormley’s route to Naked Wines Mr Gormley led the division from its mentwithanewmanagerlefthim“with become ratings,” he says. “The wisdom of the endorsed by the Even if start-ups are not appears,withhindsight,entirelylogical. initial phase offering pensions and life no job, some cash and 17 people from crowd is much stronger than the wis- government, 526,000 new generating employment He grew up in the South Africa of apart- insurance to banking and then online Virgin”,heremembers. their domoftheindividual.” businesses were registered immediately, many think- heid but always knew his future would banking. He remembers “discovering He went to market and successfully number one For all his enthusiasm for wine, it is last year, up from 484,000 tanks argue that there beoutsidethecountry.“Thesystemwas new bands and new authors on Amazon attracted investment from the German the passion for running his own show the previous year and should be more support. broken,”hesays,and,havingdecidedto through the recommendation services”, family group, Wein International, and dream that drives Mr Gormley. “Frankly, I’d 441,000 in 2011. This year One, the Social Market acquire a portable skill, he became a andthoughtitwouldapplytowine. NakedWineswasborn. customer’ rathersellpavingstonesformyselfthan so far, the number has Foundation, found that charteredaccountant. A pitch to Virgin was rejected, but “Crowdfunding didn’t exist as a con- haveabig,corporateglamorousjob.” passed 400,000. individuals in full-time jobs, To policy makers and with degree-level corporations, the rise in education and a household entrepreneurs is a good income higher than thing – creating innovation, £34,000, are most likely to wealth and employment. become successful More to tech scene David Cameron, the prime entrepreneurs. minister, attended the The government could launch of StartUp Britain in do more to help them 2011, and the programme is launch businesses, it says, sponsored by businesses requiring bosses, for than London as including Dell and BT. example, to allow more But there is a caveat. flexible working hours so Many of today’s companies staff can start companies do not necessarily require while still in full-time work. cities transform large numbers of Although the millennial employees, whether they generation finds it harder are start-ups or not. to borrow from banks than Instagram, for example, older generations, they are into digital hubs was bought by Facebook more “self confident and for $1bn when it had only value driven”, Mr Moffatt 13 employees; Snapchat says. They are also more turned down a $3bn bid co-operative. Tech City UK Agency promotes benefits of other from Facebook when it had “Twenty to 30 years ago fewer than 30 staff. people who set up alone centres as well as the capital, writes Andrew Bounds “It’s not just start-up didn’t share ideas as they digital companies that were scared rivals would require relatively small steal them; we find there is hich city is home to the industry has gone digital, helped by numbers of staff,” says Iain a far greater willingness to UK’s only FTSE 100 the arrival of a large part of the BBC; Moffatt, who heads KPMG’s share,” he says. software company? and Birmingham has secured a new enterprise division, which Ms Hynes’ company, Which makes the com- development centre for Asos, the online has 25 staff advising on Kiddyum, is typical of a W puter chips that control fashionretailer. tech start-ups in the Silicon modern day start-up. the engines of half the cars made glo- Mr Grech warns against cities trying Roundabout area of There are no immediate bally? And which is the home of the to emulate one another. “Each has its The sky is the limit: views over Belfast from the Victoria Square commercial centre — Alamy London. “Even larger plans to hire any staff but developer of 2013’s best-selling video own DNA and councils need to under- companies can grow and she does use consultants game,GrandTheftAutoV? standthat.”Theyalsoneedtoworkwith Small is beautiful Investors use Northern Ireland as a test bed make an enormous impact some of the time. She has The answer is not London. For the thelocalleadersofthetechindustry. with relatively few people.” found backers and has the record, Newcastle is home to Sage; Bris- Universities also need to work more Emma Jones, founder of support of her husband, tol churns out the chips and Leeds is a closely with industry, he says. “Those Belfast has been successful at winning overseas resources such as lesson plans and strategic tools small business support also a chartered surveyor, baseforRockstar,thepublisherofGTA. growing companies have fast-changing investment, with its devolved administration able to help run schools. It was originally funded as a network Enterprise Nation, who has been able to bring As criticism grows that London needs. I still believe that we have a to offer grants and cheap loans; Sheffield cloud peace and reconciliation initiative between the agrees that start-ups – not in an income while she absorbs too