Start ups BQ Live Debate

Start ups BQ Live Debate

LD Taking PartBarclays had assembled a room of key people from across all sectors and areas of the West Midlands who were clearly focussed on the development of an entrepreneurial ecosystem for the region to make it the UK’s most attractive area for aspiring new businesses and setting out a clear plan for supporting innovation, aspiration and growth. After introductions around the table, Tim Virgo, relationship director for Barclays Corporate, started the evening off by setting the debate in the context of the region’s huge growth.

“My real passion is supporting clients through their journey from early stage right through to scale-up and beyond. It is about bringing together this eco-system through the fantastic people in this room. But rather than just focussing on the stage of the journey and how supportive the bank is, we will try to find solutions and workarounds because the bank supports with finance, but that is not the only solution. We are looking at business angels and crowdfunding as things that will sit alongside the conventional banking routes because we know that solutions don’t always fit neatly into certain boxes.

“There is a concern that the provision of support is a bit contrived and perhaps the flow needs to be a bit more easy. Whether it is at places like iCentrum or The Latitude Club, we should meet more regularly and tap into what businesses need.”

Steve Walker, chief executive of ART Business Loans, said there were pluses and minuses to the existing system: “There is a real quality about some of the support out there, from the likes of Entrepreneurial Spark and sometimes from the universities – although they do tend to hide their light under a bushel.

“But I have also been ashamed going into some areas like Alum Rock that are really interested in innovation and were keen for someone to go around and see them, but they don’t have a clue what is happening about a mile down the road at Innovation Birmingham in Aston.”

Robert Hallmark, CEO of male grooming company Gruhme said there were great opportunities in the West Midlands, but he added: “There is as danger of the corporates being too generous and an expectation of that needing to be the case for start-ups. Instead, I think it is a case of miniaturisation and that small is better rather than some of the awards dinners I have been to where the winner gets £12,000. Better saying you have all made the shortlist and give 300 a nod rather than one because there is a danger that that money will be spent on offices and staff and that there will be huge issues with overheads a few months down the line.

“The finance I am using at the moment is 60 per cent interest, but it is so accessible if you just need £250 at a time or £1,000 a month because start-ups often need flexible, small amounts that you can get at quickly.

“This approach also helps filter out the noise and seed the successful ones. Certainly, there are some bad lenders out there, but that is the advantage of this coming from someone like Barclays – there is already a trust in the community.”

Prof Monder Ram, director of the Centre for Research in Ethnic Minority Entrepreneurship at the University of Birmingham, said: “In the policy arena, the word is ‘growth’ because you can’t really get business support without messaging your offer as growth – and you can understand why that is the case.

“Most entrepreneurs don’t want business support, I agree a lot of them are lonely people and part of quite a closed network, so it is the arrangements that facilitate the start-up - what is around it - that is really important.

“When we talk about business support often the conversation pivots towards access to finance and I think that is really unfortunate because if you look at the evidence, finance is not the problem - firms that want the money get the money. This is a great event from Barclays, but I would bet my substantial mortgage that most of those Alum Rock, Sparkhill and Balsall Heath businesses would not have heard of it. They have their own eco-systems and that is really problematic.”

Jodie Cook, MD of JC Social Media outlined her approach to mentoring and support, telling her fellow guests: “I use the phrase ‘useful people’ a lot because I try to be a useful person
myself and I surround myself with useful people and try to turn everyone I work with into a
useful person.

LD 03“There are people who see solutions rather than problems, and challenges, not obstacles. I think it is a mindset but there is also an element of it that you can train. Entrepreneurs are probably already those sort of people, but we need to create more of them, which will never happen with anyone who just goes into ‘transmit’ mode and tries to tell them how something will be done. But it can happen with coaching.”

Whisk CEO Nick Holzherr was identified as one of the region’s ‘useful people’ and said there was an ‘amazing’ amount of talent in Birmingham. “We have found there are great clusters of innovators in the likes of Digbeth and the Jewellery Quarter, but they don’t really talk to each other – and there are probably quite a few other areas that we haven’t even heard of, which is a massive issue.

“One thing we are all picking up from this is ‘what do we mean by support or mentorship
and how can legal, accountancy and banking firms help?’.

