How does your business benefit the country?
Anyone who has started a business will tell you that the first few months are a battle for survival. Every waking minute is spent trying to transform your idea into a reality, and the thought of taking a step back and looking at the impact that...
However, that is exactly what the government-backed Technology Strategy Board (TSB) is asking startup companies in London's Tech City to do. Unlike venture capitalists or banks, the money invested by the TSB is public money, so there needs to be a compelling argument for why it is needed to fund any given project.
According to Dr. Nick Appleyard, Head of Digital at the TSB, this is a question that pollaxes a lot of entrepreneurs. It is all very well claiming that your technology will make a big profit, but why should taxes be increased in order to help you get on your way?
At the highest level, the purpose of the TSB is to grow the national economy through the effective application of technology. As a result, it tends to invest in projects that will have a broad social impact. For example, a technology that enables mobile payments could benefit a wide range of companies, but that technology might not get off the ground without an extra financial nudge.
Appleyard said that most early-stage startups do not need a lot of investment, just enough to keep the wolf from the door while they get established, and give them enough time to work on their second best idea - which may well turn out to be the one that really pays off.
“£20,000 will allow a startup company to take on an extra member of staff, but if you stand back and think of that in terms of the national economy, that's not a lot of money,” said Appleyard. “You can make quite a lot of £20,000 investments if you're running a national organisation, and help quite a lot of people.”
More than money, however, what most startups need is support and mentoring. Appleyard believes that the TSB's most vital role is to act as a broker, guiding entrepreneurs through the various stages of development, helping them to build confidence, encouraging them to work with other entrepreneurs and, when the time is right, setting up meetings with angel investors.
One of its best-known activities is running competitions that challenge entrepreneurs to solve particular technological problems. For example, the TSB's service facility IC Tomorrow recently launched a contest giving ten startups the opportunity to win up to £24k for developing an application or service for a museum or art gallery.
“We've got no skin in the game, we're not commercially interested, we're not taking sides, we've got no axe to grind, we're just trying to help,” said Appleyard. “We can build trust relationships with everybody separately and then we can bring them together and help them build trust relationships with each other.”
It would be a mistake to think that the TSB is the answer to all your company's investment woes. It sits upstream from the equity investors and deals with entrepreneurs when they are trying to develop their ideas, rather than when they are trying to go into the marketplace.
However, if your company is at the stage where what you really need is support, advice, contacts, and perhaps a small amount of money to get yourself off the ground, then the TSB could be the place to start.
Just make sure you've worked out how your product will benefit the country...