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01 June 2005
“By far the most common reason why entrepreneurs fail to secure funding is that they do not properly prepare their bids to investors,” says Doug Richard, chairman of innovation information company, Library House, and 'Dragon' from the BBC programme, Dragons' Den. He has launched The Gauntlet in an attempt to change this.
In the middle of 2004 he was approached by the London School of Economics which was interested in finding out what obstacles entrepreneurs encounter in gaining funding. “We knew the answer straight away,” recalls Richard. “We track 3,000 companies annually and so we know that the reason is simple and entirely avoidable: entrepreneurs do not know what investors want.”
In the year since then, Library House has spent 10,000 man hours asking investors to describe the attributes they look for when allocating funding. Remarkably, there was almost complete consensus on the sixteen key indicators of an enterprise that is likely to succeed. This information has provided the basis of The Gauntlet, a web based service, which will enable entrepreneurs to build and test their business propositions.
The indicators fall into four categories. The first is the innovation itself, and includes issues such as whether it is an improvement on an existing idea or a genuinely new idea. The second is the team of people involved in the enterprise, their skills, experience and so on. The third is the market, covering factors such as whether it is a large static market or a small growing one. The fourth is the investor’s specific requirements, such as return on investment.
Users of The Gauntlet answer questions in each of these sixteen areas and are provided with educational resources to support them in their responses. They then receive personal Report Cards which tell them how ready they are to put their ideas to investors. This includes detailed feedback across each one of the sixteen areas.
The majority of the funding for this project was provided by the LSE, with Library House providing the rest. The Institute for Manufacturing at the University of Cambridge provided some research. Each run-through by a company will cost £199, and Richard explains that this is to ensure that the project is sustainable and can reach as wide an audience as possible.
That goal was given a significant boost when the East of England Development Agency launched its competition entitled "runningthegauntlet." As part of a broader business support programme, this will offer entrepreneurs in the region the opportunity to run The Gauntlet for free. The ten best entries before November will have the chance to present their ideas to a panel of the UK's top venture capitalists and the winner will receive an equity investment up to £250,000 plus over £100,000 of business services.
This, together with the widespread enthusiasm that has accompanied the launch of The Gauntlet, is leading Richard to predict a bright future for the scheme. He says: “We ran a couple of venture capital firms through it and they were very interested. It’s possible that they could start using it themselves. This would be a very good way for them to keep their doors open to all those ideas which are potentially good, but not yet fully developed. That would only be good news for them, for the entrepreneurs and for business as a whole.”
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