much financial, political gap between the type of graduates that computing company WANdisco has opened an Protestant and Catholic communities, and still just digital ones – are launched the business. and economic power, the UK govern- universities are producing and the office there. Frank McGonagle of Wholeschool employs and trains disadvantaged youths. increasingly deciding not But for herself and for menthasbeguntonoticethetechsector typethatfoundersandCEOsarelooking Software says: “We do have an entrepreneurial set “Small is beautiful. If we can create an to hire staff. “We are seeing others, self-employment elsewhere. Tech City, founded to pro- for. We want to make sure they have of people in Northern Ireland. The recipe here is international hub of excellence and demonstrate small businesses expand remains a tough option. “I mote the capital and especially the Sili- applicableskills. good. There is a lot of foreign direct investment.” it, then we can sell that worldwide,” he says. by outsourcing and was very naive,” she says. “I con Roundabout area of Old Street, has “We have a moment where we can be The veteran Belfast entrepreneur says the small Wholeschool has clients in the Republic of Ireland subcontracting as opposed thought it would be become Tech City UK. This well-funded theleadingforceforinnovation.” size of the country can make it a great test bed. and is looking at the dozens of former colonies that to hiring permanent relatively straightforward public sector agency has formed an alli- Entrepreneurs who cannot find His company provides curriculum management still use the British schools system. AB employees,” she says. “This but it has been a long and ancewithcitiesacrossthecountry. funding locally should look overseas, is a way to grow as the winding road.” It has started bringing promising saysPeterHoptonofIceotope.TheShef- business remains lean.” Gill Plimmer regional start-ups down to people with field-based company, which has their online advertising results were group Servelec, while healthcare soft- The trend towards self- money in the City and has also worked invented an energy-efficient way of fictitious but that US ones were more ware supplier Emis in Leeds is collabo- employment is also todriveinvestorstoprovincialcities. cooling computers using liquid, has keen. Despite the US move, develop- ratingwithAppleonitsnewhealthapp. reflected in the UK’s These cities all have different areas of raised$10mintheUS. mentisstilldoneinLondon. Alex Letts, chief executive of Ffrees Office for National Power of expertise, but also boast cheaper “We have a different funding culture The UK capital is home to about Family Finance, says that he founded Statistics figures, one: Jayne accommodation than London, helpful compared to Silicon Valley. But if you ‘We have a 90,000 technology and digital compa- his company in Sheffield because of its which show that the Hynes local authorities and a pool of graduates get something international then fund- nies. Birmingham and Manchester have digitalandfinancialsector.Headdsthat number of sole — Rene Mansi fromtheiruniversities. ingseemstoflowovertheborders,”says moment about6,000each;BristolandBath1,400 the online-only current account pro- traders in the UK Gerard Grech, chief executive of Tech MrHopton. between them and; Newcastle employs vider has 30,000 customers and is add- is at its City UK, says London financiers are Even a London location is not a guar- where we about32,000peopleinthetechsector. ing 6,000 a month. Mr Letts, who has highest level starting to wake up to the opportunities antee of finance. Anthony Rushton, can be the Sheffield and Leeds are collaborating, raised £3.5m, said it had been easier to in almost outsidethecapital. chiefexecutiveofTelemetry,wasforced based on their histories. Leeds has a findfundinginYorkshirethanLondon. 40 years. “Weneedtodemonstratethestrength to open a New York base after his soft- leading long tradition of building societies and “In Sheffield, Ffrees found a really The of the tech sector in the UK, and that is warebusinessstruggledtowinclientsin force for banks,andishometomanyhealthcom- creativeandefficientofficeinthedigital most notjustLondon,”MrGrechsays. the UK. The company’s technology panies and NHS departments. Sheffield business park, providing us with scala- common Edinburgh has an edge in artificial detects fraudulent web traffic that gen- innovation’ has expertise in heavy engineering and bility on demand and low overheads. jobs among intelligence thanks to its university; eratesfalsehitsoninternetadvertising. Gerard Grech, specialist materials. Sheffield has pro- With two universities and a history of the UK’s Dundee is a centre for video games; Mr Rushton said that British busi- Tech City UK duced WANdisco, the cloud computing engineering, there is no limit to the 4.6m Manchester’s longstanding media nesses did not seem to care whether company, and infrastructure software potentialofthetalentpoolhere.” ‘Never mind the big names – has your mentor got the time?’

