Knowledge Peers

Beer and Partners is not one of those brands that does what it says on the tin; there was no beer at their London Investment Fair in Pall Mall last week (although to be fair there was wine.)

The business angel network has been running the Fair, connecting investors wishing to invest between £50,000 and £3m with promising companies, for well over a decade. Despite the misleading company name, I had a really inspiring day, meeting several exciting small businesses and angels with a genuine desire to help them grow.

One of our current Knowledge Peers topics is Innovative Routes to Funding. Attending this Fair, I got a genuine sense of what the feeling on the ground is with regard to SMEs securing cash, the different methods considered by chief execs, and the importance of institutions like Beer and Partners.

‘Bank funding – what’s that?’

There was an overwhelming feeling from the exhibiting companies that bank funding is not a real option for SMEs. Whilst one company CEO told me that of course ‘in an ideal world, bank lending would be available,’ he went on to detail how he had pursued a loan, giving a bank the benefit of the doubt for a while, but after 15 weeks of no progression he reached the conclusion that ‘bank managers exist to exist.’

Another CEO described how she had grown her business organically so far but needed funding to scale operations. She mentioned how the banks are understandably risk-averse in the current climate, and so not particularly interested in speaking to entrepreneurs.

This sentiment was echoed by most companies I spoke to, and summed up by the CEO of stem cell bank Precious Cells, ‘Bank funding? What’s that?’

‘We have doubled turnover year on year in a recession’

This is not to say that the exhibiting companies were especially ‘risky’ or would be wild card investments- several were already turning over profit.

Anita Human of Human Touch Care, a company that provides the NHS with ambulance service, has ‘doubled turnover year on year in a recession.’ Petstop, a Telford-based pet superstore, was cash-neutral and the directors trying to raise revenue to build four more stores.  Norris Panton of Circle 360 was seeking investment to accelerate the roll-out plan for his company’s already-profitable circular champagne bars across several more locations.

Also there was Elizabeth Emanuel, the celebrated fashion designer notable for creating Princess Diana’s wedding dress and being consulted on that of Kate Middleton. Elizabeth, who has also designed clothing for Elizabeth Taylor and Sharon Osborne, was seeking funding to develop her aspirational label.

‘There is money out there’

The investors were there in force. A host of business angels and institutional investors (tangentially: noticeably all men) were eagerly browsing the Beer and Partners catalogue in between sitting down with companies, filling up on refreshments and being accosted by me on their strategies.

One investor I spoke to was a former CEO who now chairs several companies and was looking to privately invest. Another, Richard Hewitt of Mayfair Capital Planning, explained a different investment model of raising business loans, typically without an equity stake or cash flow impact in the first 2 years, by working with a lender and a broker. I tried my best to keep up, whilst making a note to tell the Knowledge Peers research team, who possess superior financial understanding to mine.

Most striking was Richard’s comment that ‘in essence there is money out there.’ It’s just a case of businesses having to be slightly more creative in finding it than in the past.

‘A focus on face-to-face’

When I asked the exhibitors what brought them to the Beer and Partners investment fair, they were as unanimous as they had been in decrying bank lending in their favour of face-to-face meetings with investors.

This is something Beer and Partners as a company wholeheartedly promotes. In the ‘The Golden Rules’ given to all investors on arrival, it states, ‘Whatever a business plan may say, there is no substitute for looking into the eyes.’ As with any relationship, it would seem chemistry and rapport is as crucial to an investment relationship working as the strengths of the facts and figures.

‘Not at all like Dragon’s Den’

My own experience of the investment fair echoes the Beer and Partners affirmation that it’s, ‘not at all like Dragon’s Den.’ Mike Weaver and the team made me feel completely comfortable milling around the HNWs, and pointed out which companies would give me free flavoured coffee, should I wish…

Whilst perhaps not one of the most ‘innovative’ routes to funding when compared with crowd funding or retail bonds for example, the kind of meet-ups facilitated by Beers offer a feasible, attractive and relaxed option for viable businesses looking to grow.

‘We want to pay more taxes’

Guido Molinari, CEO of thoroughly planned out- and frankly, delicious- ice cream company, ICE Italy, summed up the situation eloquently. ‘Small businesses are the fibre of society. We would like to hire more people and pay more taxes. But it’s like planting a tree. You need water.’

It sometimes seems as if we’ve been in the ‘current economic climate’ since we can remember, and the banks are more tied up with getting their houses in order than ‘watering’ the SMEs. If recovery is dependent on small business growth, trusted alternative initiatives like those of Beer and Partners will be indispensable. Certainly, the talented businesses and strong ideas are out there.

Sophie Orbaum is Account Manager at Knowledge Peers.  You can contact her at sophie.orbaum@knowledgepeers.com