VENTURE CAPITAL - Risking everything
Tim Waterstone made his fortune from the eponymous bookshop chain that he founded in 1982 and sold to W H Smith in 1993. He told last week’s English ICA conference how to succeed as an entrepreneur in search of venture capital.
Write your own business plan: ‘I can’t stand a business plan written by accountants. If an entrepreneur does not have enough passion and belief in his business to write his own plan, then there is no reason why anyone else should want to invest in it.’
Don’t use financial intermediaries: ‘They are awful. Find your own venture capitalist. Shop around. Never, ever become discouraged. I can’t remember how many people turned down Waterstone’s in the early days. If one venture capitalist doesn’t understand your plan, there are another ten who will.’
Think ‘cash’ all the time: ‘You have to be the dominant financial brain.
You have got to be looking further ahead than anyone else. You have to know when a rights issue is going to be needed and to pre-plan for it.’
Work with your investors … ‘You must have the kind of relationship with your investors that allows you to share bad news and good news equally.’
But divide and rule: ‘We (Waterstone’s) had seven shareholders. If you have one or two, they can gang up on you. Don’t allow yourself to be bullied by your investors.’
Have contempt for risk: ‘You have to be prepared to mortgage your home and wife and kids, and do so happily. Never tell your wife about the risk because she will walk out on you immediately.’
