If Europe is to take advantage of the apparent ‘green shoots’ of economic recovery it will need more entrepreneurs than ever before, particularly in countries such as Ireland and the UK where government spending cuts are biting. But setting up your own business, no matter how good your idea or how strong your passion to succeed, is never easy. So where does the corporate titan of the future turn for help?
At first sight the banking community seems keen to support new and growing companies (as long as you don’t need to borrow money from them). Almost every high-street bank offers guides to setting up your own enterprise, and enthusiastic small-business teams to help you.
The problem, of course, is that most of these team members and guide authors will have spent their working lives in the comfortable environment of a large institution and will consequently have no real experience of what it’s like to set up a new business in practice.
Business schools also seem to believe they are the natural first stop for the budding entrepreneur. Students at Oxford University’s Saïd Business School, for example, have an Entrepreneurship Project integrated into the MBA programme and are expected to develop a complete business plan and present it to a panel of invited venture capitalists and other practitioners.
But considering just how few of the world’s most high-profile entrepreneurs, from Mark Zuckerberg to Simon Cowell, have spent more time in a formal business-school setting than they have making speeches and picking up awards, might you not be better off taking advice from someone who has actually built a company from the ground up – a business angel, in other words?
According to Patrick Molle, co-president of the World Entrepreneurship Forum – a global think tank that brings together entrepreneurs from business, social, political, and academic fields – you cannot ignore the wider range of support that a business school and indeed society can provide beyond the classroom. “Entrepreneurs are created by their experience as they grow and learn,” he says. “They are influenced by teachers, family mentors and role models.” He points out that the experience of studying and working alongside a wide range of individuals on a masters programme or an executive course plugs students into a network of contacts and advisers that may prove invaluable in the future. “After all, entrepreneurship is about the exchange between individuals to create value.”
However one of the most valuable forms of practical support, at least in the early days of a new venture, may not be the network but rather the increasingly ubiquitous business incubator. These provide students and alumni with a range of services to help them turn their ideas into reality – everything from basics such as office space and a phone to advice and guidance from alumni and access to investor funding. According to Alain Fayolle, who works with one of Europe’s longest-established incubators at EM Lyon, such facilities are now more crucial than ever because the current generation of entrepreneurs often has a science or technology background with little real experience of the commercial world. As a hub for ideas, academic expertise, practical advice and finance, the incubator provides such individuals with a basic foundation on which to build a viable business.
The desire to address the needs of the technological entrepreneur is behind an initiative at Warwick Business School in the UK. In a module called Envisioning and Enabling Innovation, it is forming classes from a mix of MBA students and engineers and scientists taking PhDs at its parent university. Participating students will be targeted with the development of a business idea, and will pitch it to a panel of potential investors with a view to creating a new company.
This approach of providing techies with business training and support appears to work. Although the success rate for start-ups in France is estimated at below 50%, the rate for those passing through the EM Lyon incubator is 85%, and only one of the organisations it has nurtured has failed in the past four years. And across the Atlantic, the Entrepreneurship Center at the Massachusetts Institute of Technology claims that its parent school has generated more than 26,000 new firms with more than 3 million employees.
One reason that new enterprises might look to a school rather than to a business angel for support and inspiration may be the tendency for the latter to ‘command and control’ rather than just guide. Anyone who has watched Dragons’ Den will have noticed how quickly friendly guides can turn into quasi-bosses, something that schools are intent on distancing themselves from. The business accelerator at Nyenrode in the Netherlands, for example, insists that it “won’t tell people how to run their business, but it will help by answering questions, providing a network and supplying the infrastructure necessary to get it going in the beginning”.
Many of those who have built successful companies are choosing this route too. According to James Caan from the UK version of Dragons’ Den, who built an international business empire without any help from academics or incubators: “There is no substitute for practical experience.” However, when he sold the business in 2002, one of his first moves was to take the Advanced Management programme at Harvard Business School.
Asked why, he points to the value of hearing how others built their companies, particularly in the BRICs and N-11. Perhaps, as he seems to suggest, one of the most valuable things an incubator can offer is not the personal road to success of an individual investor, but the knowledge, experience and skills of a whole range of fellow students, academic experts and proven entrepreneurs.