Advice live,”saysPeterJanes,founderandchief model in an intensive process”,he adds. Thornton, the global accountancy firm, able to match clients with consultants. we retain a banking relationship with executive of shopa.com, an ecommerce “When you are at the coalface, it is very is open to all fast-growth UK-trading “Chemistryisall-important,”shesays. Cisco today. Twitter is a more recent Start-ups must be selfish if marketplace. easy to think that everyone gets your SMEs with sales of less than £40m per When Saiphin and Alex Moore, example. Mr Janes decided that exposure to conceptasmuchasyoudo.” annum and growth ambitions of 20 per founders of Rosa’s Thai Café, wanted “a “The real test is when [you hit] the they are to make the most of seasoned entrepreneurs, the finance Shopa has raised what Mr Janes centperyear.Whileajoiningfeeispaya- fresh set of eyes on the business”, Mr bumps in the road, not when the busi- a business adviser’s support. community and peers in a competitive believes is the third largest Series A ble, match funding from the govern- Moore was sure he “didn’t want a con- nessisgoingwell.” environment would be “a litmus test for funding ever in the UK – just over $11m. mentisintendedtomakeitaffordable. sultant”,hesays.Itwasessentialthathis He points to initiatives by SVB to lev- Liz Bolshaw reports how we stood”, he says. He entered his “It has enabled the company to open an “Growth Accelerator brings together coach had successfully grown and erage the bank’s network of some company into IBM-sponsored Smart- office in North America and we are just fragmented advice in one place,” says exited a business – and Ms Marchelle 16,000 entrepreneurs and some 1,000 “Being a CEO is a pretty lonely place,” Camp – which identifies early stage launchinginChina,”hesays. Stephen Peacock, director of operations haddonejustthat. private equity and venture capital cli- says Gerald Brady, head of UK relation- entrepreneurs who are developing a An advisory board ideally comprises for business growth services at Grant TheywentontouseGrowthAccelera- ents. SVB hosts networking events, ship banking for Silicon Valley Bank – business – and successfully negotiated three or four “key people who can help Thornton. tor to help them access growth finance, offers clients a mentor network and whichiswhyyoumightneedanadviser. competitions in London (UK), Vienna you grow your business”, he says. “You The project connects some 3,000 with the help of coach Tom Kristensen. runs a joint incubator with MasterCard The principal advantage to an entre- (Europe) and finally San Francisco don’twantyesmen.” coaches with fast-growth UK-based Neither coach “wanted anything”, says inthefinancialtechnologyspace. preneur of mentoring, coaching and (world)towintheoverallaward. Growth Accelerator, a government- businesses.Theschemeworkstosolvea Mr Moore, and this gave their advice Mr Brady has this advice for busi- advicecanbeasmuchtocounteractiso- “SmartCamp not only puts start-up sponsored initiative run by Grant specific business challenge – be that objectivityalthough,ironically,bothare nesses seeking advisers. “Be aware of lation as for any specific need for legal, entrepreneurs in front of seasoned and strategy, leadership issues, finance or nowinvestorsinthebusiness. gettingbignames,”hesays.“Youneedto financialorstrategicadvice. networked advisers, but also connects internationalexpansion. Advicethatflowsfromexperiencehas be selfish. Have they got the time? Be “Withstart-upsyouhavetolearnvery them with the venture capital commu- 3,000 16,000 Barbara Marchelle, an entrepreneur becomeamantraforentrepreneurs. aware too that, as the business changes, fast and if you can eliminate a number nity,”MrJanessays. The number of Entrepreneurs in who sold her own business in 2007,says Silicon Valley Bank is, says Mr Brady, so does what you need of an advisory coaches Growth SVB’s network of options based on other people’sexpe- Competitions help a company “meet Accelerator has to who meet venture coaching for Growth Accelerator is a “narrowly focused on what we call the board. You may need to limit service rience you’ve gone a long way towards like-minded entrepreneurs and VCs connect with fast- capital clients at “second life”. One of the organisation’s innovation economy. We banked Cisco terms to, say, 18 months. Finally, never cutting down the timeframe to going who can really quiz you about your growth businesses the bank’s events strengths, says Ms Marchelle, is being when it was a start-up 28 years ago and forget:chemistrymatters.”