This article was created for Spinouts UK Quarterly Journal, published December 2013. For the full publication please click on the link.
At some time or another, every successful entrepreneur will be asked the same question. What is their secret? However, for most new ventures, the basis for success is no enigma: strong IP and good investment – the foundations upon which great businesses are built. Today’s spin-outs are already in possession of the former but the real mystery often surrounds the latter: how to secure funding. Key to this is the addition of a third element: investable talent.
Enhancing the leadership team with someone experienced in both the sector and the early-stage lifecycle can be the biggest accelerant to a company’s growth. But how can a spin-out venture attract this kind of talent? In pursuit of the answers, Intramezzo has conducted a study* into the aspirations and motivations of today’s business leaders.
One of the recurring findings of this research is that, for many, the opportunity to take on a seminal role in a business at a formative stage is highly compelling. In fact, the study revealed that the desire to build something new had been the most influential factor in our respondents’ career choices to date, with 30% citing this motivation. Furthermore, nearly half (44.4%) confirmed that, when considering a new proposition, a challenge was the most important thing they looked for. The potential for equity or wealth generation also ranked highly here (25.5%).
However, offering a suitably attractive compensation package can be a stumbling block for many start-ups. For example, a world-class executive may command a salary that an early stage venture simply could not compete with. It is worth noting, therefore, that our survey revealed that 83% of business leaders would consider a reduced remuneration package if there was an opportunity to participate in equity.
This is interesting as it demonstrates that, by offering share options and exciting exit potential, even the smallest and youngest of companies can attract an experienced, investable individual.
Furthermore, the study went on to reinforce the increasing appetite for entrepreneurialism – with 73% saying they would be prepared to take mitigated risks for a venture they truly believed in.
Of course, while bringing in “investable talent” can be pivotal to building a successful business, investing talent can provide an even greater boost in getting a venture off the ground. This is not uncommon practice – half of all respondents had made a financial equity investment and 38% had made a sweat equity investment. A separate study of Intramezzo’s Investing Director programme showed that 86% planned to make an investment in the next 12 months and that the majority of people (57.7%) were interested in opportunities to invest alongside holding a role in the business.
What this research has demonstrated is that most spin-outs and start-ups already possess the tools necessary to craft a highly compelling proposition: the opportunity to build a new business, participate in equity and lead an exciting exit strategy. Understanding how to attract world-class talent is key to ensuring a venture is able to translate strong IP into good investment and, ultimately, become another entrepreneurial success story.
*To read the full report, please see: Business Leaders Survey 2013
– See more at: http://www.intramezzo.co.uk/news/30/64/Intramezzo-in-Spinouts-UK-Quarterly-Journal/d,basic-archive.html#sthash.3C2bzHyh.dpuf