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Yiuwin Tsang
Hello and welcome to the Beautiful Business Podcast. Beautiful Business is a community for leaders who believe there's a better way of doing business. We believe beautiful businesses are led with purpose, by people who care, guided by a clear strategy, and soulfully grown.
Yiuwin Tsang
Hello, and welcome to this week's episode of the Beautiful Business Podcast. My name is Yiuwin Tsang, part of the Beautiful Business team. And this week, I was joined by Tim Evans, Investment Director at CreativeUK. Tim for the past 15 years has been helping entrepreneurs build resilience and prosperous businesses delivering compelling and creative content products and services to market. He is the investment director at Creative UK Investments, overseeing all investment activity for the company responsible for building and delivering investment strategies, including Best Practice origination, due diligence, governance and monitoring, as well as formulating and building new fund propositions. Tim, let's talk a bit more about reasons to be positive. Let's explore how founders can unlock funding despite these economic challenges we're currently facing are certainly those with my face further down the line. Can you tell us a bit about the work that you've done to help businesses raise funding.
Tim Evans
Well, we're not purely just an investor, we talk about ourselves as being a strategic investment partner. What does that actually mean? Well, it means that we'll probably only invest in a business where we can have value beyond the cash, right? What that looks like, is quite unique to the business, every business right? is different for different challenges. It's got different capacities, it's got different ambitions. So how we help businesses are is very different. But one of the few areas that we're really active isn't supporting our clients to raise finance. And we do that that might be in terms of CO investment. Now, we won't have an equity proposition live until October. But in our last equity fund, how investing with rounds, but giving other non sector specific investors have confidence to invest also, by means of us being first in sector experts, investors who can give, so that's one way, but also then by the means of us breathing with one of our creative businesses now and actually then then looking to raise beyond our capacity, making introductions to investors, we've got a great network of investor partners, VCs institutions, who will really start to get excited about the creative industries. And we make those instructions, sometimes just kind of formal kind of emails, we do something that internally we call a pitching pipe when our cohort are currently raising kind of finance, we'll just get them around a room, we'll we'll book a room out and have a bit of lunch, we'll get some of our investor partners. And we'll just in a very informal way, we'll just get them to do a 10 minute pitch, those have been really successful. Over the years. We've also got our programmatic activity, things like creative enterprise programme, which is partnered with the UK business angels Association, to pitching events of the year UK BAA will bring. And our last event a couple of months ago, was attended by 78, high net worth investors, to introduce them to new creative industry opportunities, but also profiling our clients, right, there's their successes, put them forward for awards, right. So they've got that visibility, using our presence and our reach to actually, you know, promote them so that actually, investors come to them. So it's ad hoc, it's unique. But we've got a whole host of kind of cards up our sleeve. And in terms of how we support them to raise finance hubs touch on one last point is also that you know, quite often helping them be investor ready, is really critical. Now, our investment process is one by which our investment managers, once they see a really good opportunity and sort of invest, they will kind of champion them or help them develop their proposition to a strong proposition to get through our investment processes. Off the back of that there is a whole host of areas where actually by which we can see, they can improve terms of their systems, their messaging, and their processes. There's a feedback loop in terms of helping them improve on those items. And then also, we're always a sounding board for new investment decks where, you know, we've seen 1000s of investment propositions, we know what's good, we know what's bad, and we know what's going to sell. So we can often give some good advice in terms of that kind of investment thesis.
Yiuwin Tsang
So you not only have invested in previous equity funds that you have invested yourself, but you've also brought on the co-investor as well. So you almost have to sell your cohort in as well as then kind of selling themselves in terms of bringing in that external investment and additional co-investors.
Tim Evans
Yeah, it's not selling it investors are there to invest, that's what they want to do. So they're just looking for the best opportunities. Now, what you build up some kind of credit with certain investors who have invested in your portfolio or deals you've taken forward. So they're more likely to listen to you as if you share a deck. Now, that's why it's really important for us that our clients are best are ready and that deck is strong, because we don't want to lose that credit, right, we want to make sure that they keep listening and give these propositions time of day. So investors want to invest, they often just don't have the reach. So they're really keen on partners like us who have early stage portfolio to mine.
