It seems very much the rage at the moment for companies to hire Non Executive Directors (NED). I am a big fan of these “outsiders looking inside“. They provide wisdom, guidance, help to raise the bar and introduce more robust systems and processes, help leaders make decisions and support change. In many instances an NED can help to open up new doors to finance and potential customers – help in the transition of growing up. If you are pursuing VC funding or PE finance then having a NED is often part of the deal.
One observation would be that many young companies appoint NEDs too early on in their cycle. They view them as the saving grace and the magic wand with all the answers. The reality is young fast growing companies should initially seek out a mentor or experienced person and trial the relationship before Companies House papers are signed. There are many individuals out there searching for NED trophies, it almost becomes their barometer for success – food for the ego!
My message to young growing companies who are seeking their new best friend, the NED, is be sure they can add value, be clear on where they can take you and most of all dont GIVE AWAY equity, people either buy or earn a stake in your company.
For the past ten years marketing experts and the finance community have stressed the importance and benefit of having an “elevator pitch”. This is the term, originating from the US, used to describe very clearly and concisely your proposition or offering. The elevator pitch is commonly used in selling situations, increasingly it has become one of the key tools entrepreneurs use to raise finance.
The Dragons Den format has dominated investments forums in recent years and it seems to be these events where the elevator pitch has greatest application. Just how effective is this pitching environment? – on TV we have seen many individuals face humiliation in front of millions. Makes great TV (not for me, as I personally can’t stand the programme). These TV styled events have got boring, local entrepreneurs (business angels, devils more like) with ego’s the size of planets, sit there in judgement of nervous individuals struggling to get their message out in three minutes.
Well in my view anyone who can make a financial judgement based on a three-minute elevator pitch must be a genius. The sensible and ethical investors I have come across avoid TV style pitching formats and spend time trying to understand the idea, the proposition, the person, the market, and the numbers. It’s a considered response based on a least a couple of hours of discussion. How many ideas get lost or fail to see the light of day because an individual can’t get their message over within 30 seconds to 3 minutes. Does that make them a bad entrepreneur?
Two serious and successful VC’s I have spoken to (one in the UK and the other from North America) have started to do away with pitching type events – instead they want to get under the skin of the ideas and the people. How refreshing!