“The key thing here is that the people who have helped me are entrepreneurs who have made it and are now either retiring or investing their money and they can talk from experience and help me with pretty much any problem I’ve got, whether it is people, money or business plans.

“The legal, accountancy and banking firms all have access to these people because those are your clients and they are willing to help, but they are not put in touch with the people who need that help. The bigger companies can be the connector between the people who have made it and the people who are trying to make it.”

Emphasising the personal approach which is so important for a mentor, he added:  “We don’t really need people to write profit and loss accounts or deal with massive legal issues or legal products when we get templates online for free.”

Rich Westman, founder of digital health and well-being platform Kaido, said he owed a lot to the e4f incubator at Innovation Birmingham.

“We were started at a coffee shop in Shirley, and we weren’t getting out of Shirley anytime soon had we not come across this programme. It is an amazing initiative, but there are a lot of people stuck in there and they are quite happy to keep their desk and keep coming up with ideas.

“Our approach was to get out of e4f as soon as possible and get commercial credibility and raise the finance we have in just the last two or three months because of corporates opening doors for me rather than going through seven layers of an organisation to get to the person who is going to listen.

“There is a great opportunity in collaboration, but I wouldn’t have known about iCentrum or Innovation Birmingham, so I wonder how many people are stuck in Costa Coffee in Shirley
with a brilliant business idea but can never get it out anywhere?”

Shana Owen who runs Brightlet, a digital lettings and property management company, paid tribute to her hosts, saying: “We have been successful in building brand awareness around our product only because of our relationship with Barclays. People think we are credible because Barclays thinks we are credible and that strength applies to all the big corporate who have the contacts. We are looking for partnerships, collaborations and JVs with some of the people on your client lists.

“For us, it is about enabling those connections to happen – get us to the right people and give us the opportunity to show what we can do. Brightlet doesn’t see itself as only a regional or national company, we know there is scope for it to be international and being connected to a big corporate brand will enable us to get where we want to be.”

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Tim Virgo replied: “One of the things we are trying to build is an angel network at iCentrum and people have wrongly assumed that is about access to finance – but in reality it is all about that connectivity. We are very conscious of wanting to support that network and bring people in not just from the city, but from across the UK if they can help your proposition and link you into the right CEOs.”

And Ray O’Donoghue added: “iCentrum’s work has been amazing for what is a small platform for a very few fortunate businesses that have got on there. I think it should be embraced and scaled to a place where everyone else can benefit from it.”

That need to scale up the region’s offering was echoed by Nick Holzherr, who said the target should be those Alum Rock entrepreneuers: “When we go to those places where no one has that experience and tell them basic stuff about Seed Enterprise Investment Scheme tax relief for someone who has put some money into a business they think it’s great and ask what it is and I think ‘surely this should be common knowledge among our network.’”

From the corporate side, Graham Nicoll, strategic director at KPMG, said: “So many of the successful entrepreneurs come from an ethnically diverse background, whereas if you look at iCentrum or a lot of the hubs in Birmingham, as a rule you are not getting the diversity of gender or race or religion because of this knowledge gap. I don’t think it’s a matter of
trust so much as a basic knowledge of the available networks because to some degree they tend to follow in the footsteps of their parents or those who influenced them in their upbringing, not necessarily because of their jobs but because of their networks. It’s about access, availability and awareness.”

Alan Lusty, MD of engineering firm adi Group, applauded the role of connectors, putting the right people in touch with each other. He said: “If I was asked how often I ‘touch’ the 17 MDs I work with, I will be lucky if I touch them for three hours a month, which is not enough, but for me if I can touch them for one hour as a mentor outside my own business then that would give me a personal achievement.

“As to whom I would trust to be connector, the banks touch everyone, the entrepreneurs and the businessmen. Would I go out and find someone? No. But I might meet someone around this table tonight that I could work with because there is a similarity in our stories. If I was just given a name of someone and told to go and mentor them, that is much more difficult. “I couldn’t give someone I mentor three hours a week, but I’ll be on the end of a phone for them 24/7.”