Yiuwin Tsang
And you mentioned investor readiness, and you've kind of alluded to it a couple of times there, I've been lucky enough, again, to kind of be part of some of the programmes you've done before early stage ones as well. And these programmes are really comprehensive. There's a cover all sorts of stuff, everything from financial management, forecasting, sales, marketing, pitching, team building, and team development and people strategy. But in your mind, what do you think are the three big things that business owners need to think about when they are preparing to raise finance or to raise capital?
Tim Evans
I think the first thing is having the right founder foundations, right. So people invest in people, they invest in teams. Now, no team is the full article right from the start. And no individual is the ideal kind of founder or entrepreneur. However, from our experience, and I've made mistakes in the past, and not investing in the wrong kind of mindset is that there's certain characteristics of individuals have who are have a greater chance of success. And I call it the fan of foundations, but that those items are under being willing to look at yourself, take on advice, having the presence to understand your limitations, being willing to be honest with yourself and park your ego in terms of actually what you're doing right, what you're doing wrong. And understanding that actually, it's not one person who builds understand that nothing good has ever been built in isolation. So understanding that actually, the skill set of that individual is to build teams to deliver the foundations for growth. So that found a foundation is just it's a growth mindset. I think some people call it you know, that's the one thing you need to nurture that within yourself, I don't think it comes naturally to everyone, I think, you know, it's something that many kind of find quite difficult, you know, gone are the days where these alpha male kind of leader kind of things sort of, you know, are seen as the kind of the go to leader for running successful businesses. That's not the case, leaders, leadership now, you know, really requires actually a degree of care to listen with, you know, listen twice and speak once you know, and it does require a lot of introspection. So what I would say is an investor needs to know that you are willing to grow, that You are mindful of your ability, and you present to them that capacity for growth, I would then say in terms of a business and a product, really important to have that product, which does have a clear differentiator, what does your product do? That chain next doors product? Doesn't do? Right? What is the barrier to entry for your product or your service? Right? So why would I invest in new when actually Jane next door can equally look at your product and say, well, oh, that's a great idea. I can very quickly drop a bit of code in there and my product can do the same. So really understand, what's the kind of differentiating What's that barrier to entry that's going to stop someone else doing it? And then I would say, as a product, how is it really changing people's lives? Because what we've now finding right in economic uncertainty, that we're all starting to cut costs at home, because cost of electric is going through the roof. And actually, the things that are really important to us is making sure that our kids eat really healthily. And then does that mean we keep hold of the Sky Sports? Well, for me, it does. But it probably might mean that actually some of those kind of short smaller services that are nice to have are cut really. So from my perspective, what I really like to look at is things that aren't nice to have, but are actually essential, and would be essential when it comes to a kind of a cost cutting and kind of exercise. So you know, does it have a real meaningful impact on the buyers life?
Yiuwin Tsang
I just want to take a quick minute to say thanks to our trusted partners Krystal Hosting. Krystal is a B Corp powered by 100% renewable energy and has a goal of planting 1 billion trees by 2030. Krystal services are super fast and super reliable and they're genuinely really nice people. We're super picky over who we work with as partners at Beautiful Business. And we're delighted to count Krystal as one of them. Back to the podcast.
Yiuwin Tsang
That's such solid advice him. So to reflect on that that's like number one, your ability, as a founder, to take on feedback to grow and develop. I love that terminology, your capacity to grow and to develop because at the end of the day, as you say investors invest in people, it's a people thing. And it's interesting that you put that as your number one. And then we move on to the product, the product being defendable, being, you know, having those kinds of barriers to entry. And then a third part about the value that your product or your service provides to your customer, and not been a nice to have been essential being an essential, and it just to pick up your point there. But I think you're right, I think that, you know, the days of having this macho, you know, I work 21 hours a day, I don't need to sleep, I get up at four in the morning, go for my half marathon, come back, you know, eat a whole bowl of spinach and 10 eggs. And you know, and then read eight books before even so, it sounds crazy when you think of it like that, and you think how unfashionable it is or how outdated that sounds. But I feel like the founders often still feel quite feel like that. Also, they have to they almost feel like they have to be, you know, working really hard and not so much working very hard, but kind of almost kind of showing to investors, look how many hours I work, look how not only that, but also that belief in themselves and in their product. And in their value proposition. It's almost like there needs to be a enough of it to drive things forward. But I suppose what you're talking about is enough awareness and enough humility to be able to change if needed, is that kind of where it is?
