Member Article

What makes an entrepreneur? Ask the Fund Manager

By 2022, evergreen investment pot, The North West Fund, hopes to have supported 800 businesses, created or protected 14,000 jobs and added £300m to GVA in the North West region.

The £155m fund hopes to occupy a space that isn’t currently filled by the banks, to help businesses who are struggling to find financial support.

£45m of the cash pot is handled by fund managers Enterprise Ventures, who deal with The North West Fund for Venture Capital as well as the Mezzanine Fund.

Bdaily spoke to Enterprise Ventures’ chief executive, Jonathan Diggines about what he looks for in an entrepreneur, “zombie businesses“ and what he thinks lies in store for the banking sector:

“If we’re not inspiring entrepreneurs with the idea that they could get some funding, then that’s very disappointing and we’re not doing our job properly. People are remarkably entrepreneurial and switched on.

“Years ago I used to lecture and tell people what venture capital is, you don’t have to do that now. Everyone’s watched Dragons’ Den and The Apprentice, and people are far more entrepreneurial in their approach.

“But I mean, what does it take to be an entrepreneur? It can sometimes be bloody mindedness, it can be ambition or greed… And they’re not always the most redeeming features, but you’re looking for it.

“We are very much charged with getting the money out, investing it effectively and getting it back with a return for our clients. That’s the hard part, [especially] with the economy like it is.

“Generally we’re looking at people who’ve done it before, and if they’ve not we’ll look to put extra people into the teams, such as experts and mentors. We certainly don’t just bring cash to the table. We’re experienced investors.”

Jonathan explained how its not just the innovative, shiny startups with brand new ideas that they’re looking for. Quite the contrary, he said they are far more comfortable looking after the middle man:

“We’re interested in management teams who are sat in what a lot of people call a “zombie business”, which is a business that is going nowhere, working for the bank, maybe under the wrong ownership…

“The management then need to think, “I’ve been here for five years now, what are we going to do with it.

“We’re not trying to break businesses up, but I’d like to inspire some people who are doing a damn good job at the moment, who’d like to be doing it for themselves.

“That’s what we call management breakouts, which is a very interesting place to go. It’s very important for the UK economy that those sorts of deals are done.

“Ultimately with zombie businesses, they’re not going to go anywhere and nothing will happen unless somebody backs them.”

Jonathan spoke about how Enterprise Ventures and The North West Fund aim to help businesses who are unlikely to gain bank funding, and what he hopes will happen in the future within the banking sector:

“As a fund manager, we’ll take more risks than the banks, which is entirely right and proper. We’re not there to compete with the banks, we’re there to find businesses who would struggle to raise money.

“I want to see private capital come back into the space where the banks have left. I think, personally, the banks have had enough money thrown at them.

“Net lending to [SMEs] has reduced and reduced, and that’s not going to change. I’m not blaming the banks, but what I want to see is other sources of private capital brought into this space.

“I also want to see the emergence of new, regional banks. But that needs to be supported by the public sector.

“I see it as a mixture. The state can’t fund it all, but they can encourage private funding into those areas that need it the most.”

This was posted in Bdaily's Members' News section by Miranda Dobson .