LD 01Irwin Mitchell partner Chris Rawstron said his firm and Barclays were largely dealing with established businesses. He said: “If what we are talking about is addressing the diversity issue and getting down to a connection with real start-up businesses, we have to find another way of doing that and I am not convinced that is through professional services firms or financial institutions.

“Maybe you have to create a new platform specifically targeted at the winners of tomorrow because there are a lot of start-ups that you could waste a lot of time with, to be quite blunt. And it is a matter of trying to find people who really want and will value the input, whether that is through mentoring or advice. There are a lot of people in our organisations who play a really valuable role in terms of providing continuity with people who need some permanency in a relationship. It is about having a single point of contact with someone who understands them and their business.”

Steve Walker agreed and added: “It is a two-way stretch because the people who are being mentored have got to understand the value of that mentoring and want to grow their business, because a lot of people just want the sympathy to get to the point where they might think about growing.

“I am surprised this is still an issue, but it is, and not necessarily from the start-up stage but how they get to the growth stage after one or two years. Some academics say they are looking for ‘gazelles’ but they don’t always come from where you might think, they come from other places and going to those other places is a difficult thing.

“We have gone out to 45 of our clients who we think have growth prospects and offered them a mentoring service with mentors lined up trained and ready. Five of them bothered. We had that ten years ago and it is the same now.”

Prof Monder Ram said: “Since 2010 the government effectively retreated from the business support arena, stopped the funding and in its place is a whole host of new institutions with the banks and corporate institutions really occupying that space now. I think that is to be welcomed because, frankly, they have a lot more credibility than public sector support groups. A couple of colleagues around this table have said what they want from a mentor is someone who has been there, done it and got that inside information.

“We set up a network of black entrepreneurs ten years ago and when we put them in touch with mentors, who they wanted was someone who understood their culture as well as being a real success in business. I think that kind of interaction is missing.

“I went on a study tour to New York in early 2000, and we looked at Hewlett Packard and JP Morgan and Ford and when we asked them how they identified community engagement CSR – which can be mentioned in quite a sceptical way - was part of their job description, so if they didn’t spend a certain amount on it each year that would affect their bottom line.

“JP Morgan had small firms incorporated into their supply chain and knew the demographic of their customers so they were in an eco-system which incentivises commercially-oriented engagement between the corporate and SME sectors.

LD 02

“My university is a half-billion pound business, an anchor institution which can influence what happens in the locality. If it leveraged its own resources it could have a massive impact on the SME community. It could have a transformational effect in territory that could be profitably mined.”

Shana Owen agreed, adding: “Generally, entrepreneurs are extremely passionate about what they do and we know that we are surrounded by talented people who are just as passionate and what we do in Barclays’ Eagle Labs is that we bounce off other companies and find a lot of synergy in what we are all doing. We collaborate in terms of ideas, which is something you can’t get in any other sort of arena.

“Most of us have the ability to white-label our products which enables us to essentially pin them to any corporate eco-system, so that is something we would like to explore.”

Rich Westman of Kaido admitted that if he was one of the two-month old Costa Coffee start-ups he mentioned, he wouldn’t have gone to bank like Barclays for help growing his business. He said: “There is a culture that as a start-up, you start small and there are usually contacts internally and you don’t think you should reach out too far in case you lose your IP or you burn a bridge. There needs to be something like iCentrum where the corporate are actually saying ‘this is available to you’ because people can get stuck for far too long in a really small confined space thinking they have got to go alone.”

Joel Blake, the founder of CSR advisory firm Cultiv8 Solutions – who was later  applauded by his fellow guests on his recent OBE for services to business support and enterprise - said: “What I am hearing is a lot about this term ‘corporate innovation’ being bandied around, but it has to mean something for Birmingham in a really localised sense. I made a few notes about the three Cs – culture, commerciality and confidence.

“We need to challenge the culture within organisations so their staff can learn more entrepreneurial skills to bring the right level of creativity and innovation, which brings confidence to make better decisions and engage with the wider eco-system in the silos out there.

“The commerciality side is the bottom line – it’s all about numbers and we can’t get away from that, so how are we linking all this activity with those numbers? And if it is not about the monetary value, how are we creating other value for the communities we are supposed to be serving? “But if there is no confidence at executive level to take these risks, how are you going to create change in the deepest, darkest communities in the city and help people feel confident enough to have these conversations?

