You have a terrific idea for a product or service that will change a sector or industry. You painstakingly assembled the data, determining how best to target potential customers and build on their interest. A few key players are ready to join your team. But before you can launch your business, you need to find an investor so you can buy equipment, rent office space, pay your staff and kick off a marketing campaign. What’s next? Many people in this situation come to me for advice, specifically asking how to interest Virgin in their business plan startup.
The process isn’t at all mysterious. Many entrepreneurs contact us via our website, www.virgin.com. We receive hundreds of business ideas every month, which we record, log and classify. The best ones are reviewed and researched, and a small number make it through to our investment professionals, who take a more forensic approach to business than the detectives on CSI: Crime Scene Investigation.
What if they like your idea? If you’ve seen the BBC television programme Dragons’ Den or an equivalent reality show where entrepreneurs pitch ideas to investors, then you know what’s next, at Virgin and many other private equity and venture capital groups: The idea is stripped down to its essentials by our top team which meets almost every week to review the latest ideas. So that our own vested interests don’t blind us to new opportunities, nobody on the committee runs a Virgin business on a daily basis, but all the members work closely with the chief executives who run our businesses and sit on many of our boards.
If an idea has potential, you may find yourself invited to pitch your plan to the team led by Virgin Group chief executive Stephen Murphy. You must be well prepared, with all the facts at your fingertips. That’s where the comparison with television ends—unlike some of our TV counterparts, our top team is not at all rude. They may ask some very tough questions and will rigorously examine your business plan to see if there is a profitable business in the making. If there is, it is more than likely you will be asked to attend further meetings so that deeper questions can be answered.
Often the team meets several times before a final decision is given. They assess your business’ potential, whether it fits with the group’s ambitions, strategy, and of course brand values, and what the possible returns and profits will be. They look at spending plans, income forecasts and the marketing budget, and they pinpoint when the company is likely to break even. They work out what sort of stake the Virgin Group should take, and look at exit strategies—will it be a sale, or a flotation on a stock market? Above all, they look at the key managers who will be running the business. This is the holy grail for us, because your employees will make a great business idea work.
I do not attend the meetings—the team members don’t like my interruptions and interference. They call me Dr Yes—a parody of the wonderful James Bond movie Dr No.
You see, I have an ace up my sleeve. If I believe in your business idea, I can be quite persuasive in getting people to accept my point of view. If I like your idea but the team has concerns, then I usually ask them to find solutions to the problems they’ve identified. I can be very persistent. Before we developed our mobile phone business, I asked the team every week: Why aren’t we in this yet? My colleagues didn’t want to launch Virgin Blue, either, but in the end they came around.
I never push an idea to the senior team lightly—but, as I’ve said, I usually go with my gut instinct, and will sometimes disregard volumes of painstaking research. I would love to be able to say that every ace I’ve played has turned out to be as successful as Virgin Blue. But I can’t—which is why this makes my senior colleagues at Virgin very, very nervous!
Should we decide to go ahead with you, we will take a stake in the company and then look for a return on that investment over a period of about three to five years. In return, the new company gets the full range of Virgin’s expertise—and I’ll agree to help raise the profile, make key introductions and offer any suggestions that I can.
And if you are turned down, by Virgin or any other venture capital concern, remember that persistence is key. If your idea isn’t right for one investor, another may see its potential. So if you find yourself in this situation, dust yourself off and learn what lessons you can; then make your next call.
—By NYT Syndicate
Adapted from Business Stripped Bare, by Sir Richard Branson.
Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin Mobile and Virgin Active. He maintains a blog at www.virgin.com/richard-branson/blog. You can follow him on Twitter at twitter.com/richardbranson
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