In February, Capital Enterprise will be running or involved in a series of free events and special offers designed to inform entrepreneurs on the best and latest ways to finance a high growth business and subsequently provide those  with the  support and contacts to raise the money they need .

We have decided to theme the events and offers under the banner “Finance in Feb”. The full list is below:

1. Leading for Business Growth:                  

2nd February                  

2pm-5pm                  

@ UCL

Do you have a business model and management team that can achieve the type and amount of finance to fund high growth.  Not sure then you should consider signing up to this workshop led by specialist from  the world renown Warwick Business School  http://capitalenterprise.org/event-details/?eid=123

2. Angel Fun: 

13^th Feb                 

4pm-7pm                 

@ The British Library Conference Centre

The British Business Angel Association in partnership with Capital Enterprise will be running through why now more than ever is a good time to look at Angel Finance to fund growth-http://www.bl.uk/bipc/workevents/angelfun.html

We will look at the how the Government’s new Seed Enterprise Investment Scheme (SEIS) initiative will work in real life When launched in April this year SEIS will offer angel investors up to 50% tax breaks for a total of £100k invested in start-ups and each start-up that meets the criteria can receive up £150k equity investment under this scheme. There will be also an opportunity to question Angels on what they look for, how best to approach them and how they value an early stage business. On the latter point I do recommend you look at a recent blog by Seed Camp  or the following slide-deck

3. Finance in February

17th February

10:30-12:30

@UCL

Capital Enterprise will present its comprehensive guide to financing an entrepreneurial venture. The guide will be made available on the day and will run through:

A: Grants – They exist but only for the “chosen few” – are you one of them?

B: Tax breaks – What are they and why are they useful?

C: Borrowing – If not the banks, then where? If the banks, then how?

D: Angel and VC funding – Who invested in whom in 2011 – A look at 464 UK high growth SME’s who secured investment in 2011 and what it says to those seeking funding today.

E: What’s new? –  A look at the new online resources of funding, crowd funding and upcoming government incentives and sources of help.

Joining Capital Enterprises to answer your questions will be a panel of experts and entrepreneurs.

To book your place click here.

4. Business Bootcamp Lounge

21^stFebruary

6-9pm

@O2 Workshop Tottenham Court Road.

The next Business Bootcamp Alumni Lounge will feature short presentations and a Q&A sessions with a number of London entrepreneurs who have recently raised investment funding from Angels and VC’s. If you have not been before and enjoyed the drinks, nibbles and good company then please check up out here.  http://www.meetup.com/BB-Lounge/events/49243982/

5. The Beginners guide to the “Lean Start-up”. (or How to bootstrap a high growth business).

23^rd February

10am- 12-30pm                  

@ O2 Workshop Tottenham Court Road  

The Lean start-up method is now the preferred method used by Silicon Valley start-ups and high growth USA entrepreneurs. If you want to know what it is, why it could give you a way to reduce the risk and cost of starting an ambitious business and how you can use tools such as the Canvas Business Model to get going, then enrol now for this free introductory workshop.

6. Pitching for Management:

27^th Feb     

5-7pm                                    

@ Nabarro’s Holborn WC1.

Capital Enterprise has joined forces with Angel News to co-sponsor a pitching for management event for those potential high growth companies that need to find the right management with the right customer contacts to enable them to scale their business.  To find out more please check out http://pitchingformanagementlondon17-eorg.eventbrite.com.

7. Special Offer- Free  1-2-1 Business Planning support

Capital Enterprise has secured a deal with its member CEME, to provide registered businesses in London who are looking to raise money, with a business consultant in order to help them complete their financial forecasts and finesse their business plans and pitches. If you are interested then please e-mail john@capitalenterprise.org

I have just finished reading the Start-up Genome report produced last year by a team from the Universities of Berkley, Stamford and the VC Black Box on whether there is a framework for understanding why start-ups ( specifically tech start-ups in Silicon Valley) succeed or not.

It is very interesting reading and I hope to incorporate many of the findings into future bootcamps particularly the Tech bootcamp and the “ Getting Started in Business” tasters events that I am happy to announce we  will be running with the Computer Science department of UCL and Imperial in the next few weeks.