“We can put on our game face all the time, but the reality is that we need to be honest about what we are trying to achieve at the end of it. My own eco-system has been built around relationships because I only want to work with passionate people and harness that passion to make something happen in an organisation. I also look for evidence of impact – how did you do it, what did you learn and simple things that have a direct effect on your business holistically like ‘how do you handle date night with your wife?’.

“There is also peer accountability through which you can build the trust and the bond we have talked about. And then conditioning – we all come from different backgrounds of experiences and knowledge, but how often do we embrace those conditionings – good and bad - and have an honest dialogue about them?“That human relationship builds a really collaborative eco-system. If not , then it becomes all about bureaucracy and European Social Funding, and Brexit, which are all things we have to deal with – but let’s get down to the basics.”

Steve Walker then told the room there were 39 Growth Hubs across the country, which prompted Nick Holzherr to underline one of the challenges for the region by admitting he didn’t know what a Growth Hub was.

Steve summarised it as a new form of Business Link, “a signposting that is supposed to be the focal point of putting people in touch with information about what is on offer in terms of business support and access to finance, staffed by the Chamber of Commerce and the University of Birmingham, Birmingham City University and Aston.

He added: “But there is an irony here in how many people don’t know about it because that it is the major tool that is being used, but Birmingham is different – go and look at the Black Country and Worcestershire, where they have appointed someone to make sure they engage with all parts of the private sector and the public sector. If everyone engaged with it and bought into it here, then it would still be the major tool.”

Joel Blake questioned whether it was a matter of a decision being made in isolation ‘We think people need that – give them it’, and Graham Nicoll agreed the strategy might not be right and suggested the hub was focussed on access to finance and still had some way to go to ‘catch up’ with the  way things were done elsewhere.“What do people want - probably not what it is trying to deliver as its priority,” he said.

Tony Davis, commercial director of the West Midlands Academic Health Science Network, outlined his approach: “At the NHS we looked at joining together with the other NHS bodies around things like the Growth Hubs and what the LEPs were doing and using all that landscape and traditional architecture.

“That could be a way of us in the NHS using our resources for economic growth and development and the route we have chosen to go down is to follow the corporate. So the support we have given by sponsoring the digital health hub at iCentrum is not so much about the financial support, but about the proximity to market, so we can articulate the challenges of the customers, pull in innovation and tailor the start-ups that are being created.

“They can then talk to the NHS and fully understand the space they need to inhabit – so it is not all about the incubation, but the wraparound that goes with it. We also launched an SME investment fund, which took me two years to get through the board at the University Hospital – you can imagine the discussions with the finance directors.

“But again, this is also about the message that the NHS is investing in some of the things that we think are the solution, rather than wait for the Growth Hubs and the LEPs and other organisations that spend all their time sorting out their  infrastructures before they go out to companies and start asking what they want.”

Looking at the increasing role needed to be played by the private sector,  Graham Nicoll said: “I need to defend the Growth Hubs slightly, in that they have one person who is trying to set up, drive and run it, so it is a resourcing issue.

“When I set up a business when I was 18, I went to the Prince’s Trust and the money was useful, but the most valuable thing was for firms to have mentors who can open up networks. I think if I had just gone to the banks, I would only have had the money.”

On behalf of the banks, Ray O’Donoghue said: “I have been around our 1,000 employees and have a list of Barclays people who want to be mentors across a whole spectrum of businesses and, after this dinner debate, I will task my  relationships team to ask their clients which of them would also be mentors. Then we will have a database - but what do we do with it after that?”

Nick Holzherr said it should be available in buildings like the Custard Factory in Digbeth and the Big Peg in the Jewellery Quarter that had become landlords to thousands of business across the region, and Jodie Cook said there should be a marketing campaign for a Barclays’ Little Black Book.

She said: “This lists not only Barclays customers, but also the people who you know or have met, and to have access to the book they have to have met Ray  or his team so you know what they are looking for and can match the right people with mentors who have the right amount of time or expertise. It is absolutely not a directory that people are formally on, but rather it is about facilitating conversations.”