Tim Evans
Well, let's flip it a bit. If I'm an investor, and I've invested in this individual in this business, and in their business plan to grow a an effective and successful team, and this individuals come to me saying I'm working, you know, and he's give me the impression that he's flat out 100 miles an hour doing this, then I'm thinking to myself, this is a risk, this person's got that complete risk of burnout, what's happening to my investment, then? Also, is he an effective manager, if he's doing all this delivery work, right? Who's doing the thinking? Where's his capacity? Where's his time for thinking? And actually, it's a grown scaling business. Right? You know, we've got this ambition, but the what next is still kind of slightly opaque. Right? You know, so he's thinking about the Now what about the next and the later if he's just focused on delivery? So I'm not sure actually that washes in terms of the expectation of the investor, hard work is expected? Absolutely. But I suppose what I was trying to drive at originally, was the importance of hard nurturing a really effective culture of, of course, hard work, but have one where actually, a culture where people want to stay work with talent will be attracted to you, rather than you having to attract talent. The Macho alpha male point I was trying to make was around those kind of, you know, not necessarily Robert Greene, kindness, attitudes, but you know, one where actually people feeling included in the decision making process where their expertise is valued, where they're given the autonomy to really own their area of work, right? And not one where there is a single individual who can sit Is it their business, not our business, their goal, not our goal, their rights make the decision and not ours. So it's about working culture, and healthy working culture. And a healthy working culture will make a successful business because you'll attract the best talent, you'll retain the best talent, your customers expect the healthy kind of effects your brand your customers and expect to help the brand from you. Right? Because if you're not doing it for your competitors, so it's sustainability as well.
Yiuwin Tsang
100%, a 10, that I came across two years ago was that within your teams, if you're lucky enough to have a team is there always be a little pot of discretionary productivity? You know, a little bit where people will can dig that bit deeper for you. But it is fully discretionary. It's up to them to do it. And it's like, how well can you tap into, you know, that pot of discretionary productivity? And I think everything you said just says completely right. I just want to touch back on to what you said, because
Tim Evans
I think you've smashed something there. And actually, that's something just to kind of that we're looking within our own investment company in our own investment team. And it's that discretionary productivity. Yeah, that comes with a kind of a leadership attitude, isn't it where you give people the ability to be leaders and the ability and the autonomy to kind of go and do that delving and that stuck sometimes unlock some really kind of magical stuff, you know, but you've got to nurture that leadership attitude, you've got to nurture that culture, right.
Yiuwin Tsang
100% So back to your point earlier talked about having seen lots of pictures and we've seen have spoken about having a defendable product with a uniqueness genuinely unique, and also being a must have your product or service being a must have. So you've seen many pictures and lots of pitch decks over the years. What advice would you give to businesses when it comes to actually showing their competitive edge? This, you know, this uniqueness that you mentioned before?
Tim Evans
I mean, I don't think I can answer the question for you actually. But in terms of showing, I just think, what it's really important to provide proof. Okay. Now, grand statements are, you know, littered throughout investment tax, but where you can provide some proof within that what you are saying is true, validates your product, or your service, then that is meaningful, that's what we look out for. Okay? And that might be people have just a one person has licenced our product at this price, as a proof point, you've got a proof point there. Okay. So we've got a customer, we're gonna sell it at this. And that kind of validates so much in terms of your, your assumptions for your growth expectations. So we're deaf different in the market. Okay, we've got a unique show us, put your kind of your put the landscape there on a paper and show us how you're different right? Make sure it's accurate. Don't miss anyone, because you look incompetent. Right? But the point is about, own it, do you research and provide validation? proof points? grand statements are, you know, all well, and good to kind of attract the eye, but actually, what will get you at a deck and investment deck is about getting the second conversation? Right? You won't get that second conversation? And certainly unless you see some validation,
Yiuwin Tsang
That's really, really good. And just something I must ask. And I know it's a bit of a buzzword, but it's cropping up more and more on conversation, we're hearing it more and more in the news. But what do you see the impact of a I having in the world of raising capital? How are investors looking at this new technology? And what should business owners be thinking about here?
Tim Evans
That's a massive question!
Yiuwin Tsang
It really is, what's your kind of top liners because I know when we talked about before, I suppose this comes back to that whole piece about how almost like how defendable is your product or your service. You mentioned your example was Can somebody else just drop a bit of code in or replicate it? But I suppose there a similar kind of considerations that kind of come through here from a value proposition perspective, but also, I imagine from a delivery perspective as well, how much could AI?