There is a lot to digest especially concerning the 4 models they report tech start-ups can be segmented into and the subsequent different guidance and expert support services that companies that fall into one of these categories require. But I thought I would blog the summary of their overall findings and suggest that anyone who is interested should check out the report on   https://www.startupcompass.co/)

So here goes. The Start-up Genomes report key findings for tech entrepreneurs and the investors and mentors who support them are as follows:

1. Founders that learn are more successful-  Start-ups that have helpful mentors, track metrics effectively, and learn from start-up thought leaders raise 7x more money and have 3.5x better user growth. (The most important finding and lesson for anyone starting an ambitious business although given the sample size the exact numbers ( e.g. 3.5 x ) should be taken with a pinch of salt. )

2. Start-ups that pivot once or twice times raise 2.5x more money and have 3.6x better user growth, and are 52% less likely to scale prematurely than start-ups that pivot more than 2 times or not at all. (To pivot means to fundamentally change strategy to make sure your product fits the needs and demands of target customers. A pivot will require you to fundamentally change  what you are offering to customers, or the channel to market or the customer segment who will be your initial market. So it is good to adapt to market feedback but if you do it too often it is for obvious reasons not a good sign)

3. Many investors invest 2-3x more capital than necessary in start-ups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.

4. Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A but it does suggest that the role of mentor and investor are significantly different.)

5. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.

6. Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven start-ups than with product centric start-ups. ( N.B. The Y-combinator model suggests the ideal team has a combination of people with sector knowledge/ credibility, business capability and sufficient in-house technical ability to get the product/service designed, made and delivered.)

7. Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric start-ups with no network effects than with product-centric start-ups that have network effects.

8. Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

9. Most successful founders are driven by impact rather than experience or money. (So they say)

10. Founders overestimate the value of IP before product market fit by 255%. (A classic example of endowment fallacy)

11. Start-ups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely. ( From first-hand experience this rings true)

12. Premature scaling is the most common reason for start-ups to perform worse. They tend to lose the battle early on by getting ahead of themselves. (Whether it is more important than other strategic decisions is debatable. Bad management decisions and the lack of market demand are the main reason business fail and or under-perform)

13. Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.

14.B2C vs. B2B is not a meaningful segmentation of Internet start-ups  anymore because the Internet has changed the rules of business. ( A kind of tautology but I agree that tech businesses can be divided between those who can use the web to complete the sales/distribution cycle ( such as Google) and those who still require a real world sales function to convince a sceptical customer to buy ( such as Sage)

The report (based on a very small sample size) also  believes there are  6 stages that allo entrepreneurs go through

1. 1.       Discovery

Purpose: Start-ups are focused on validating whether they are solving a meaningful problem and whether anybody would hypothetically be interested in their solution.

Events: Founding team is formed, many customer interviews are conducted, value proposition is found, minimally viable products are created, team joins an accelerator or incubator, Friends and Family financing round, first mentors & advisors come on board.

Time: 5-7 months (average for all types)

Amount of External funding required: ( mostly from friends, family or fools) as $10-50K (or $7-35K)

1. 2.        Validation

Purpose: Start-ups are looking to get early validation that people are interested in exchanging their money or time/attention on the product.

Events: refinement of core features, initial user growth, metrics and analytics implementation, seed funding, first key hires, pivots (if necessary), first paying customers, product market fit.

Time: 3-5 months (average for all types)

Amount of External Funding Required: Seed investment of between $100-1.5M ( £75K-£1m) depending on type of start-up.

1. 3.       Efficiency

Purpose: Start-ups refine their business model and improve the efficiency of their customer acquisition process. Start-ups should be able to efficiently acquire customers in order to avoid scaling with a leaky bucket.

Events: value proposition refined, user experienced overhauled, conversion funnel optimized, viral/ sticky/ profitable promotion driven growth achieved, repeatable sales process and/or scalable customer acquisition channels found.

Time: 5-6 months (average for all types)

Amount of External Funding Required: 0 -recommended to wait until stage 4 until raising.

4) Scale

Purpose: Start-ups step on the pedal and try to drive growth very aggressively.

Events: Large A Round from Venture Capitalist, massive customer acquisition, back-end scalability improvements, first executive hires, process implementation, establishment of departments.

Time: 7-9 months (average for all types)

Amount of External funding Required: $1.5 – 7M depending on type. There is not much difference in the capital raised between stage 2 and 3, which is to be expected in our model because in Stage 3 a start-up should be focused on efficiency and there’s no need for excess capital beyond what was raised in stage 2.

