Sharing the lessons of starting a business
IF ALL you need to transform your brilliant business idea from a spare bedroom operation to a potential stock market star is cash then here is the secret to getting your hands on it. “Be honest and transparent”.
That, according to Danny Moore – a former chief operating officer of NYSE Technologies and an entrepreneur – is what it takes to unlock the hearts and, more importantly, wallets of venture capitalists and angel investors these days.
Moore, who now runs Northern Ireland headquartered Lough Shore Investments, has just a little experience in this field. He was at the helm of the Belfast-based trading technology firm Wombat Financial Software when the New York Stock Exchange acquired it in a deal worth €146 million in 2008.
He also helped Northern Ireland land its biggest ever ICT jobs boost when NYSE subsequently pledged to create 400 jobs in a satellite office in Belfast.
In Moore’s experience, no serious potential investor has not “got sold a pup or a litter of pups”, which is what makes them cautious and perhaps even more so in what he describes as “the current economic climate”.
Not that this has dissuaded him from seeking new companies in which to invest and he is confident there “is a genuine entrepreneurial spirit” in Northern Ireland and throughout the island. His plan for Lough Shore Investments is to bring “10 great companies to exit or IPO by 2025” and he is constantly on the lookout for the next one to add to his portfolio.
In the meantime, Moore is keen to sell the story of small private equity firms and share the lessons he has learned. At InterTrade Ireland’s 11th annual venture capital conference at Belfast’s City Hall – one of his key pieces of advice to budding business entrepreneurs was to “have an angle”. It is no use having a brilliant business idea if you do not know what to do with it or how to project it.
Moore believes there are five fundamentals to running a successful business – particularly if you are just starting up:
prioritise face time with customers and partners;
any ambitious organisation should always be “doing deals”;
never take your eye off “product and engineering”;
a commitment to team building and leadership;
always look at the big picture.
But while it may be exciting to dream of the future, he also warns that no company can survive if you do not look after the “boring stuff”. Focusing on fundamentals is one of the most crucial elements of securing business success.
Aside from being honest and transparent, Moore believes it is important for entrepreneurs to be patient and consistent when it comes to cash management.
He said anybody looking for investment funds needs to be more than convincing when they are pitching their ideas.
“Major on proof of traction. The best stories are based around revenue acceleration. The founding teams has already got the business up and running but needs to augment the balance sheet and invest to scale sales.”
Moore also believes that, while it is important to be ambitious and aim high when you are starting out – you also need to realise that telling tall tales to potential investors will not bring in the cash.
“Be realistic about projects and valuation. Take outside advice,” he cautioned.
“Many 11th-hour collapses stem from investor unease about either the valuation or the integrity of the founders.
“To make it big in the medium term, entrepreneurs need to understand the power of compound growth – it is a concept that’s fundamental to growing a customer base, cash flow, team, balance sheet and retaining equity,” Moore also warns.
“It’s all about base hits and RBIs [in baseball] – take the base hits and the home runs will come.”
Fundamentally, success is built on hard work, consistent hard work, Moore said as he told the 250-strong audience at InterTradeIreland’s venture capital conference.
“Get the small calls right and grind out the results consistently, day after day, week after week, year after year,” he said.
It is timely advice with the launch of the annual £25,000 competition this week in Northern Ireland that aims to find the next pioneering business entrepreneurs.
The awards organised by NISP Connect want to discover innovations from Northern Ireland’s hi-tech community and shine the spotlight on the potential next generation of hi-tech stars.
Neil Buchanan, a team member of last year’s winner Flish, said the £25,000 awards represent a huge opportunity to “learn how to sell your research as a commercial venture and exposes you to the business world”.
Potential business stars of the future have until April 20th to make themselves known to NISP Connect.