A management team with proven sector experience is the most valuable asset that a start-up company can have, according to the Springboard start-up survey 2002. The survey also reveals successful start-ups generally require less than GBP1 million in funding to get off the ground. Two-thirds of start-ups raised less than GBP1 million of external funding and only 18 per cent had raised over GBP5 million.
Stephen Ross, CEO of Springboard, the investment business that led the research, said: “Successful start-ups aren’t always led by revolutionaries and evangelists. Most in fact are led by people who can calculate opportunities and have the experience to exploit them.”
The survey shows where the dot.coms that crashed got it wrong. Many of these were led by founders with no management experience who thought raising money from investors was a substitute for selling to customers, says Ross. “We hope this survey will encourage a few more proven teams to get out and have a go themselves and not be too concerned about the current difficult environment for raising funds.”
Other key findings from the survey reveal that nine out of ten founders of successful businesses had prior sector experience and 80 per cent of them had worked in their chosen sector for over five years. Two thirds of founders did not find it difficult to raise initial funding and around 70 per cent of successful start-ups make their first sale within four months of opening their doors for business. Upon exit, 66 per cent expect to become millionaires when they sell the business with nearly 40 per cent expecting to make over GBP5 million.
Springboard is a venture capital business focused on start-ups. To date, the firm has backed over 20 management teams across a range of sectors. A start-up itself, the business was founded in 1998 by Stephen Ross, formerly of 3i, and raised GBP5 million by floating on AIM at start-up and a further GBP24 million in April 2000.