Cutting It

When serial entrepreneur Lee Henshaw took his latest venture, Five Leaves Left, through the g2i investment readiness programme, he wasn't expecting to hear much that he didn't already know. The owner of Way to Blue, a successful online public relations (PR) company for the entertainment industry, he already had plenty of experience in both raising money and running a business. With his new venture also rooted in the PR sector, he felt he had a credible business plan in place.

By the end of the four day session, however, all that had changed. He'd turned a UK project into a global one, refined his business model, rethought his philosophy on investor relations, and even dumped his company name. He'd also found out the true meaning of the phrase 'nerve-wracking'. As he recalls now, 'I turned up thinking I knew everything, and they thoroughly slapped that out of me'.

'I turned up thinking I knew everything, and they thoroughly slapped that out of me'.

The idea for Henshaw's business, now renamed Happy Cuttings, stemmed from the problems he experienced in finding a specialist service for his existing PR agency. Part of an agency's job is to try to get editorial coverage for their clients in newspapers and magazines, and it's usual to provide press cuttings after the event to show clients what's been written about them. In the traditional print media world of newspapers and magazines, those cuttings are often provided by specialist service companies - but Internet tracking is still in its infancy. It's a laborious and time-consuming task, particularly as some articles only appear on news sites for a few hours, and has to be done manually by the PR agencies.

Happy Cuttings is developing search technology to meet this online need, tracking down stories about specific people or companies on the Web, and putting them into a report for agencies with relevant context. Working with a freelance developer and project manager, Henshaw has put ₤25,000 of his own money into the venture, which will go into beta testing in the new year. He'll then seek to raise around ₤1 million to offer the service across multiple types of media - such as property, IT, fashion and sport - and expand it globally.

Challenged by investors

These global ambitions were fuelled by Henshaw's g2i experiences, which challenged many of his preconceptions about the direction of the company. His original plan had been to provide a service purely for the UK entertainment sector, but one of the first things he was asked during his g2i presentations was why he was limiting his options. If an idea works and meets a real need, investors want to scale it as far as it will go.

That wasn't the only thing he was challenged on. To begin with, the g2i team wanted to know what his sales projections were based on. 'I had a very vague understanding of the amount of PR companies that exist in this country and how substantial they are,' he says. 'Now I've got a better understanding of the global PR market - for example, about what percentage of publicists work in technology or entertainment. So I have a lot more regard now for the potential market size for the product. It reminded me how important research is, and made me less cavalier.'

Henshaw was also taken to task about financial reporting. He points out that the shareholders in Way to Blue are relatively passive and don't expect many reports - but most angel investors and pretty much all VCs are far more demanding. The sessions taught him about monthly management accounts, 12-monthly projections and other investment reports - and in short 'made me more serious about how I treat investors'. He also picked up information about the Enterprise Investment Scheme, which is designed to help smaller companies raise capital by providing tax relief for investors on certain shares.

Even the name he'd chosen came under fire at the workshop. 'Five Leaves Left', like 'Way to Blue', was named after the songs of one of Henshaw's favourite folk artists, Nick Drake. But as an investor asked at one of his g2i presentations: 'Why not just call it what it is?'

Grilled by his peers

The presentations to investors turned out to be the most gruelling part of the g2i experience, despite Henshaw's years of experience as a presenter. 'I had to keep presenting to an audience of 20 - 25 people. I found it nerve-wracking - they constantly critiqued me. I found it one of the most unnatural things I've done. I'm used to presenting to clients and I like public speaking, but the task of presenting my idea in one minute was really difficult. But at the end of the course, I felt I'd grown enormously in stature.'

He also found himself better placed to sway investors. Although he'd raised money before attending the workshop, he'd only done so informally. Since his g2i experience, he's gone on to raise ₤925,000 for two other companies he's involved in, a record label and production company, and he credits part of that success to his investment readiness experience. 'When you first do it, you think of the investors as 'them and us',' he says. 'But with a social networking event, it just gets easier and easier to talk to them. It's possible that the investment for Happy Cuttings will come from outside my community, and from someone with a history of investing in technology.'

'By far the most beneficial thing was meeting other entrepreneurs, watching them pitch and taking their critiques of our business plan,' he concludes. 'I was fascinated by the people I met. At times you can feel like giving up - but putting you in the company of other entrepreneurs really dissuades you. You realise some people have got really bad ideas, and some are really brilliant, and you can see where yours falls. When I arrived, I was near the bottom of the pile - next year I'll be at the top.'

Lee Henshaw was talking to Keith Rodgers of Webster Buchanan Research

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