They brought the UK economy to its knees, but Cass Business School has launched a center focusing on financial entrepreneurs with £10 million of funds for start-ups, as some business people express doubts about the country's competitiveness.
The Peter Cullum Center for Entrepreneurship, which opened yesterday, is named after the founder of one of Europe’s leading insurance companies, Towergate Underwriting. Cullum, a Cass MBA of 1974, provided the £10m seed money, which will be available to start-ups from September this year. He was optimistic that it is: “exactly the right time to launch entrepreneurship.”
New businesses in the UK can seek start-up funds from family and friends or turn to the venture capital industry for large-scale investment said Nick Badman, the chair of the Center. “But between those two sources there is an equity gap which we are seeking to fill through Peter Cullum’s generous fund.”
Badman also highlighted the wide remit of the Center. While you can’t teach someone to be an entrepreneur, he said, it’s crucial to provide talented individuals with a dense supporting network and a mentoring scheme that works. Small businesses succeed, not primarily through fancy marketing and finance, but through teamwork and by realizing the value of different skills. Without a supporting environment, this talent can easily “drop between the cracks”, he said.
Of the top ten business schools in the UK, four now have dedicated centers of entrepreneurship: Cambridge, Oxford, City and Strathclyde.
Lord Mandelson, the UK Secretary of State for Business, Innovation and Skills, acknowledged that Britain lagged behind other advanced economies in funding new businesses, and praised the “guts” of young entrepreneurs “who strike out on their own in a recession.”
Entrepreneurship not only strengthens national compeittiveness, he said, it also drives social mobility, self-determination and diversity in commercial life. It is crucial, he added, to protect not only established businesses, but also those that don’t yet exist: “This investment is as important today as were the roads and canals for the economy of the eighteenth century”.
There were about 2.2 million businesses in the UK in March 2008, according to the Office for National Statistics, up three per cent year-on-year.
One attendee argued that a lot of funds are wasted on low-value start-ups, and that public spending should focus on big industries that boost long-term productivity. Lord Mandelson said the government would fund pre-commercial trials and research in industries such as renewable chemicals and biotechnology. He also spoke of a global economy that values sophistication over scale, where: “It is no longer about making the better car, but a better component of the car”.
However Bruce Garvey, chair of the Cass Entrepreneurs Network, criticized Britain for lagging behind countries like Germany and Sweden in developing new technology and engineering expertise. “The British economy overemphasizes the service industry”, he said. He suggested that as well as focusing on financial services, the new Center should collaborate with City University at large on high value-added technical innovation.
Nick Badman said that while only three per cent of Cass graduates currently set up their own businesses, the rising proportion of students from overseas: over 40 per cent, often from families that run their own firms, means that the school is rapidly becoming more entrepreneurial.
Badman also defended the Center’s financial focus: “At a time, when some people are a bit... schizophrenic about the City, Cass is not.”