Recently I met Chris Spencer-Phillips (S-P) and Chris Brigden of First Flight Placements; they are aware of the difficulties that experienced investors have when finding companies to invest in and they are also aware of the difficulties young companies have raising funds. They propose a different approach… and it is one that is working well.
Over a tea and biscuits at the Institute of Directors in Pall Mall, Chris S-P explained that they are a recruitment/corporate finance company with a difference. They have a substantial database of High Net Worth potential Non-Executive Directors (NEDs) with currently 4,775 senior business Non Execs of whom 70% are prepared to invest a minimum of £50K and 450 who are prepared to invest £150k to join the board of a suitable, aspiring company. Companies who approach First Flight pay for the search and appointment of their new Non-Executive Director. When the director is appointed they make their investment into the company and add the additional value of their experience and background.
In the last four years, over one hundred and twenty investing NEDs have been appointed to around 90 client companies resulting in over £5M of investment and help to businesses across the UK. And only one of those 90 companies has failed. Chris explained the benefits of this approach to both company and NEDs:
- Businesses are vetted by First Flight. They only work for businesses that already have a proof of concept, customers and the appetite to scale to £10M in 5 years. Amongst other things they also check that the Total Available Market is at least £500M so that there is a good possibility of growth.
- Sector experience. First Flight has such a large database of potential NEDs that they are able to match potential candidates by sector as well as experience. Angel Investment research shows that investors from the same sector have a higher chance of success than others.
- Heavy weight board members. Businesses benefit from connection from senior members of the business community on their board. These are people who have wide experience and are not afraid to ask the difficult questions that only an informed outsider can ask. The board members can also help in future funding rounds if they are needed.
And who has benefited from this model?
- Pod, a health food outlet in London received £250,000 and gained a Chairman and three NEDs: a former director of Grand Met, a Director of Boots, a former CEO of American Express and a former FD of Arcadian International.
- CentraStage of Reading received £50,000 and gained a former Director of Marconi and VP of Qualcomm.
- Bacchus Wine Closures received £200,000 and appointed a former MD of Communica Plc, former FD of Schweppes and former Director of Hambros.
The model has only been running for four years so it is too early to find the first NED who’s exited. So all eyes on these companies for the success that proves the model works.