“Congratulations! Here is £9000!”
Four sentences and a few numbers on a page is all it took for a start-up incubator to award my business £9000 of taxpayers’ money as an unsecured loan.
Dishonest money dwindles away, but whoever gathers money little by little makes it grow – Proverbs 13:11
People often say it is hard to raise money for a start-up business. That’s because it is. The difficulty of the process appropriately proves out the passion, desire and relentlessness required to start and sustain a company. But you probably already know that. And it is for that reason that my business partner and I turned down the £9000 loan, knowing we probably wouldn’t get as much from another Start-Up Loans provider. But let me start from the beginning.
For those who are not in the know, the Start-Up Loans incentive is a government-backed programme to fund tomorrow’s business leaders through the early stages of their venture. And so, with excitement and trepidation, we attended a Start Up event, where we could acquire such a loan by the end of the day. The venue was packed with about 80-90 loan-seeking entrepreneurs, which made me wonder, “how will they get through everybody and deliver their workshops with only 3 members of staff?”
After 5 hours of workshops and with one hour of scheduled time left, my question was answered. We had to discuss the intricacies of our business idea, budget and plan with a member of staff and a group of other applicants gawping at us. When I say discuss, my pitch was interrupted after 5 seconds and the member of staff didn’t ask about either of our backgrounds; to this day, he doesn’t even know what my business partner’s voice sounds like! After 5 seconds of the pitch, and 3 questions about a budget without the contextual backing of my business plan, we were offered a £9000 loan, plus a mentor that we could only have group sessions with. Any one-on-one time would come at an additional price.
I’m not saying I wanted to recite my business plan back to front, or be given 30 minutes to thrash out all of my ideas before I received funding. But the careless nature in which we were offered funding is a cause for concern. Can you really discern the capability of any given business to succeed and flourish in the space of 3 short minutes? It is more than likely that some people received funding that day, who will not be able to pay that money back, let alone use the funding to successfully grow a business. It is great to see the government offer such accessible avenues to start-up funds, but is this initiative really going to help create a generation of future business leaders? Or will this lead to a few big wins but ultimately saddle even more debt on young adults, whilst the loan providers smile with the commission made off of the loans sitting in their accounts?
In my opinion, it is not access to funding that young entrepreneurs need the most. They need dedicated mentors; someone that will hold their hand through this process, give them access to their network and expose them to the hazardous world that is running your own business. Someone who handles 8 start-ups in a group setting is not a mentor. At best, it’s an opportunity to network and watch each other grow. There is nothing wrong with that, because the support and encouragement would be great. But how can you develop the parent-like relationship that many people have with a mentor in that scenario?
We are now in the process of acquiring funding through another Start-Up Loans provider. One that we will probably get less money from, but has already added significant value to the planning of the business, because there was allocated time to talk in depth about the venture. And I don’t question our decision, not for one second. (OK I thought about it for the following 24 hours and I’m comfortable with it.) But I’m interested to get other people’s perspective. What would you expect out of a business incubator that was offering a loan to a start-up?