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MEnt student featured in The Sunday Times

Monday, June 11, 2012

MEnt student featured in The Sunday Times

Alexandra Gibson, one of our current Master of Enterprise (MEnt) students, was featured in The Sunday Times on Sunday, 3 June 2012. She was commenting on the new StartUp Loans introduced recently by the government.


Alexandra was recently named as a runner-up in the 2012 Venture Further competition with her business, Beach Bacchanal.


Read the full article below.


Bright young things given a £2,500 lift


By Kiki Loizou
The Sunday Times
Published 3 June 2012


Will new sources of loans breed a generation of entrepreneurs and cut the dole queue, wonders Kiki Loizou.


Late last Wednesday, Alexandra Gibson stopped work on her masters dissertation and picked up a needle, thread and a big pair of pants. For four hours, she worked on designs for her plus-size swimwear range called Beach Bacchanal, which she hopes to launch in January.


Combining her studies with establishing a start-up is tough, but Gibson, 22, is confident she will find buyers for her products.


Helped by skills learnt on the Master of Enterprise course she began at Manchester Business School in September, she has written a 27-page business plan to submit to competitions that offer cash for promising business ideas.


Keen to avoid a bank loan, she also sought backing from the Prince’s Trust, but she did not meet the criteria because its main target is jobless youngsters, not those in education.


Last week, however, the government offered Gibson and other cash-strapped entrepreneurs a helping hand. It has earmarked more than £180m to help start-ups and small businesses grow.


There are two schemes. The £82m StartUp Loans fund will lend up to £2,500 to entrepreneurs aged 18 to 24. The second will make £100m available through alternative funding sources, such as peer-to-peer lenders.


“The StartUp loans will fill a gap,” said Gibson. “There are others in my position who need that small amount of money to kick things off.”


The prime minister offered his encouragement. “I want this year to be the year where people can think, ‘Yes, I can do it’,” he said.


Will it be enough, however, to inspire a new generation of business people, cut the 1m youth unemployment total, and help the country crawl out of recession at the same time?


Loans from the StartUp scheme will be repayable over five years at an interest rate of inflation plus 3 percentage points. But more than financial assistance will be available. Successful applicants will receive mentoring.


This is what will make the scheme worthwhile, according to Husayn Kassai, president of Oxford Entrepreneurs. The university society has 7,000 members, so he knows what would-be entrepreneurs are looking for.


“The money offered by the StartUp fund will not be attractive to many,” he said. “But I would apply purely for the mentoring.”


Kassai, 22, said he could save £2,500 in just a few months with a weekend job on the minimum wage, and added: “Our business society holds competitions that offer £10,000 to the winners.”


The small amount offered by the state will be useful only to start-ups whose running and production costs are extremely low, such as “someone selling jam at a market stall”, Kassai claimed.


The announcement of the loans coincided with a report from Lord Young of Graffham, David Cameron’s enterprise adviser. He said Britain would have 900,000 more businesses if it had the same enterprise culture as America. One who has already made the leap is Andrew Cannon, who opened Ruffians, his Edinburgh barber and grooming business, in March. He spent £8,000 of angel investors’ money on the website alone.


Cannon, 30, raised about £1m from three investors, whom he met through his social circle. “You can’t get quality contacts through a bank or a Wonga-style loan,” he said, referring to the short-term loans company.


Cannon added that the low interest borrowing available under the government’s National Loan Guarantee Scheme would not appeal to him because it is still a bank loan. It helps companies with turnover up to £50m and offers interest rates one percentage point below the norm.


Like Kassai, he believes youthful entrepreneurs want to learn from others’ experiences. “Angel investors understand what it is to start and grow a business,” Cannon said.


Samir Desai has reaped the benefits of expert advice. Funding Circle, the peer-to-peer lending site he co-founded, has secured investment from Charles Dunstone, chairman of Carphone Warehouse, and Ed Wray, co-founder of Betfair. “They tell us when we’re doing things wrong. It’s invaluable to our growth,” said Desai.


Funding Circle has lent about £34m to 780 companies since starting in August 2010. It is one of the non-bank lenders hoping for a share of the government’s £100m fund for alternative financiers. Desai, 29, will be applying for about £30m.


Another bidder will be Anil Stocker, who co-founded Market Invoice, an online service that allows companies to raise cash by auctioning their invoices. Its buyer pool comprises more than 35 private investors, family trusts, hedge funds and asset managers. Last month it auctioned business worth £3.6m.


“The money offered to start-ups by the government may not stimulate people to take the risk,” said Stocker, 28. “It is more likely to attract those who have made up their minds.”


For start-ups seeking small amounts, Stocker said new sites such as Crowdcube are likely to be more useful. Crowdcube allows people to invest as little as £10 in a business in return for a share of equity. Since starting in February last year it has raised about £2.8m for 18 businesses.


Banks do not want to be overlooked as the range of funding sources for small businesses multiplies. Barclays is one of the biggest players in the National Loan Guarantee Scheme, and expects to lend the first £1.5 billion of its allocated funds within the six-month deadline. “We continue to review how we can create more awareness about the services and mentoring that we have on offer,” said Steve Cooper, vice-chairman of the bank’s business division. 


Master of Enterprise (MEnt) >>

Venture Further competition >>

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