5) Profit Maximization (not assessed in the Start-up Genome report)

6) Renewal or Decline (not assessed in the report)

I hope you agree all good food for thought.

Why is the “New Year Resolution- Starting a business bootcamp” not like any other Start-up programme and if I do attend will I know anymore than can be gleamed from downloading a few fact sheets on the Business Link website? Well you sceptical “Jeremiahs” I think our programme is different and better and will give you the tools to assess whether you or your business idea “has what it takes” to at least have a good chance of succeeding in 2012 and this is why:

1. The whole bootcamp is built around the business canvas model. If you have not seen it before do take a look below.

Most start-up programmes use the traditional business plan as their template but by using the canvas model we can isolate the essential requirements for success, visualise them, and see how they connect and review and adapt the model created to fit the evidence from our market research.  The Business Canvas model gets the would be entrepreneur to ask the essential questions on “Value Proposition”, “Key Resources”, “Cost Structure Strategy”, “Partnership Development Methodology” “Channels to Market”, “Key Activity Metrics”, “Growth Models” and “Revenue Projections”. If this jargon all sounds double dutch then come to the bootcamp and we will tell you what they mean in simple plain English and in simple plain English help you to understand how they can be used to build a roadmap to being a successful entrepreneur.

1. The first part of the bootcamp will look to use the latest research on the personality of a successful entrepreneur, explain why agreeableness and empathy is important, provide tips on how to cope with uncertainty and manage risk (intrinsic if you are going to be an entrepreneur) and show you how to map out the skills and resources you will need to make your business successful.
2. The bootcamp will get you to work in teams with your fellow would-be entrepreneurs so that you can share experiences and tips. Each team will have, as a mentor and advisor on the day, an experienced entrepreneur or expert who will be on hand to offer guidance and help you validate your idea.
3. The bootcamp will get the teams to take an idea from one of the would-be entrepreneurs and within 45 minutes attempt to turn that idea into something that could be successfully launched on to the market.  What we are hoping to do is to give those who attend a taster of the dynamic and successful Launch 48 programme that does something similar (admittedly in significant more depth and over 48 hours). It will also be taster for the “Bootstrapping  a high growth business bootcamp”  which kicks off in February.

This is why I think the New Year Resolution Starting a Business Bootcamp is sufficiently different from what (at least in London) has been attempted before. But because some of you will want to have some good old fashion information and advice on starting a business we have also reserved a timeslot in the bootcamp to:

a)      Have an audience Q&A with the “brain trust of 12 or more advisors” that together should be able to answer any question any would-be entrepreneur could possibly ask about starting a business including  advice and info on legal, tax, finance, support etc

b)      Provide a quick run through the sources of help, funding and support on offer to businesses in London.

Also we will be handing out basic start-up guides and an updated 1000 offers for start-ups in London factsheet.

So where is the catch I can hear you say?  Well there is one and it is to do with the fact that this is the first time we have tried to do something as ambitious as teaching the latest business techniques to the general public in such a short period of time, and we are particular concerned that there is a possibility that the “launch 45 minutes” could make us all fall flat on our faces.

On the plus side, the fact that this is the first time we have tried this bootcamp should make it fun and interesting to anyone looking to start-up an ambitious business in 2012. Still not convinced then perhaps the fact that the bootcamp is free of charge (a £10 deposit is required but you get that back if you turn up) and that we are offering copious amounts of Pizzas and drinks perhaps should perhaps sway the undecided.

Finally, if you are still not convinced that the New Year Resolution- Starting a Business Bootcamp is “not just another start-up programme” then simply do not come. I still hope you still start an ambitious business in 2012 and wish you all a very Happy and Prosperous 2012.

Britain is one of the easiest places to start a business in the world so why attend an event like the “New Year Resolution Getting Started in Business Bootcamp”? This is a question I asked myself when Natwest suggested that we put on start-up workshop  early in the New Year to take advantage of the phenomena that the biggest spike in interest in starting a business occurs in the period between boxing day and the first day back at work.

If it is factual information you require to help you get your business up and running, you could do a lot worse than checking out the Business Link start-up website. There checklist and guides may be a little too simplistic for my taste but they were certainly cover the basics and video case studies I think are quite impressive.

