The papers are full of Lord Karim Bilimora of Chelsea, founder of Cobra Beer, about his plans to raise £13million to fund expansion in India. LKB gives one of the most inspiring talk on entrepreneurship and the crowd always leaves with a buzz. He talks about the importance of teams but we never hear any names.
Cobra is like Innocent Drinks but without the margins although they are both run by Cambridge graduates. Cobra is in the very competitive beer market whilst Innocent has carved out a new market and able to charge a premium. Both operate as marketing companies with production sub-contracted and the product probably sent direct to the customers. Innocent also talk about teams but in recent accounts there is no sign of any options for the team they rate so highly.
As LKB says, he has managed to retain a controlling interest in the company which has been funded by angels who seem to have no exit in sight; it is always in the next couple of years. LKB’s major pre-occupation must be how to raise the £13million without losing control. If he does he might find that his long suffering investors to sell out. To quote from the article “Cobra has previously outlined exit plans to shareholders. A flotation was pencilled in for 2006 but was mothballed after Cobra raised £27.5m from Och-Ziff Capital Management, the US hedge fund. It raised further funds from Och-Ziff in 2007 and at the start of this year.”
In his talks, he is always quoting his sales after adding in a quick aside, retail, which roughly doubles his turnover. The newspaper reports give the proper figures. His accounts are interesting as the first accounts show a large revaluation for the value of the Cobra brand which is not allowed in audited accounts. So at the back of the accounts, you find the proper audited accounts which show the problem of building a business on fine margins.
And as for the so important team at Cobra, if the business is sold, Bilimoria, who retains a controlling stake in Cobra, said “this did not necessarily mean staff would lose their jobs. “I would do my best to protect all the people,” he said”. Perhaps they would prefer some options for their years of service, 20%.
I hope that this is not another example of someone saying the team is so important but not so important to share in the value they have created.
That is why it is so much better to be in the Cambridge Cluster and Silicon Valley where companies include options in their Equity Fingerprint, the business plan resource. Teams want to share in the glory and in the value – we all do! It is a pity that neither Cobra nor Innocent Drink will benefit the Cambridge Cluster directly.
Come on Cobra – shares for all!