Jean Miller: Following the crowd could pay off for firms in need
InvestingZone aims to help the public enable start-ups and SMEs to get the equity they want to succeed
Margareta Pagano is a former business editor of the Independent on Sunday who now writes columns and business interviews for a range of publications, including the Independent, Independent on Sunday and London Evening Standard.
Thursday 22 August 2013
Jean Miller was nine when she raised £12 from her family to fund her first start-up; buying crisps and chocolates from the local cash and carry and selling them to her schoolfriends. But she didn't borrow the money, worth about £150 at today's prices; she gave them equity instead.
"My mother still has the share certificate I wrote for her on a scrap of paper. As a kid, I knew I wanted to go into business and have my own company. Making money is in my genes – the female ones that is," she says, with a big laugh. Her great-grandmother had a ginger beer brewery and, during the depression, her grandmother ran a stall on Leeds market, Mary's Flower Box, while her Aunt Margaret was another formidable businesswoman.
"She owned a chain of wholesale and retail wine outlets, selling out to the supermarkets when they started going into the drinks business. Then she got into frozen foods and freezers, way ahead of her time."
So it's no surprise Ms Miller got the bug, and by her teens was buying penny shares. Choosing not to go to college, she talked her way into a job at Demon Tweeks, the world's biggest supplier of bits for racing cars, even though it meant cycling the 18 miles along Cheshire's country lanes to and from her home to work each day. Then came a sales job at Dixons Stores, one of the UK's biggest retailers, where she learnt the hard way to sell anything from TVs to cameras but also to trust her instinct: "The chance came up for me to buy Ninja Turtle cameras, when the Turtles were all the rage. I bought 10,000 of them and Stanley Kalms, the founder, went berserk, thought I was turning the stores into a toy shop. But I persuaded the store managers to stack the dump bins around the store and they sold out, with a whopping profit, within weeks."
After Dixons, Ms Miller worked in top jobs at Kingfisher and Compaq Computers, before joining E-Synergy, the venture capital firm, where she is still a director.
Now she wants us to catch the bug and invest in the next generation of UK entrepreneurs. She has just launched InvestingZone, a crowd equity platform to help start-ups and SMEs raise money direct from the public. It is the first crowdfunding platform with venture-capital expertise and to have high-profile City backing: Jon Moulton of Better Capital and Ron Armstrong of E-Synergy are investors.
You can see why they are backing her; she's inherited all those killer-Miller female genes in bucketloads. The daughter of a Dutch colonial mother raised in Sri Lanka and a Northern engineer, she's refreshingly outspoken in her mission. Her biggest bugbear, she tells me over lunch near the London Stock Exchange at the Chop House in Paternoster Square, is the way the City likes to pretend that investing is so difficult and the preserve of professional investors and angels: "It's nonsense. Investing is not rocket science. Most sensible men and women are every bit as good at spotting great ideas or investments as the professionals."
What's more, she says, now is the time for them to be investing in small companies as the returns from savings are so low. "After the latest guidance from [Bank of England Governor] Mark Carney that interest rates are likely to stay low, savers need alternative places to invest their money. What better place for them to invest than in the next generation of business?"
Like the companies pitching on InvestingZone? "Exactly. We have only been going for a month or so but so far seven new companies have raised more than half their £1.3m target money. It's working well and new investors are signing up on a daily basis." The start-ups range from Epicardio, a healthcare company that specialises in training heart surgeons to practise their skills through simulation, to OkoBay, a frozen coconut health food maker. Another 15 or so companies in high-tech to clean-tech are waiting in the pipeline to be vetted by her team.
"Everyone is obsessed with bank lending and debt finance but what most companies need when they are starting is equity – this is the missing gap in the UK. I also know from experience that there are great UK businesses going unfunded. This is because too many venture capitalists and angels don't look beyond their noses; they take a short-term view and too many look for a quick exit," she says.
Indeed, she knows first hand just how tough it is to raise money. Her brother (the Miller males are engineers) designed a revolutionary structural flooring product, Tekdek, which could have transformed how buildings are put together. He failed to raise the funds but the experience showed her how blinkered the venture-capital industry is to new opportunities, particularly those in the engineering and manufacturing sector.
Technology is changing all that – for two reasons. First, the internet is revolutionising access to finance, giving the public the opportunity to invest directly in unlisted securities who didn't have the chance to do so before: "Now they have access and they can take advantage of tax incentives such as the Seed Enterprise Investment Scheme, one of the most generous in the world."
Secondly, she's convinced there is a new breed of investor, the younger, tech-savvy individual who has money to spare and who is interested in investing in the latest technologies: "There are so many bright youngsters out there who understand technology and who want to invest in the long term. Who knows, maybe they will be good at spotting the next Google or Facebook?" Her bigger ambition is that existing SMEs will turn to crowdfunding as a source of finance for expansion.
However, there's a catch. She's worried that regulators such as the Financial Conduct Authority are so narrow in their outlook that they may kill off this new source of finance before it's had the chance to flower: "Investing in unlisted companies does need regulating but the current rules are archaic, better suited to the Victorian times than now, and not fit for purpose. It just needs people to apply some common sense.
"You can spend what you want on spread betting, bet on the gee-gees but the FCA says you can't invest even £100 on a company raising money on a crowd platform unless you show you are a 'high-net-worth individual'. How crazy is that? Why shouldn't young men or women in their early 30s, who haven't got pensions or savings yet, be able to consider investing in a start-up that might see returns in 10 years' time?"
Even she accepts there needs to be guidelines but the rules should not be proscriptive. That's why InvestingZone offers investors advice on how to limit the dangers by recommending that portfolios include long and short-term investments; low and high-risk categories: "We are taking great care with our due diligence, and helping entrepreneurs where we can with their plans. But we also advise investors to do their own diligence, to ask the founders and CEOs questions and solicit opinion from other investors."
And how does she make money? Well, InvestingZone takes its cut when companies raise their money – the platform charges 7.5 per cent of what they raise.
"We haven't earned revenue yet as the deals haven't completed. But I have always made profits for the companies I have worked for. It's what I do – improve businesses, make them better and drive them forward. Women are rather good at that."
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