As I said for the vast majourity people, starting a business in the UK is easy. Unlike certain countries in Europe you do not need permissions from a Chamber of Commerce or to purchase a trading licence from the government. All you need to do is to notify HMRC, choose your company structure (and if you are going to set as a “Limited Company” you can pay £18 and register on-line at Companies House) and purchase your insurances and you are away.  Of course it can be slightly more difficult if you are looking to set up a business as a gun trader, or seller of hazardous materials or wish to sell food you have cooked yourself to the great British public. For then you will need to comply with a number of quite reasonable if burdensome regulations designed to stop you killing yourself and your customers.

Nevertheless the point remains, that there are over 4 million self-employed workers in the UK (3.5 million businesses with one or less employee) and many of these businesses will not have their own websites, will not operate a business bank account, will never earn enough in a year (at present £73,000) to be forced by law to register for VAT and will never need to raise or borrow money.

In fact it is so easy to set up this type of lifestyle business that the DWP reported in the last quarter that over 166,000 people did so, making self-employment account for over 70% of all job growth in the UK. Most of these businesses we classify as “skillpreneurs” because they have a skill (a clean driving licence) that they can through a channel to market (a mini-cab firm) sell to the public. Can they make sufficient money is another matter, for the facts are that most will earn less than the average UK salary. (If this is you then I do recommend you check out working tax credits  for this is by far the largest government contribution towards helping small businesses survive in the UK and perhaps the major reason why people are deciding to go self-employed even when the prospects of earning a good regular income seems so poor).

What about the rest?- Those who want to start a business to make an impact, or have an idea for a product/service that could change a market , or feel that if the employment market is making them consider starting a business, they might as well find out how they can do so in a way that could make  them significant amounts of money (and as a by-product create the jobs and wealth that will keep UK PLC afloat). These people are what we call potential entrepreneurs and if they are going to overcome the quite substantial barriers to start a business that has ambition then they may be up for obtaining some extra help and know-how.

So if I was an entrepreneur why would I give up my precious time to come to another start-up bootcamp? (albeit one that is free of charge and promises drinks and pizza). The answer to that is that I wouldn’t unless I nothing better to do or because it was entirely new programme that could:

1. Give me more information and insights into starting a business than can be downloaded for free from a website.
2. Allow me to assess whether I have what it takes to be an entrepreneur or whether I could really see myself enjoying it.
3. Give me the latest management thinking, techniques and tools that will enable me to structure my idea, develop it into a business and validate whether it would work. ( The high level stuff that is taught in quality business schools, tested in the real world and not the platitudes you get from certain websites or TV programmes)
4. Give me an opportunity to meet and talk to some interesting people who could help me become an entrepreneur, source a customer, obtain finance etc.
5. Give me a supported pathway ( if I do decide to become an entrepreneur) to a host of support and offers that will make it easier and cheaper to start my business.

Finally, if I was going to attend a 3 hour workshop I would need to know that it will be fun, interesting, and participatory and that I would not be sat in a seat being lectured too for the whole duration.

So you will not be surprise that is what we intend to do with the New Year’s Resolution “Getting Started in Business Bootcamp”. In the next blog I will tell our potential entrepreneur readership more on how we are going to do it, why it has never before been done this way, why we may be crazy but we think we can get people to launch a proper profit earning/ job creating business in 45 minutes and who will be there to support you to make it happen.

The final tip bit I will leave you with is that the latest research published in the Autumn found that of all the 5 big personality traits (e.g. extroversion, neuroticism, adaptability, conscientiousness etc)  that psychologist use to classify us, the one trait that has the  most impact on the likelihood of being a successful entrepreneur is “Agreeableness”- that is you need a high degree of empathy so that you can walk in the shoes of other, see through the eyes of your fellow man, know what they think and are thinking and then  turn this insight into making the world a better place, or alternatively some easy to make product/service you can sell to them for a healthy profit.

The true message of Christmas.

So how do you go from a handful of beans to one enormous stalk that leads to a new land (admittedly full of giants) and a crock of gold? A fairy tale that entrepreneurs often find they want to believe in and bring to life but is it possible? Well there are “rules of thumb” that future Jacks can apply from if they want to bring about those “exponential growth stories that apparently allow a handful of beans to be turned into amazing wealth.

