Launchpad helps to nurture hatchling businesses

Children don’t generally aspire to become actuaries or accountants. They want to be astronauts or professional footballers, musicians or artists.

To Jim Duffy, “chief executive optimist” as he puts it, and co-founder of Entrepreneurial Spark, it’s that loss of innate ambition that damages our individual prospects for business success. In November last year, he launched a concept entirely new to Scotland: an equity-free accelerator operation designed to turn people with a business idea into entrepreneurs.

Duffy feels we’ve lost our sense of ambition: “Remember when you were a kid and there were limitless possibilities? No one taught you how to think; you woke up in the morning and lots of things could happen. Then something happened along the way and you were conditioned to fit in, to play the game. Well, we want to change the way people think in Scotland.”

E-Spark’s business model sounds like an unlikely one. No equity in the businesses, no charges to them and no direct central government support. Instead, there are two fully supported “hatcheries”, each with some 50 entrepreneurs busily trying to get their businesses to work, and the space comes free. How does that work?

“It took me nine months of planning and research,” says Duffy. “I went to the US to find out what was happening there. I looked at Mass Challenge in Boston and I learned from them. By the time I’d done all that research and accumulated tons of information, I knew exactly where the pain point was in Scotland. Students, graduates, retirees thinking of starting up a business from their garage or the basement can’t afford expensive premises or serviced offices. And when you do start up, you feel isolated and alone and that is very disheartening.”

Duffy saw what was needed and he put it into action with support from Sir Willie Haughey and Sir Tom Hunter. Each of these Scottish entrepreneurs has put up fully serviced space, complete with phones, desks, printers and other technology, to provide a co-operative working environment for start-ups.

RBS is the only bank to be supporting E-Spark. Not only has the bank given  financial support to many of the chiclets but each week RBS staff spend time in the hatcheries offering advice and support on a whole range of issues from access to funding to business security issues.

The Glasgow hatchery has been given 10,000 square feet of workspace at the headquarters of Willie Haughey’s City Refrigeration Holdings. The West Coast hatchery, which launched in May, is supported primarily by Hunter. He has spent £200,000 fitting out 4,000sq ft of office space at the Hunter Foundation building in Dundonald, South Ayrshire.

But with all this talk of chicklets and hatcheries, just what is actually happening to the “hens” who have managed to secure a place at either of the E-spark centres?

“We’re here to provide support and sometimes blunt comment,” says Duffy. “This is all about the 40 or so individuals who first come to a selection day. We ask them ‘do you want to be an entrepreneur?’ and every hand in the room goes up. Then we put them through a reality check: 70 per cent divorce rate, financial problems, huge number of hours, commitment, determination and all the rest of it. We throw stuff at them, they do some group challenges, prepare a pitch and so on, then we ask them again ‘Do you still want to be an entrepreneur?’ and maybe 10 per cent will have dropped out.

“E-spark is the next selection level, looking at the business model, setting up a team, the matrix set up, cash flow, marketing and making it work. Then we bring in key speakers who will make participants think hard and really examine everything they’re doing. We check on them every week. We can see where there are red flags and can step in quickly. The difference here from advisory organisations like Business Gateway is that all of us have run businesses and had the experience of setting up. We know what it means in real life, not theory,” says Duffy.

He feels that Scots are lacking in confidence and an entrepreneurial spirit, not in ideas. He wants nothing less than to entirely change the mindset we traditionally have towards business: “I want to create a new breed of entrepreneurs who think positively and think globally, not locally,” he says. The Americans are about five years ahead of us so we have a lot of catching up to do. We need to learn from our experiences, including failure, and use that information to build success.

“People can stay in the space for up to a year, although most are ready to fly the coop after about six to ten months but everyone goes at their own pace. Some do drop out but we are already seeing real results from our chicklets.”

Significantly, Scottish Cabinet Secretary for Finance, John Swinney, pictured inset, is a supporter of the scheme as he explained when he officially launched the E-Spark West Coast facility: “Scotland is recognised for our contribution to shaping the modern world through innovation and the Scottish Government, with our agencies and Local Authorities, working closely with business and industry to ensure the country continues to be a competitive hotbed, generating innovative ideas and new entrepreneurs.

“Entrepreneurial Spark’s decision to  establish operations in Ayrshire is a fantastic boost to the local business community. This industry led, not-for-profit initiative, is the first of its kind in Scotland and offers new start-up businesses free workspace, IT access and invaluable mentoring advice from Scotland’s leading business people.

“I am confident this private and public sector collaboration will play a key role in providing our next generation of entrepreneurs with the skills and tools they need to flourish and contribute to Scotland’s economic success.”

Or as Duffy puts in his ownsuccinct way: “He gets it. He really gets it.”

E-Spark’s own business model may not seem like the ideal one upon which to start a new business, but there can be no doubt Duffy’s initiative is not only attracting support but begining to prove its effectiveness.