Looking like an Entrepreneur.

There is a look - the look of the entrepreneur. It is hard to define - a crystal-clear and steely-strong look, that comes with a calmness and a fathomless confidence. It's not bravado, it's not ego - it is the antithesis of both. But when you see it, it is worth recognising. 

I have just spent sometime meeting clients in London. After day two it suddenly struck me, as I was flicking back through the meetings flahbacks,  that all of these people had a similarity - they had that look. It is one I remember encountering first back in 1985 when I ventured out into the world of start ups. But I didnt recognise it then. It's unmistakable but hard to define and it cannot be simulated. I suppose my best attempt would be to describe it as like the perfectly still rock pool. Clear, calm, deep and powerful. Even after the wind removes the image, the calmness returns time and time again. It is immutable.

This is something you cannot recognise unless you meet someone face to face. Video doesnt carry it. A group meeting doesnt always reveal it. Eye to eye, one on one, close contact, is the only way. It bears no relation to physical looks, although it is clearly present in demeanour and presentation. It strikes you within a minute of meeting - or it is not present. Without that look, the chances of a start up succeeding on a scale that makes an investment worthwhile, is pure chance, with the odds stacked against it.

To make sense of this where we are now in the altfi world, you have to realise that most ECF investment is raised without any attempt to see if this look exists. When the wind blows and the look is disturbed - it doesnt return and your investment is lost.

When Crowdcube for example use referrals as a major source of new campaigns - handing over around 2% of their stated 7% commission to the referer, you can see why the platform is so chockablock with rubbish. People who work at CC, in senior management roles, are not experienced enough to know the look. How could they be, when they have had just a couple of 16 month jobs with the likes of Virgin Start Up. Misusing the Branson look is not helpful. Yet Virgin Start Up are one of CC's main referers. You can see the problem.

We can do so much better.

We need better business skills if ECF is to work

Basic business skills are not out of the reach of anybody willing to do the graft. But you cant just make stuff up and hope that when it comes to the crunch it will just work like magic. Throwing a couple of eggs at the cooker will not make you an omelette.

The latest pitch to launch on Crowdcube looks quite promising in a small but compact way. Timbergram have a track record of three years of climbing sales, they have made profits and the team are ideally suited for the product. They have a non ludicrous valuation, which makes a change.

However, when you are attempting to drive your sales in such a cut throat mature market, you do need to spend some money on marketing. And if you are going to service customers at a level which helps your growth (rather than one that hinders it) you do need to spend money on staffing and administration.

This company currently sells 100,000 'cards' pa and is looking to increase this over 3 years to 1m. The marketing, administration and personnel budget only increase 2/3 times with this growth and that is from a small base. The sales increases are largely driven by overseas markets which in effect will be far more expensive to service.

Ignoring the ambition to increase EBITDA from Yr1 18% to Yr3 48%, partly as a result of the non spend above, would be foolish if you were an investor. Likewise making the mistake of using mass market card sector data to project potential growth when you have a niche, up market card come gift offer, would be the same.

We see no reason why this outfit shouldnt do well but it will not follow the projections on the Crowdcube platform. A basic understanding of how these things work is essential - just plugging in the same expense figures for 3 years for key areas like marketing and customer service is a little daft when the sales figures are flying.