Recent interviews with Oxfordshire based entrepreneurs and those who support local entrepreneurs, have revealed that the current climate for entrepreneurship in Oxfordshire is; “healthy and more exciting than ever” says David Mott – Partner at Oxford Capital.
Oxford University has always enjoyed a superior position in the global world of academia, and particularly in the life sciences space. The numerous Oxford University life sciences spin-outs are well known and include the likes of; Adaptimmune, Genomics plc, Oxford Nanopore Technologies, Oxitec, and Oxford Immunotec. Commercialising University based research brings significant revenue both to the University environment, and also has a massive and positive knock on effect towards the profile and available funding for all other enterprises. 2015 witnessed a ‘game changer’; the arrival of the new Oxford Sciences Innovation £320m fund, bringing additional high profile backers and expertise into the local ecosystem. But it’s not just life sciences which fuels Oxford’s reputation. Harwell, Culham, Begbroke, Milton Park, and the Oxford Science Park host a plethora of engineering, physics, energy, internet and software based businesses. Oxford also enjoys the additional pull of Oxford Brookes University and the Saïd Business School, both globally renowned academic institutions, and with their own courses and funding for supporting entrepreneurs. Additionally it seems that the current generation of bright, ambitious students are choosing to start their own businesses instead of leaving to join big corporates.
There are other factors which make Oxford such a desirable location for entrepreneurs. It is close to London and major airports. It is near London, but much more attractive in terms of overall quality of life (housing/schools/rural). Oxford also benefits from its vibrant and high quality support framework for entrepreneurs – industry sector clusters, membership bodies (eg OBN), angel networks, and professional services (eg legal, accountancy, marketing).
Most importantly, Oxford is home to many successful entrepreneurs and those who support entrepreneurs. ‘Success breeds success’. Recent listings/sales eg Oxitec, Sophos, NaturalMotion and Circassia all add to the momentum of Oxford as a destination of choice for budding entrepreneurs. I asked those I spoke to what advice they would give regarding some of the key fundamentals of starting a successful business:
Funding
It seems the key to convincing those with the cheque books that you have a winning proposition is not a well drafted business plan, but that you have identified who your customers are and most importantly that you have engaged with your target market to shape and validate your proposition. Investors want to see that you “understand your customer, what their problem is and how you intend to solve it” says Matthew Arnold – Principal at Oxford Sciences Innovation. Investment might come via local VC’s, Pitchfest (or similar), or angel networks but Marcelo Bravo’s (CEO – PharmaScience Group Plc) advice is don’t just engage with local investors. Find out globally which firms/people are investing in your space, and go and talk to them – even if that’s US firms or further afield. An unsuccessful investment pitch might be a signal to re-evaluate your proposition, or to head in a different direction for investment – ask for feedback. “Don’t be afraid to pivot!” says Tony Hart - Oxfordshire LEP. Of course some ‘ideas’ need more capital to get off the ground, particularly science/technology product based businesses, but in any event bargain hard when negotiating equity ownership. Sage advice from David Mott is not to focus on fund raising at the expense of generating sales. “Sales is the cheapest form of equity”, he says. If you can delay fund raising until your business can demonstrate real momentum in that area, there will be less need to dilute equity in exchange for investment. 1st round funding may cost the business owner(s) 20-30% of ownership. Sue Staunton – Partner, James Cowper Kreston encourages exploring the EIS and SEIS schemes for offering tax efficient investment opportunities for investors.
Common mistakes
It is heartening to hear, that even the most successful entrepreneurs have made some mistakes along the way. Here are some ‘do’s’ and ‘don’ts’:
A brand follows a great service or product, not the other way around
Avoid projecting your hopes for the product or service onto your customer; what do they actually want?
Natural inertia means that your product or service has to have enough of a differential on the current market to warrant customers using you, and to ensure others don’tcopy what you are doing
Failing to understand your customer – be the customer yourself
Don’t delay getting early professional help and advice eg legal and accountancy advice, for the sake of saving early costs – it will save you in the longer term
Your product or service doesn’t have to be perfect before your launch – go for a ‘beta launch’, or is it possible to pitch and sell your product or service before it’s fully developed?
Try doing a ‘Mum test’ before you pitch your business idea! If you can clearly and succinctly describe and explain your business idea to your Mum, then it’s more likely others will get it
Don’t settle for people who are ‘fit for purpose’. Aim to hire the best that you can possibly afford
Be wary of bartering equity in return for expertise – you might regret it later on!
Entrepreneurship can be a financially risky – be sure you are clear from outset what your financial objectives are.
People
“Often you require the skills and experience of people who are in the corporate world but often these people are just not capable of functioning in the start-up environment. People who have the corporate background and have transitioned to a start-up or emerging company environment, people who have experience and can succeed in both worlds, are like gold dust.” (Dream, Design, Surf – Marcelo Bravo).
Entrepreneurs might hope to tackle all business challenges themselves, but repeated advice is that getting a great team of people around you early on pays dividends. These might be paid professional advisors, business mentors, or board directors. Nicola McConville – Partner at Penningtons Manches, highlights the importance of finding expertise from firms who can provide you with a truly international network, and given that any successful business is the sum of its people, founders like investors need to be focused on attracting great talent.