FINTECH FOCUS: FOUNDERS As 2021 draws to a close, it’s worth reflecting on all the ways in which the UK business landscape has changed in the last half-decade: getting to grips with Brexit, the post-COVID recovery and the environmental pledges made at November’s landmark United Nations COP26 conference. The UK is in real need of new, innovative companies that can react quickly to the challenges heading its way. But recent evidence suggests the country may not be as up for it as we thought. Despite early evidence of an entrepreneurial rush to the head during the pandemic, with a host of lockdown-inspired startups, there was a sharp fall in the number of individuals setting up new businesses in the last few months of 2020, compared to 2019, according to a definitive study by the Global Entrepreneurship Foundation (GEF). Paradoxically, the study also found more people than ever before thought starting a business would be a good career choice, but 53 per cent were prevented from doing so by fear of failure (an increase from the 46 per cent in 2019). It’s not that recent events have made us all super-cautious. The confidence and emotional resilience needed to embark on an entrepreneurial career have been lacking for some time. An earlier, 2017 study by the same organisation among new graduates found a distinct lack of enthusiasm, with only 0.6 per cent of them having started their own business, compared to 8.7 per cent for the population at large. As Brexit begins to have a more profound impact on the way the economy functions, a faltering pipeline of startup businesses could be a real issue at a time when Britain
must learn to be more self-sufficient. It poses an important question: how do we most effectively drive entrepreneurship in the UK to increase competitiveness, particularly given the apparent apathy among graduate cohorts? One company taking a proactive approach to tackling the problem is financial services provider OakNorth, which has been in the business of encouraging entrepreneurship since 2015. The white-label business credit analysis platform spun off its own business bank under the same brand, to cater to a group of SMEs that it defines as the ‘missing middle’ – those in need of serious investment but lacking the size to get conventional institutional investors excited. OakNorth’s founders Rishi Khosla and Joel Perlman found themselves in just that situation when they were looking for funding to support a previous business in 2005. Despite it being profitable with good metrics, no high-street banks were willing to provide the finance they needed to expand. This informed the founders’ next move in – launching a credit intelligence software suite designed to (affordably) assess the creditworthiness of companies in this tricky middle segment, and then a bank to help secure them the funding they so badly needed. A sharp focus on entrepreneurship has served OakNorth Bank well: it achieved unicorn status in 2019 and was the first UK challengers to turn a profit in 2018. It remains one of the few to do so. Now, in the face of the seismic challenges facing the UK economy, there is a sense at OakNorth that the time has come to expand the scope of its work beyond finance and funding, to broader social initiatives. “We made a pledge, several years ago, to
give one per cent of our group profits to organisations that we think have impact,” says Khosla, also CEO of OakNorth Bank. “How do you help people, who naturally won’t have the opportunities, get an opportunity to progress?” That’s led OakNorth into partnership with Khosla and Perlman’s old university, the London School of Economics (LSE), on a ‘Mentorpreneurship Programme’ . It’s run by LSE Generate, an initiative that’s been helping to build socially-minded businesses by offering a network of support and practical tools to would-be entrepreneurs since 2010. It boasts notable alumni including Allbirds, Lensational, and Disperse.io. And it’s just opened its first European hub in Lisbon. The new Mentorpreneurship Programme encourages businesses to engage past, current and future student entrepreneurs in a ‘life-cycle of mentoring’. The hope is that the programme will be replicated across education to help address the transformations that the UK economy is facing, to prepare the workforce with the skills it will need more of, and break down misconceptions about who ‘qualifies’ to be an entrepreneur: in the GEF survey, four-fifths of the non-entrepreneurial population believed that those successful at starting a business came from an advantaged background. Ultimately, the programme to inspire a new generation of businesses that drive change in their communities. Planting the innovation seed starts early. “That mindset of entrepreneurship doesn’t get embedded when you’re finishing university or finishing college,” says Khosla. “It probably happens much, much earlier on – in terms of your willingness to take risk, how you interact, how you collaborate.” So, the Mentorpreneurship Programme
HOW TO INSPIRE A STARTUP NATION A new partnership between business bank OakNorth and the London School of Economics hopes to encourage a new generation of founders through a ‘Mentorpreneurship Programme’ that breaks the norm, as the bank’s Rishi Khosla and LSE’s Laura-Jane Silverman explain 14
TheFintechMagazine | Issue 22
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