Tag Archives for Financial Services

Cronto makes a sale

Thin Air At Over The AirImage by Rija 2.0 via Flickr

I first met Igor and Elena, the Cambridge, UK, based husband and wife team that runs Cronto (simple strong security), a couple of years ago when they first started working on their new encryption service.  It is a very simple idea and relies on people keeping their mobile phones handy.  Apparently they are rarely more that two metres from us!  When you access your bank account, a pattern appears on a screen, which you photograph with your mobile phone.   The Cronto software decodes the pattern and you key in the code; very simple and very secure.

It always amazed me that you could travel and access your bank account without informing the bank that you were away from home.  With Cronto,  you feel your bank account is safe.

Looking at the website, there is no sign of a VC and so I wonder what business plan resource they are using?  As they are based in the University of Cambridge’s William Gates Building, do Cambridge Enterprise have any involvement?

The website is very busy and Grant Dain, internet marketing Cambridge, might suggest that it is simplified with clearer calls to action.

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Boodles are a girl’s best friend to relax

In an interesting article on Boodles, it states that the company was founded in Liverpool in 1798 and is now owned by the sixth generation brothers, Michael and Nicholas Wainwright.  It would be very interesting to follow the ownership changes through the six generations to understand how and why members of the family were or were not included in the equity ownership and if they were, how were they bought out.

Nephews James Amos and Jody Wainwright have joined the business and I wonder if they are included in the equity.  James sums up the allure of the life-style or Passive Equity Company “We’ve turned down many offers from private equity – and that boat has probably sailed away anyway – but we really benefit from being relaxed about the pace of the firm’s growth”.

Do you want to be relaxed?  Not me!

Aside: Lots of flash on the website.  Why would I want to go to a website to order a brochure – I want to buy…..  As Grant Dain, internet marketing Cambridge, might say, it is an online brochure – the classic mistake.

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Stay in the Game

The Bank of England is avilable to rent...Image by aminorjourney via Flickr“Stay in the Game” says my son as KPMG offers staff a four day week or a few weeks holiday.  Tempting to take the latter but as we move into unknown territory (when before did KPMG and the like have to make such an offer) it is better to stay at the coal face.  At least until you are made an offer you cannot refuse.

Herman Hauser is promoting the cause of the Cambridge Cluster with thousands of jobs and companies at risk as they are unable to raise further rounds of funding.  The future of the UK knowledge-based economy could be at risk.  The case needs to be made to the government – the Cambridge Cluster is as important as the car and other industries.  I hear from Bristol that a company visited VCs in London and found the atmosphere chilling.

Although the banks were supervised by the Bank of England and the Financial Services Authority – what were they doing? –  bankers have to take the stick but how come the likes of Applegarth of Northern Rock, Hornby of HBOS and Goodwin (paid £30million over ten years and relaxing with a pension pot of £8.4million) of RBS get away without taking responsibility for their actions.  If they had been entrepreneurs they would have lost all their wealth which might have concentrated their minds.

So should we encourage the talent in the Cambridge Cluster to start a business or are they better joining the relatively risk free and highly rewarding career of large companies.

One last thought, we will know we are in a full blown recession when the public sector starts reducing head counts.  I guess we have a long way to go.  So it is all about chosing the game you want to play and staying at the coal face.

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Samantha Sharpe is the NESTA Innovation Policy and Research Fellow

The Judge Business SchoolImage via WikipediaDr Samantha Sharpe is part of the team at the Centre for Business Research, Judge Business School, University of Cambridge studying early stage companies.  She is funded by NESTA and has a project in the same area as the NESTA project using Equity Fingerprint, the business plan resource.

In  her talk at a meeting at Lancster University Management School (when will it be re-named Lancaster Business School?), Samanthan outlined her work on researching the portfolio of investments made by the N W Brown Group, now IQ Capital Partners.  She has been allowed acess to all the confidential information and so is only able to produce summaries of her data.  Most interesting was a graph which related to Equity Fingerprint.  But whilst Equity Fingerprint concentrates on the decisions made by entrepreneurs in raising fund and how it impacts on their ownership of the company, Samantha’s graph showed the total funing of each round from equity, loan and grants – it showed the gearing achieved by the entrepreneurs on the funds raised.  It would be good to incorporate a measure of the change in valuation at each stage.  I also suggested that she showed the number of founders at each round as it appears that most Active Equity Companies have three or more founderswhich is very different from Passive Equity Companies which have fewer than three founders.

Of course the sample reflects the types of team which will approach a relatively small player in theUK funding and not the entrepreneurs who will chose other routes such as a trade investment, angels or VCs.

Would a study across the funding groups show that entrepreneurs who take a specific route – customer funding to VC – be significantly more successful than companies following the IQ Capital Partners route or taking investment from Cambridge Enterprise?  Or should we stop studying and get on with building business?

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Passive equity companies near The Lakes

Railway cottages, TebayImage via WikipediaOut of Eden, Lyon Outdoor and the largest of them all Lakeland are all passive equity companies with the latter in the second generation family control.

The Internet has made it possible to build these companies far from big centres.  However if you start-up in a beautiful small village like Dent, there will come a time when you will have to move to Tebay to cope with the large artics which Lyon Outdoor has had to do.  Also all three companies are re-sellers of other peoples ideas and products.

I met Ian Hartley of Out of Eden high up on the Langdales where he was seeking inspiration for the next stageof the companies growth.  And where I sprained my ankle slipping on a wet stone.  Each company now has experienced management some of whom may go and join another company in the area or even start on their own.  With passive equity companies, how can the companies offer a stake in the growth of the business without opening up the share register?  It is easier with the Cambridge Cluster and active equity companies where everyone is a winner in the business plan!

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Wash out rounds with billions

The Royal Bank of Scotland Plc Banca Rìoghail na h-AlbaImage via WikipediaWe all know that the worst thing that can happen to founders is to work hard, build value and for the stock market to dive leading to a washout round with great dilution. Even those who fully understand Equity Fingerprint, the business plan resource, find that difficult. Neil Collins in the Spectator in an article titled Hand Over Your Cash: How Banks Are Mugging Investors describes the deeply discounted rights issues being offered by HBOS and Royal Bank of Scotland – “they’ll have received a matching batch of gobbledegook” – leading to washout rounds for existing investors.

Of course the ceos and executives are not interested in Equity Fingerprints. They are interested in salaries, bonuses and options which are readjusted when they have gone under water. Since MBA students are aiming at executive roles they also find Equity Fingerprint perplexing – so much easier to change the rules as you go along!

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