(Exponential growth is an idea that sales double and carrying growing so that 1 becomes 2, 2 becomes 4, 4 becomes 8, 8 becomes 16, 16 becomes 32, 64, 132, 264, 528, and so on).

The usual conditions that allow this pattern of exponential growth to occur are found when you have a “Gold Rush” or more rarely when you originate and put into the market a new “disruptive” technology or business model that undermines the present/ traditional market relationships between established companies and their present or potential future customers. (i.e. you but a bomb under the present cosy market players that blows it all sky high)

A “Gold Rush” scenario occurs when you introduce a revolutionary new technology (such as the smart phone) or new regulations (Carbon Tax levies) or when there is large on-going socio-demographic trend (such as growth in the number of OAP’s) or just changes in taste (fads such as disposable fashion) that will create a whole new set of customer demands that some new and existing market players can compete to serve.  Most business advisors and investors have seen entrepreneurs quote market reports predicting massive growing markets for their type of product. Growing demand and potential shortfall in supply can create the perfect conditions, where in theory anyone who can stake ( and defend) a “claim” in this new and growing “Gold Rush” market will make money. There is “Gold in those hills” and all you need to do is to be one of the first to enter the market on sufficient scale to literally strike gold.

But as everyone who knows a little history will recall, most gold prospectors end up losing their shirts. Some will emphasise the need to have “Insider” intelligence and the necessary resources to have so called “first mover” advantage if you are going to make money from the upcoming “Gold Rush”.  Others point out that in a “Gold Rush” it is better to make and sell the picks (and thereby make money from each miner) then to try a build your own gold mine. Most business plans I see, from ambitious new businesses, will make some, if not all the above claims, but even then it is invariably not sufficient to obtain the funding or support that entrepreneurs think is necessary to make their plans happen. After all to sceptical investors, stakeholders etc (in this story, Jack’s mother, if you are still following this laboured analogy) your business plan can seem like an unlikely fairy tale.

The same applies to “disruptive” technologies and/or business models. After all, for every Google Adwords or Twitter there are many more failed search engines or failed social networks. So what is the secret to growth?

You may rightly point out that if I new the answer to that question then I would not be working at Capital Enterprise. And you would be right. My own history as an entrepreneur(one failed business, one moderate success and one “Zombie” business that cost a fortune to set up and for the past 3 years has just about broke even) attest to this opinion. But nevertheless I do think that there are “rules of thumb” that if applied will, I now believe, increase your chances of growth.

Firstly, have a “value proposition” that has been developed through real life contact with your customers. Customers are an unpredictable lot, so to reduce your chances of failing to produce a product or service that they will actually want or buy, you are well advice to build, launch, test, measure and adapt until you find a “value Proposition” that customers will buy in their droves. This is why I am a convert to the lean start-up model and increasingly less enamoured with the “develop a business plan,-raise funding-then launch the business on the unsuspecting market” start-up model.

Secondly, have or develop a well-balanced management team. I am a big fan of the “Y” combinatory model that suggest management teams need to have a combination of someone with

1. Technical know how to create, build and deliver your product or service to customers.
2. Industry know-how so that you have the insider knowledge, contacts and brand credibility to reach and convert your target customers.
3. Business “Know-how” to develop and deliver a profitable business model.

Which brings us on to the third essential which a scalable growth model. If there is one persistent criticism from the Business Angel and Venture Capitalist constantly report is that they find it very hard to find in the UK, business models that can be scaled- that can be predicted to grow exponentially.

There are 3 main strategies or business models that have a chance of creating “exponential growth”:

Viral- Where each new customer you acquire brings along with them at least one other customer. Twitter is a fine example of a “viral” product where intrinsic to how you use Twitter is that you get your customers, colleagues, friends and family to also become users. Products go viral because of their nature, because they are easy to use and share ( being free of charge helps here) and because you are motivated to get others to share your passion.

Stickiness- The classic and most tried and tested growth strategy in that it means that your customers keep on coming back for more so that you have very low customer churn. This means that in most cases every new customer is an addition and not a replacement for a past customer that no longer uses your product. How to lock-in your customer’s loyalty is the key to stickiness growth strategies and that means they are often more suitable to businesses who have achieved a strong foot hold in their market.

