Glum Glover and the rise of the micro business

Anne Glover of Amadeus Capital Partners fears real value destruction for fast growth startups, while the launch of another micro business tells a bootstrapping story for our times.

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7th November 2008 at 5:23 pm

One of the things I love about what I do is the sheer variety of businesses and people I get to meet, interview and write about.

From the outset SmallBizPod has combined aspiration and identification.  That’s why I’ve always found as much pleasure talking to the smallest of startups as I have to the largest of successful businesses.

So in the last seven days I’ve had a great time at both The Economist’s annual Innovation Summit packed with well funded startups and mega corporations, and the London launch of a one woman micro business called DaisyChainBaby.co.uk.

Lindsay Drabwell at the DaisyChainBaby.co.uk launch

Lindsay Drabwell of DaisyChainBaby.co.uk

An interesting contrast and one highlighted by the comments of Anne Glover of Amadeus Capital Partners, one of the UK’s most respected venture capital funds.

Speaking at the Innovation Summit Anne’s assessment of the current economic turmoil for startups and fast growth businesses was one of the bleakest I’ve heard.

She anticipates a lot of businesses going bust in the coming recession and implicitly suggested that a lot of those businesses deserve to disappear.

Her view, one I’ve never heard expressed before, is that there are too many startups being funded in the UK and Europe.  We need greater focus and fewer new businesses competing in roughly the same space for roughly the same market.

This Darwinian outlook is as it should be, but Glover has serious concerns that even well funded businesses with solid business plans are going to struggle as capital dries up.  As she said:

There’s going to be real value destruction, rather than just a necessary market correction.

Scary stuff appropriately delivered to an audience on Halloween.

But what’s this got to do with Lindsay Drabwell who launched DaisyChainBaby.co.uk on Monday night?  The answer is probably not a lot.

Lindsay’s website sells organically and ethically sourced clothing, accessories and skincare to a carefully focused niche of under 2 year olds. The whole business was set up for just £5,000.

Lindsay has big hopes for her startup, but is quite happy to grow it organically while continuing to work for a firm of data security specialists full time.

Of course, DaisyChainBaby is not alone.  The rise of the micro business, the ebay business or the spare room startup, however you want to describe them is something of a phenomenon.

It seems likely that it’s these businesses that have been responsible for the growth in the UK small business sector over the last decade.  According to a recent report on home based businesses they now account for some 2.5 million of the 4.6 million SMEs in the UK.

These ultra-bootstrapped businesses will of course barely register in the minds of VCs like Anne Glover.  But it’s the fast growth businesses which are going to find it tough over the next 12-18 months.

The big startup beasts will be fighting for survival in a world with no funding, while the bootstrapped minnows will be providing a very useful income to their founders at a time when every penny counts.

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Alex is the founder and editor of SmallBizPod, the UK's first podcast dedicated to small business, start-ups and entrepreneurship. Alex writes about topical small business issues, entrepreneurs and anything else that catches his eye here on the small business blog. http://www.smallbizpod.co.uk

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  1. […] annual Innovation Summit for UK and European start-ups and small businesses.  The outlook is exceptionally gloomy from the venture capital world, with wholesale carnage predicted over the next few years in the small business sector – go read […]

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