Avoiding the pitfalls that lead to ‘zombification’

Apparently Brad Pitt filmed a movie in Glasgow all about zombies. Many of the streets around the city centre were renamed and given American-style street signs so it looked like a typical US city centre.

I’m not a fan of zombie movies, so I cannot say I’ve seen this particular film. But, as I speak with numerous Scottish start-ups and many angel investors, there would appear to be a fair bit of “zombieism” or “zombification” taking place in the start-up scene.

There is nothing better than a pitch from an entrepreneur that blows you away. It should be well rehearsed, but not robot like. It should cover a few of the staple bases, but not be too technical. It should be delivered in a professional and business-like fashion to show respect to the audience and potential investors. There should, in short, be enough to hook an investor into wanting to find out more.

Then, if an entrepreneur communicates well with investors and completes some due diligence, a seed investment of say £150,000 can land. It seems £150,000 is a nice number as it dovetails well with the Seed Enterprise Investment Scheme, where up to 50 per cent of an investment made in a qualifying company can be offset against a private investor’s tax burden. So, whether the start-up entrepreneur needs 150 grand, the magical pitch number is – yes you’ve guessed it – £150,000. So, in it goes and the entrepreneur looks at her bank account and her breath is taken away. My word, after all that pitching and diligence, HMRC work and business plan formation, she now has someone else’s cash to run her start-up and shoot for the moon. Yippee…

But then something happens. Reality kicks in and the entrepreneur has to do what she said she would do. She has to hire at least one or two key members of staff. She has to negotiate on contracts, terms, incentives, share options and the like. Then there is the new workplace pension and setting up everything with HMRC and her accountants on payroll, etc. Of course, there will be some form of premises needed to rally the team and stick on the website. There may be the formation of a board and the appointment of non-executive directors as specified by the investors. And still there is the business of running the business. It is here that the zombification process starts to form.

While the entrepreneur is running around doing admin-type functions to make the business legal and work, she also has to focus on hitting certain agreed metrics and targets. Metrics and targets that she used to convince investors to swell her bank account with coin. But, alas this is really and truly the hard bit. She is on her own and there is no turning back. She promised a bumper payday and she has to deliver. And the next 12 weeks are torture. As she works out where and how to spend her money to hit targets, get traction, produce sales and attracts users or customers, her cash pile starts to reduce and the brutal reality kicks in… “I could be dead in five months!”

So what does she do? Well, she starts to act like a zombie as the zombification process sets in. Her communication with her investors tails off. She does not share her frustrations, insecurities, fears and worries with her team. She starts to feel all alone and even lonelier as she knows that she should ask for help, but cannot work out how to. Her thought processes turn to mash and while there is still some glimmer of hope that she can pull it all back on track, she cannot face the reality that in essence, she has no idea how to run a business. In effect, she is already a zombie and will not get second-stage funding.

My shout out to anyone who has raised investment is make sure you avoid zombification. Enlist the expertise of your investors, mentors and anyone who you think has a brain. Be honest and communicate. Brad Pitt won’t always be around to save the day. Jim Duffy, co-founder of Moonshot Academy and author of Create Special

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