In for a Penny…

There are many things that keep small business owners awake at night: how to secure your next client, how to make your systems more efficient, how and when to take on your next team member…  The list is endless but nothing keeps budding entrepreneurs from their sleep more than money.

Listen to any successful businessman or woman and they’ll all tell you how important cash is; “cash is king” they say! It all makes perfect sense of course, but successful early days cashflow management is easier said than done.

Never is this truer than when you’re dealing with innovative new technologies. Here, convincing people of your original idea’s intrinsic value is critical from the outset if you’re going to attract the necessary capital to fund thorough research and development, in-depth market testing and ultimately achieve success on a global scale.

That’s why we set about uncovering how other entrepreneurs secured the necessary funds to enable their businesses to grow into the household names that they are today.

First up, the entrepreneur that everyone hates to love: Sir Richard Branson. The famous founder of the Virgin Group is worth an estimated £4.1 billion – and most of it has been self-funded. On his last day at school, his headmaster told Richard that he would either end up in prison or become a millionaire, so it comes as no surprise that he started his own company at the tender age of 16 with a magazine called Student in which he advertised records for sale at considerably less than high street prices. Although we don’t agree with his methods of solving a cash flow crisis, the lessons he learned from the experience pushed him to expand the record store which opened in Oxford Street in 1971 into a global venture. This in turn netted sufficient funds to create Virgin Records. Signing the Sex Pistols and Culture Club to name but a few enabled him to start-up a business for his other passion – flying. Virgin Atlantic launched in 1984 and so on, through Virgin Trains, Virgin Mobile, Virgin Cola, Virgin Cosmetics, Virgin Money and many, many more – 400 companies under the Virgin umbrella in fact. Many of his companies were publicly floated or acquired, facilitating the next ‘unachievable challenge’.

And then there’s the guy that everyone loves to hate! The Apprentice star and Amstrad impresario Lord Alan Sugar used his own savings to get his foot on the business ladder. From humble beginnings to an estimated fortune of £1.4 billion, the story of Lord Sugar is a true rags to riches tale. The rise to power and fortune began when Sugar used savings of just £100 to start a business, selling car aerials and other electricals from the back of his van. Within five years, he’d founded Amstrad, which, in 1980, was floated on the London Stock Exchange. Riding the wave of a new era in home computing and word processing, Amstrad’s share price and market value doubled each year, reaching a peak at £1.2 billion until the stock market crash of 1987 wiped its value. Ultimately, the company, which had moved into designing and developing set-top boxes, was sold to BSkyB in 2007 for £125m. In the last decade, it has been property, not technology, that took Lord Sugar into the billionaire club. Much of his current wealth was created on the back of an impressive commercial and luxury residential property portfolio and shrewd transactions.

The next generation is surely spearheaded by Mark Zuckerberg. The eternal face of Facebook, Zuckerberg has a net worth of around $51.2 billion, despite now taking a salary of just $1 as CEO of the company. Since 2010, Zuckerberg has been named annually in the 100 wealthiest and most influential people in the world by Time magazine. What went on at Harvard during the development of Facebook we will probably never know, but there’s no doubt that Facebook’s launch in 2004 changed the world forever. His subsequent move to Tech Central – Palo Alto California – proved to be a good one because it was there he met PayPal founder Peter Thiel whose investment enabled Facebook to expand its global influence fast. The pair were soon busy turning down acquisition offers and Zuckerberg repeatedly shunned commercialism, even rejecting the idea of advertising on the site on numerous occasions. However in 2007 Microsoft purchased a 1.6% share of the business for $240 million which included the rights to place advertising on the site, preempting Facebook’s NYSE launch in 2012. Twelve months on, it had become the fastest company to reach a market cap of $250 billion, enabling Zuckerberg’s team to continue to innovate.

This decade’s new kid on the block is undoubtedly Nick D’Aloisio who devised the Summly app which algorithmically summarises the news for the smartphone generation. The Oxford undergraduate was, like Branson and Sugar before him, just 16 when he had his breakthrough moment in 2011. He is cited as being the youngest person to receive a round of venture capital in technology at just 15. Funding also poured in from people like Ashton Kutcher, Wendi Deng and Stephen Fry. On getting that funding, he commented: “I was nervous when I met Li Ka-shing (the Hong Kong billionaire who invested $300,000 in Summly in 2012) but I also saw that I had absolutely nothing to lose.” Yahoo was quick to snap up the resulting app for $30 million, placing Nick in the FT’s Top 50 European Tech Entrepreneurs. He is now developing a new app, Yahoo News Digest, for the Apple Watch.

At number 35 on the same FT list is Eben Upton, the entrepreneurial brain behind the Raspberry Pi Foundation, initially formed to encourage computer-science education in the UK. The resulting technology, a credit card-sized single-board low-cost, high performance computer, has become the must-have gadget for programming hobbyists and tech-savvy youngsters across the globe. Within just 20 months since its launch in 2012, 1.8 million units have been sold, making it the best-selling UK personal computer and spawning entire industries of spin-out products and services. The UK based registered charity behind this computer revolution is now benefitting from donations and support from global tech giants like Google and Western Digital. It has, in turn announced a £1 million education fund to support projects that enhance the understanding of computing and to promote the use of technology in other subjects, particularly Science, Technology, Engineering and Maths, and creative arts for children.