Spinouts – Scaling Up


This blog was written for Spinouts UK Quarterly Journal 2015. You can join their distribution list by emailing research@ycf.co.uk

Most spinout companies from universities have the ambition to be companies of scale. If they are to win significant investment at an early stage, they will need to demonstrate that they have a ‘road map’ to enable them to establish a strong position in their chosen market.

However, this ‘road map’ passes through different stages, each of which places different demands on the company founders. Initially, the spinout founders will be immensely relieved to have completed the spinout process itself, with the knotty issues of IP ownership, and the relationship of the academic founders with the university. The next stage is generally one of spending (on prototypes, clinical trials, and other proofs of technology) rather than selling. As a very broad generalisation, academics in spinout companies are more comfortable with the ongoing research and development (which is in many ways similar to their academic work) than in market analysis, recruitment and team building, or the management of premises, financial records, and all the other administrative tasks which are essential to get a startup company on its feet.

The next stage is growth. For all young companies, whether spinouts or not, there are natural barriers to growth. Winning Pitch identifies the most important of these as the emotional cost and the financial cost.

The emotional cost to the individuals involved is usually manifested in self imposed pressure, and in the uncertainty that demands resilience and mental toughness to keep going when the inevitable road blocks are presented.

A scale up company is defined as one that grows its employee or turnover at a rate of 20 per cent per annum over a three-year period, and the financial costs of doing this can rack up very quickly – the cost of recruiting new talent, and of raising finance, professional fees, new premises, IT infrastructure and administrative costs can shoot through the roof. Costs must be controlled and the execution of a growth plan needs to be effectively choreographed – clear roles need to be defined, people need to be accountable for delivering on their tasks. Very rarely can growth be achieved without impacting on profitability.

This is why the majority of the 500,000 of last year’s new startups will never go on to employ one person never mind 10, and also why over 99% of UK firms employ fewer than 50 people. Very often it’s the financial cost of growth that holds individuals back.

What does this mean for academics spinning out a new company from a university?

The main point to recognise is that no one entrepreneur can build a business alone – it takes a team, combining the different skills needed to grow the business. The second point to recognise is that as the team grows, different leadership challenges emerge as the culture of the business evolves. At Winning Pitch we refer to the ‘growth staircase’, with different challenges as the number of staff increases. When the company reaches 7-12 people, the entrepreneur has become an ‘entrepreneurial social worker’. At 25 or more people, the business culture becomes ‘the team vs. the mob’. With 50 or more staff, the business needs to evolve towards a corporate culture, where processes need to be standardised and continually improved, with less scope for individual innovation. Individuals who can take a company through all these stages are rare indeed, and academic entrepreneurs do well to realise that at some stage in the company’s development, the business will be best served if the reins are handed over to others with practical experience of running a large and growing company.

Small company – punch above your weight!


Setting up a new company can be a daunting task. How do you differentiate? Stand out from the crowd? Overcome the challenges that come with the territory of an organisation that has no track record? No one really cares of what you did in the past, all that matters to your customer is that your are not going to let them down, go bust, or fail to deliver on time.

The secret lies in the company you keep and who you hang out with. If you are an ambitious start up find ways of aligning yourself to success and others with credibility (win-win is vital). This helps you punch above your weight and potential customers will be comforted with your partners. When I set up WP, I did it with my mate and top bloke Tony Walker from University of Manchester Incubation Company. Proving to him, WP was well meaning, no hidden agendas, focused on delivering results, passionate about helping entrepreneurs – it is assisted us gain credibility.

Punch above your weight, find the partners to align with and dont let them down – life is really very simple. Keep it simple and always stay close to your passion.

From Zero to £10M revenue in 7 years – how ?


I have been asked this question on more than one occasion. How did you do it? This blog is based on my own experience with Winning Pitch. Well this is my advice to anyone who wants to set up in business and build something of significance:

Have the ambition to change the industry or sector you operate in. A business set up because of a desire to change the status quo creates energy more powerful than you can imagine. The sense of purpose creates clarity and momentum. Be clear on your crusade.

Think big from day one. You need to have a massive dream and more importantly you must have the courage to believe you can achieve what you set out to accomplish. Make your intentions clear and write them down – courage and an ability to overcome fear will drive action and build momentum.

Develop a unique way of doing what you do. Make the delivery of your product or service stand out from the crowd; make clear unique aspects of your proposition. This delivers a memorable experience, one that others will acknowledge and communicate. Think – IP, brands and knowledge, these drive value.

