Business is a Daryl of laughs
I had come to meet Daryl Woodhouse, who opened up by telling me that because of his children, he’d “had a bit of a slow start to the day”. It turns out a slow start means getting up at 7.30am rather than 5.30am – this was the first clue that indicated Daryl means business.
With a background in corporate management and mentoring, Daryl decided it was time to take some of his own advice so he set up Advantage. Now a successful businessman, mentor and investor, I was here to find out what motivated him, what he looks for in a potential investment and how to avoid common mistakes when pitching to an investor.
What’s your motivation?
Daryl began by explaining there’s a difference between a solo entrepreneur and someone trying to build a big business with great people that you eventually sell. He fell into the latter category because of his passion for business.“I love working with people, I love business and I love networking. I want to be able to help people run successful businesses.”
To this end Daryl is building a network of complimentary businesses spearheaded by his coaching and consulting company. In the course of this process, not only is he building companies from scratch, he’s also investing in startups.
What do you look for in a startup?
Echoing what we had heard from Simon, Daryl’s answer came quickly and unequivocally: people. “They say that 75% of business is enthusiasm and drive and only 25% comes down to ability.”
Proof of this comes in the form of one of Daryl’s investments. He was an early contributor to one particular startup because while the business plan was good, he completely bought into the founder’s “almost wacky belief and enthusiasm”.
Daryl explained that ‘interest’ is another key area to look at before investing. If a company has been involved in a successful round of crowd funding there’s a good chance the business is economically sound and has an exciting future. Conversely, if a company has been unsuccessfully trying to attract funding for two years, they’ll often be a good reason behind this.
What common mistakes are made when pitching for investment?
“There are cases of people being arrogant or just naive but the biggest mistake is to be unrealistic.This means overvaluing your business and offering a very small amount of equity.”
The example Daryl gave was that if you’re a startup company with an idea but haven’t started trading and you ask for £200,000 in exchange for 5% equity, theoretically you value your unproven business at £4 million. For an investor this is very hard to believe for a company that hasn’t made a sale.
Any pitching advice?
“Prove that the idea works.” Daryl stressed the importance of having a robust business plan that covers all bases and projections. In order to get this right he suggested, “It’s a good idea to go on a course, there are loads of government funded courses out there.”
Daryl advised putting yourself in the position of the investor. “What would you want to hear? You have to let them know what is it that you are good at.”
A great point from Daryl was that investors understand that people looking for funding often lack business experience. If they had bundles of experience and had already started loads of successful companies then they probably wouldn’t need funding. For this reason you should recognise where you don’t have experience and explain to investors how you are going to combat this. A good idea is to employ a business coach or mentor, which I think leads us nicely back to the beginning as Daryl’s business, Advantage, provides exactly that service.
My timeslot was up. It had been fascinating to hear about startups from the point of view of the investor. I left thinking what both of us would be doing at 5.30am the following morning. Daryl, no doubt would be making up for his slow morning the previous day and sending out a few emails. I, with near 100% certainty, would be asleep.