How It All Started

The Context

It comes as a surprise to most people, but investing in SMEs is seldom about the money, or EIS, or SEIS, or CGT. Let's say nothing, either, about pre- and post-money valuations, debt/equity ratios, share structures and a thousand other things to worry about. It's not even about the business plan, with or without ludicrous projections. No, it's first and foremost all about the people. So, who is involved with the business? The founder(s), their friends, their families, supportive fools encouraging them (a.k.a. the "Friends, Family, Fools" collective appreciated and often despised by future investors). Then there's the professional advisers warning them about the risks and explaining why it won't work, even in the best of times.

It makes you wonder why any of us bother, doesn't it?

It wasn't always like that.

Networking as it Should be

By the end of the 1990s once again the economy was characterised by yet more deep and dire warnings of doom and gloom and spirals down. [OK, they were right, so what?]

A number of us, Members of The Association of MBAs (AMBA), saw the potential for exciting business in SMEs that nobody seemed interested in, apart from David Beer and his Business Angels Group. Word spread and there was clearly a demand for something to address the evident, available, attractive opportunities.
(In those pre-email, pre-mobile phone days, we used a variety of means of communication: telephone; fax; letters; face-to-face, sometimes 1-to-1, more often getting together as a group.)
AMBA promoted the idea and arranged a meeting in Grays Inn Road in London, with a pre-booked room for 20. About 115 Members turned up and about the only things agreed in the inevitable chaos were we'd be called MBA Angels and we'd form a register of interested parties, with a Management Committee to give a semblance of order. A number of attendees then had to leave for trains to points-various of the compass, some volunteering to submit suggestions via AMBA Head Office. A small group of us retired to a local hostelry for a celebratory pint and whilst I was buying a round, I was appointed Chairman. My first ruling, assisted by a second pint, was to change the name to MBAngels, primarily because I speak too fast and couldn't master MBA Angels [try it].

Initially, there was a small admin fee payable to AMBA for back office support, including maintaining the database of MBAngels members and their preferences.

Different & Brave are Good

Business plans were posted to AMBA HQ and we collected them and looked over them in a quiet room in somebody else's building. It was heartbreaking to see all the time, effort, money that had been wasted by entrepreneurs in producing what were effectively useless documents. I don't like to admit it, but to relieve the pain, we separated them into piles according to whichever template they were based on.

One of the Team volunteered to go to each of the banks and others who were selling and/or supporting these inadequate outlines. She was shown the door by one and all.

As Chairman, I went to see David Beer in Dorking, forming a friendship that lasted until his early death, just 2 weeks after I'd bought him lunch in Bedford. [He regularly offered me a job, much in the same way as Fergie would in time offer Steven Gerard a transfer to MU.] David's advice was to persist with the business plans and to focus on the financials, particularly cash flows. That last item was a gem!

Obviously, we saw the emergence of new Business Angel groups, with redundant executives and early retirees looking to find a future income stream, so we decided to do something radically different. We dropped the requirement for a business plan.

The reasoning was that the time taken to write it, even with assistance, was wasted time distracting from growing the business, the structure of the various plan templates distorted what the business was actually about and if we, an army of MBAs, couldn't write a better business plan for our own purposes than a template, there was something wrong. (One of Members even set up a great business writing business plans for all manner of businesses!)

The upshot was that we got to see more businesses, in more true detail, more quickly than the market bureaucracy declared to be "the proper process". More importantly, the main revelation was that these businesses needed more professional management support and guidance and mentoring than they needed money.

Today, this is still the case and the secret key to so much success.

The implications of this are my business life story for the last 20+ years, so join MBAngels and I'll pass it all on!