If you are the founder, build a strong personal profile, however as your company grows provide a platform for other key members of staff to develop their own brand. No one on their own can build a great business – team is vital.

High profile customers provide a reference point for others to buy from you. Evidencing the impact you have delivered for existing clients will help to win more.

Hang out with like-minded partners and build alliances with others who add value to your proposition. Collaboration is an essential ingredient to success; always work on a win-win basis

Have a voice in the marketplace and become a thought leader in your industry. Have a view, have a voice and let the world know what you are passionate about, this will resonate with those you need to influence.

Have a mentor or coach – someone who you respect. This is a person(s) you can pick up the phone to and ask – what do you think about……..? Can I ask your advice on? They will give you an honest view.

Chose your advisers very carefully, trusted advisers are few and far between. Many of them are fee chasers and I have had so much bad advice from so called professional advisers. (YOU KNOW WHO YOU ARE, YOU COST ME, MY COLLEAGUES AND FAMILY LOADS OF MONEY!)

Use controlled experiments as a way of testing new ideas, products and services. If they fail, fail fast and move on, but do this in such a way that you don’t empty the till.

Manage your business as a shopkeeper; keep a keen eye on the cash. Be clear on cash coming in and cash going out. Never, ever lose sight of cash. Profit does not equal cash!

Immerse yourself in the “Customers World”- second-guess what they are looking for. The customer is not always right; they usually are not clear about what they want. You have to be one step ahead.

Be part of a community of other entrepreneurs – you will learn so much, far more than blogs like this one, books or training courses.

My thoughts only !

10 Principles for Growth


I have touched on these before and updated them for individuals who want to build a high growth business – this stuff really does work. The insight has been built on studying what the best do – I have used them myself and supported/encouraged lots of ambitious entrepreneurs to use them. If you are up for it then embrace them and go for it: The 10 principles:

Principle 1 – An ability to climb the growth staircase

Embrace change and commit to personal development, this facilitates smooth transitions along the growth staircase.

Principle 2 – Effective leadership

Highly tuned leadership and management capability lies at the heart of strong profitable growth. An ability to enthuse others, set and execute strategy is paramount. Internal and external leadership must be displayed at all times.

Principle 3 – Be future focused

Shared clarity of vision and strategy is a must have. A practical game plan with clearly devolved roles and responsibilities is paramount –success is based on 20% thinking and 80% doing. Iteration is vital and let tactics dictate strategy.

Principle 4 – Build a great team

Thinkers, sellers, doers and controllers provide the balance needed to gather momentum – create a culture where values and behaviours are aligned to delivering great service both internally and externally

Principle 5 – Disciplined systems and processes

Innovation and entrepreneurial flair must be tempered with the implementation of a robust set of disciplined systems, processes and controls. The appropriate dials on the dashboard (KPIs)will provide a real time picture of the company state of health. Finance, sales, pipeline, customer service – be clear on the crucial dials for your business. (Disciplined Entrepreneurship)

Principle 6 – Gain an edge through innovation and creativity

Drive innovation into the processes and functions of your company and practice alternative thinking. Be clear on your points of difference and embed a culture of freshness. Fusion of ideas to create new ones helps to drive the “innovative edge”. Have a voice in your sector – be seen as the movers and shakers.

Principle 7 – Build differentiated propositions

Differentiated propositions that stand out from the crowd win the day, they must be memorable – demonstrating and evidencing the difference and impact products and services bring to customers is a job well done. Avoid competing on price, as this strategy is not sustainable; compete on difference – IP, brand and quality.

Principle 8 – Live in the “Customers World”

By living in the “Customer’s World” real product and service needs are captured. This fuels a sales approach based on an authentic sense of purpose – it’s selling what you believe in and not just a product or service. Embed effective customer connectivity strategies within the find, reach, win, keep framework.

Principle 9 – A winning mindset

Condition your mindset to one of infinite growth and potential – Clarity, mental toughness, passion, determination, endurance, faith, sense of purpose, resilience, confidence. A BYC mentality – Believe You Can, is vital to gazelle thinkers.

Principle 10 – Have a mentor

Find connectors who can provide answers to the challenges you face – experienced mentors will help to raise the bar of performance. Be part of a like-minded network, this eliminates the feeling of loneliness – they will point you in the right direction.