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ARM Innovation Hub
17 May, 2006 - 12:42 By Staff Reporter

Gauntlet is thrown down over lust for aggressive cash pitches

As the £1m ‘Running the Gauntlet’ competition was launched in the East of England last week – inviting companies to pitch for funds to a panel of investors – the director of a top Venture Capital firm advised budding entrepreneurs that the VC community generally took a less dramatic approach to funding negotiations than was often portrayed.

As the £1m ‘Running the Gauntlet’ competition was launched in the East of England last week – inviting companies to pitch for funds to a panel of investors – the director of a top Venture Capital firm advised budding entrepreneurs that the VC community generally took a less dramatic approach to funding negotiations than was often portrayed.

Aggressively titled pitches such as ‘Running the Gauntlet’ and the televised ‘Dragon’s Den’ might convey a more bloody process than was the norm, said Laurence Garrett, director of 3i in Cambridge.

“While the concepts of the two initiatives are quite different, there is a danger that entrepreneurs might think they have to have fire breathed at them to secure finance for their business ideas.

“The Apprentice- Dragon’s Den style of programme makes good television but in reality the funding process is far softer than that and more collaborative. In the real world, entrepreneurs are challenged in a polite fashion.

“If the producers filmed 10 of our meetings there would not be enough drama in the whole lot of them to make one good TV programme.

“VCs generally are looking for something different to the ‘brolly vending machines’ style of invention seen on Dragon’s Den. We look for globally disruptive technologies and generally these are presented by a group of people rather than individual entrepreneurs.

“They are often introduced by a friendly third party and many of the best ideas incubate over a long period of time.

“We have had many investments which have taken quite a while from the date of the initial meeting to convert to deals. Everything is done in a much less confrontational way than is often portrayed.

“The average time for an initial, introductory meeting between a VC and an entrepreneur to discuss the potential of a technology is an hour-and-a-half in the UK. Even in America, where people assume the process will be more aggressive, the average time of this initial meeting is 45 minutes.

“The Americans tend not to bother with fripperies about the state of the weather, but my experience there is that they are equally polite and non-confrontational.

“The other important thing in any business pitch competition is to ensure you track the companies who aren’t successful in your particular pitch.

“The particular idea you see may not be eye catching but the people presenting it may be the stars of the future with other ideas.

“You simply don’t burn any bridges in the investment community.”

3i used to run a business competition with The Times newspaper and then there were no television programmes covering entrepreneurial issues.

“From that perspective, it is good to see initiatives that raise the profile of entrepreneurial activity,” Garrett said.

“But in doing so, it is important to put the challenges across in the right manner. The object cannot be to crush the individual concerned.”

Another prominent local investor told me: “The object too often these days seems to be humiliation. That is not how it happens.

“Someone should look at the track records of some of the entrepreneurs doing the judging and some of the ideas that don’t win funding. It would open a few eyes.”

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