Tim Evans
Yeah, it is a great question. And actually, you know, for companies out there, if you're not mindful of AI, that you're burying your head in the sand, right? It is a bit of an unknown quantity. But you know, there are things that it can't do. And there are things that you can do that it can't do, you know, emotions and consciousness are things that we are blessed with that AI can't, you know, it can't build long standing relationships with clients, it's can't build trust, right? It can't adapt independently, there are things that you can and Disruptive Thinking, you know, have in abundance that AI is not going to replace there. So if I was, you know, addressing the question around AI, I would talk about the items, you know, within my repertoire within my products that are drive to those unique items, and which are not replicable, I would also be thinking about how AI is incorporated into my practice, how it does drive productivity, you know, there is a place for AI in most walks of life going forward, I expect, you know, what can it do for us and what it cannot do? You know, there are huge benefits in productivity for us as an investment company, right? We write reports we do item so that it can provide structure to those things to save us some time. But what it can't do is it can't analyse whether actually you in has those founder foundations or whether we believe that you and has that capacity to grow, right? It can't tell me whether right, Tim, if shit hits fan, right, and we've got another pandemic, and you know, title cost of living keeps going up, Picard sell me when I believe that Tim is going to cut my product from his kind of his weekly shopping basket. So there are intuitive items there that only my team and you know, with their great experience can do. And it's important for businesses to really kind of be clear in terms of actually what they do that is people really value and what AI can do in terms of that automated piece.
Yiuwin Tsang
That's interesting. And I guess from that investor's perspective that you know, AI is very much on the agenda, it's visible, but the fact that you're looking for those items, you mentioned those non replicable items, and I guess bringing that out in your stories, and also looking at how you can apply AI in terms of your own operations in terms of efficiency. These are the sorts of things that you would look out for in a potential company. And just to wrap up, I wanted to ask you this question, because you mentioned this when we were briefing about this interview about managing your expectations as a founder, and that there are some kind of home truths that you have to face up to when you're looking to raise, do you want to just give us a few of these truth bombs, please?
Tim Evans
I think we've probably covered that much. And I probably was, again, talking about those founder foundations, right, and the importance of kind of, you know, opening up your world to different opinions, you know, and so those truth bombs, you know, around actually inviting people into your world who really provoke different ways of thinking, different attitudes, and that drives to diversity in terms of background, ethnicity, gender, socio economic as well, you know, there's a great body of evidence now starting to materialise, in terms of actually those businesses that have diversity at board level, how they perform in terms of the bottom line, it's not just a nice to have, right, it will make you more profitable as a business, right, because what they're doing is they've got kind of more, you know, they've got a deeper kind of treasure chest to kind of delve into. So as a founder, you know, surround yourself with some really provoking people build a tribe around, you have advisors who can really kind of test you get you thinking, have the courage of your convictions, once you've considered those, that's your responsibility. But, you know, surround yourself with some really interesting people, we've got a chap on our credit committee, to hope he doesn't listen to this, but Dave machen, who's he's been incredibly valuable to how we've run the last fund, because he's brought a different perspective to what the company has had before. And that has really, you know, pushed us to further kind of professionalism, best practice what we do, as that been easy, no, it hasn't, you know, but I think this is the road to kind of success is actually by kind of just, you know, surrounding yourself with activity, and they will drop the truth bombs on you, you know, it's your responsibility, then to kind of absorb that and find out how you're gonna deal with it. But I think it just goes back to the founder foundations again, and that family foundation with the right attitude will mean that actually you will grow a team of advisers around you, and a tribe of not just advisors, sorry, it could be your peer group, right? We like to pull together our portfolio into a just to have a lunch sometimes, right? They like to refer to it as just sharing war stories. But within that, they will just kind of, you'll get a you know, by building that tribe and having to share in those war stories, you'll get comfortable your decision making, right? And you'll kind of be a bit close to that 100% around it. So I would kind of say, just make sure that you're more than a community of one.
Yiuwin Tsang
Thank you very much for listening to this week's episode of the Beautiful Business Podcast and a big thank you to Tim Evans from Creative UK. Thank you for joining us for this week's Beautiful Business Podcast. Beautiful Business is a community for leaders who believe there's a better way to do business. Join us next time for more interesting discussion on how businesses can bring about change, helping communities, building a fairer society and safeguarding the planet. You can also join in the discussion at www.beautifulbusiness.uk