100 Stories of Growth - Insights from Entrepreneurs

Deal or no deal: don’t jump in too soon Another important lesson that founders and capital providers should acknowledge is not to do a deal unless it really makes complete sense. The allure of an offer of cash may seem irresistible to ambitious, growing companies. But many founders tell us that the temptation to transact in haste will likely impact them negatively over time. Founder and CEO Julianne Ponan used all her savings to set up vegan-friendly superfoods company Creative Nature. And despite being rejected by dozens of investors, the company’s sales of allergen-free products have soared with various retailers including Tesco and health food chain Holland and Barrett. But finding the right recipes for her food products has been as much about trial and error as her search for the right type of funding. Ponan honed her recipes and won two gold stars at the Great Taste Awards, the only cold-pressed food company ever to do so. By 2014 the company was in profit, but was not growing as fast as Ponan wanted. She decided it was time to seek external investment. “I went to a few angels and they laughed at our forecast. They said it was ridiculous and we could never launch into a supermarket on our own. And one investor even called me a little girl,” Ponan explains. Today, the company’s range is sold in most major UK supermarkets. And with the help of the Department for International Trade, it exports to various countries including Switzerland, Malta and Denmark. Ponan has her eye on even more markets, including the US. The company has a run rate of £1.4m and is looking to hit £1.8m by the end of the 2018, and in 2019, according to Ponan, is “looking at hitting £3m”. She was even in the enviable position of turning down investment from Deborah Meaden on the BBC’s Dragon’s Den. ”It wasn’t the right valuation and would’ve hindered our growth.” Waiting for the right capital has paid off. In September 2018, Creative Nature exceeded its £350,000 target on crowdfunding platform Seedrs, giving the company a pre-money valuation of £5.5m. And the supermarket deals continue to flow in. Holding out for the best capital recipe CREATIVE NATURE Again, it comes down to that vital alignment of interest between a company founder and an investor or financier. And all-important trust. Often these talks fall at an early hurdle mainly because of disagreement over valuations or forecasts. As discussed earlier in this research report, taking cash too early in a scale-up process can be extremely stressful on a personal level and potentially very constraining on a professional level. We believe younger and less-experienced entrepreneurs should tread carefully when considering offers of financial capital. They should always consider the balance of capital providers’ expectations and the support they will offer a founder in any funding deal. Julianne Ponan is the founder and CEO of West Molesey, Surrey-based allergen-free snack maker Creative Nature. She tells us that remaining confident and working towards the best funding options have great merit (see Creative Nature story on Page 57). Tamworth-based luxury bathroom furniture supplier HiB fostered a long- term programme of invoice financing with Lloyds Banks to help more than double its revenues. Here’s how a culture of strong relationships has boosted HiB’s sales (see page 55). 59 58 INSIGHTS FROM ENTREPRENEURS FINANCIAL CAPITAL for companies that qualify for tax-advantaged investment 20% easier raising equity is THE INVENTORS