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Prof Monder Ram outlined one way his team was taking its resources out to the front line of Birmingham businesses: “We are developing an initiative now where we will embed ourselves into three areas – Sparkhill, Lozells and Balsall Heath – for about 18 months not only to support, but to integrate the businesses there into a number of Birmingham eco-systems so they become part of the city’s USP. I think that needs partnerships, and to have a stellar bank alongside us adds huge heft.

“As Jodie says, it is about brokering relationships, but also embedding it into a culture, incentivising it and making it something that employees routinely want to do.”

Joel Blake added: “I think it is also about understanding the communication methods, and tech has a huge part to play in that because digital is across all sectors. We need to harness that technology to become an engagement, supportive and mentoring tool.”

Alan Lusty said for him the pairing of companies and mentors was a key issue: “My business was seven years old before I could say it was established, so mentors may be able to do more with someone who has already been there for three years and has some stability and momentum.

“It is important if we are going to be matching mentors because I could sit ten or 12 new starters in the room, but I would rather spend time with a company that has got a quarter of a million pounds invested and could lose it all. And whoever I am with, I’m with them for the journey, because in the early days I was crying, but I couldn’t turn to anybody at 3am in the morning when we are at our most vulnerable.

“A mentor is a support mechanism, but he or she is also my friend and the ones I had 25 years ago said some things to me that have got me through tough times even now.” The consensus around the table was that which mentors went to which companies was a crucial part of any solution, and that would be helped by  some form of informal collection of mentors with their various skills, availability and sector specialisms.

Joel Blake summed up the aims and challenges of the debate by saying: “There are people in places like Handsworth who have no clue about what we are talking about, and have no interest in it because their own eco-system is about surviving. The commonality between those two worlds is about human relationships – what are we doing to encourage people to be themselves so that they are comfortable enough to feel vulnerable, because there is a strength in vulnerability. We need to create this eco-system that is natural, comfortable, chilled out and all-inclusive. Our future workforce in this city is those people who live 20 minutes away.”

In their own closing remarks, both Rich Westman and Shana Owen said how important it was that the voice of the entrepreneurs – with all their widely varying needs - wasn’t lost as a structure to help them was being built. Nick Holzherr said mentoring by video conference was an option that should be explored to cut back on time and travel constraints for some mentors and their firms.

Chris Rawstron said the private sector had a massive role to play in engaging  with businesses and realising the opportunities among the West Midlands’ 660,000 SME businesses.

For Barclays, Tim Virgo emphasised the value of making marginal gains and everyone doing their little bit – perhaps just an hour a week - to make a difference, and Ray O’Donoghue said there had been a lot said about the time people invested in mentoring and helping other businesses, so he was particularly grateful that the guests had given even more of their time to make the debate such a success.

Supporting the high growth eco-system

Birmingham has been acknowledged as the second most entrepreneurial city in the UK for the last two years and Barclays wants to support, and make life easier for budding, entrepreneurs throughout their journey.  With this in mind, Barclays is now in situ at the new iCentrum site within Birmingham’s growing knowledge quarter, working alongside the likes of Centro & Catapult Transport Systems and Digital Health, a NHS-funded West Midlands Academic Health Sciences Network. We have deliberately chosen this site to enhance our offering and support for high growth and entrepreneurial businesses within the Midlands.

The iCentrum building hosts Barclays’ new Eagle Lab which is a combined ‘maker space’ and ‘incubator’, providing both the physical tools and expertise to allow early stage and established entrepreneurs to really flourish. Apart from the new debt and digital products the facility also incorporates unique co-working spaces, 3D printers, digital cutting equipment and modern connectivity, rapid prototyping equipment. ecosystem networking, mentoring and coaching, digital product showcasing, and entrepreneurs in residence.

There really isn’t anything else quite like this in the city centre and this presents entrepreneurs with a unique opportunity to commercialise their ideas and concepts. The opportunity to set ‘tech challenges’ and work with established and new-to-market businesses alongside the academic community to help solve these should create something special and truly enhance the region’s intellectual property and brand.

Tim Virgo, High Growth & Entrepreneurs, Barclays

Published: 09 September 2016

Article by Mike Hughes
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