Acquisition (Marketing)- The final growth model is to acquire customer through effective marketing. Let’s face it, this model can be expensive and unless your unit cost of customer acquisition (how much you spend on marketing to achieve a sale) is significantly lower than the profit you make on each sale then quite frankly this is not for you. There is a reason why local high streets are increasingly dominated by coffee shops and fast food outlets or why prime time TV advertisement space is dominated by companies selling insurance or perfume and the reason is “high margins”.

So these are my tips for budding Jacks with dreams of turning a “handful of beans” into gold. We at Capital Entreprise are also prepared to put these words into action by funding a series of new pilots in the New Year:

1. New Resolutions- A Bootcamp extra event on the 5^th January for those wanting to find out whether starting a business is for them. We will use the Y combinatory analysis to test out whether they have what it takes as well as getting then to work in teams to see if they can launch a new potentially viable business in 45 minutes  (if that is possible).
2. Bootstrapping Bootcamp- Led by Sal Virani of  Lean camp fame, the bootcamp will teach the lean start-up methodology and support budding entrepreneurs to fast track there products to market and develop a “scalable “business model
3. Tech Bootcamp- Yes a bootcamp for the biggest gold rush in town.

So go to www.thebusinessbootcamp to check them out. Fairy tales can come true…. Perhaps?

The BBC is reporting that the Chancellor will announce in his autumn statement a new version of “Credit Easing” that will mean that the government will underwrite money borrowed (by the banks on the international wholesale markets) if the banks exclusively agree use to use the funds raised to lend to UK SME’s. Great. The BBC predict that it should reduce the cost of borrowing by about 1%. Great again but it will not get banks borrowing and here’s why.

Firstly the banks have on deposit from UK SME’s at least 3.5 times as much money as it has out in loans to UK SME’s. ( In London the ratio of deposits to loans is even bigger at 10-1). Banks do not need to borrow as the SME market is a net cash generator- a position that is likely to get more pronounced as the banks forecast that UK SME’s will be paying down loans at least twice rate of new loans issued to SME’s. Banks therefore, are not short of cash, they do not need to borrow from the wholesale market but they will need to increasingly lend if they are going to make a profit.

Secondly although the cost of borrowing is a factor at the margins the real reason why banks are not lending and the reason why businesses report difficulty in obtaining money to fund growth is risk or more accurately the banks refusal to take any. Banks are refusing to either price loans against the real risk of default ( i.e. charge a lot of interest for riskier lending propositions) or abandon a fetish for security or assets to underwrite the value of the loan and therefore most entrepreneurs looking for growth capital ( a brave thing to do in these uncertain times) cannot find it from the banks. Why banks are not able or willing to change their lending criterion to meet the demands of businesses for growth capital (whether it be lack of real business expertise in the bank or fear of bad publicity) requires thorough investigation. But as it stands even the government underwriting loans seem insufficient for the banks to change.

Finally, it is fair to say that the reason why businesses are increasingly desperate for bank lending is not to fund growth but rather to bail out business models that are losing money due to lack of domestic demand. Lending good money after bad is not a god policy and businesses in this situation should really be seeking expert advice and turnaround support before they approach the bank.

The suspicion is that “Credit Easing” is a policy to bail out the banks (allowing them to borrow money cheaply on the wholesale market and thereby being free to use the money on deposit from UK SME’s for other purposes) and not a policy to help fund investments from UK SME’s. If this is not the Chancellor’s intention then i would advice him to:

A: Offer the same money to financial institutions other than banks such as CDFI’s or new SME lending organisations such as Market Invoice

B: Underwrite funding only for investments in SME’s with credible growth plans that by there very nature will be more risky. Get the banks or other to price that risk and then get the government to jointly underwrite the loan with the lending institutions. This would open up the market for financial products like convertible loans ( loans that can be converted into shares and vice-versa). Even if the interest charged on these loans was very high (20%+) there will still be many takers since it will be still a lot cheaper for the entrepreneur than seeking equity investment from angels or VC’s.

C: Fund good quality business advice services. If banks lack the expertise to understand what is a good growth lending proposition then fund bodies that do and if businesses are running failing business model in need of being turned around then offer that service for free or at a heavily discounted rate. If the government does not have the money to do so, put a compulsory levy on lenders and investors to ensure that the service is available and then get the market to force the UK’s so called entrepreneurs to use it.

None of the above would cost a fraction of the £40 billion pounds and moreover they may actually work.