With banks shutting off the funding from innovative start-ups, despite promises to lend, private investors are stepping in more eagerly than ever, says Mark Nayler
With banks shutting off the funding from innovative start-ups, despite promises to lend, private investors are stepping in more eagerly than ever, says Mark Nayler
The entrepreneurs scattered around Mark Mason’s Hall at the Beer & Partners Investment Fair on Thursday looked a lot less terrified than those who come trembling into the Dragon’s Den on TV. Beer & Partners CEO Michael Weaver described the fair – which is being held three times in 2011 due to increased demand (it was twice in 2010) – as ‘Dragons Den without the humiliation’, and it’s not hard to see why.
The scene greeting potential investors was a room full of passionate business people locked in animated conversation about their products, rather than bathed in sweat and floundering under the crossfire of an impatient multimillionaire’s inquisition.
And, despite the current straightened economic times, investors looking to back innovative new companies with their own cash are plentiful. One investor browsing for a new project at yesterday’s fair said that recessions are, in fact, extremely good circumstances in which to invest: ‘These are the best times – nobody else is in the market. Banks have moved out although, in my opinion, they should have never been in the market in the first place. This is high-risk stuff.’ He has invested in around twenty companies over the last four years and some of his most successful investments were made in 1991 which, as he pointed out with some satisfaction, was also a recession year.
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According to Weaver, investors have been joining Beer & Partners at the rate of one a day for the past couple of years. Beer, which acts as a kind of corporate introduction agency, now have over 1,730 investors on their books with a pooled total of around £3.2 billion to invest. And they have plenty of choice when it comes around to deciding where to put their capital.
Beer & Partners receive around 3,000 applications from start-up companies every year and the people responsible for roughly 1,500 of those, says Weaver, ‘shouldn’t be allowed out on their own’. The workable concepts are carefully picked by Beers’ nationwide network of associates and their creators’ financials are checked out, before they are added to the books. Only 100 make it this far every year.
One wonders at the business concepts that don’t make it: just how crazy are they? One of the more certifiable inventors Weaver has heard from in recent years was after £10,000 in order to build his perpetual motion machine. He didn’t make the shortlist.
But some of those that did are no less exciting and inspiring. Duncan Coles, co-founder of North Sea Recovery, a company that specializes in retrieving sellable commodities from the 4,700 shipwrecks languishing at the bottom of the North Sea, had a stall as yesterday’s fair. He described the buzz of his profession as ‘coming after days of monotonous research and going backwards and forwards looking for something. Then you find it, you get down on it, and that is what you’re looking for. It’s incredibly satisfying.’ The same buzz must have been felt by investors who walked away from Mark Mason’s Hall yesterday having found what they were looking for.
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