£100,000 investment being offered in competition to find the next big PR agency
By Rich Leigh on Monday, April 7, 2014
This morning, I spotted a tweet from Francis Ingham, the Director General of the PRCA:
— Francis Ingham (@PRCAIngham) April 7, 2014
The link goes to this site: Agency2014.com. Here’s the site’s opening gambit:
Agency 2014 presents a unique opportunity to start your own agency with the financial backing and support of experienced entrepreneurs. All you have to do is convince the backers that your business idea is better than the rest and worthy of their investment. The winner picks up a £100,000 investment in a new PR agency and ongoing management support from some of the most successful practitioners in the land. We’re looking for people with imagination and drive to create the most talked about start-up of the year.
TL:DR: ‘win £100,000 and the backing of experienced pros to start your own PR agency by pitching your business idea’.
The experienced entrepreneurs include Band & Brown Communications and Brando founder Nick Band (about whom I didn’t know much) and PR industry authority (and the author of one of my favourite PR books, The Fame Formula) Mark Borkowski – described on the site as ‘legendary’ and ‘without doubt the most famous man in PR’. I know.
I spoke to Nick Band earlier this afternoon and joked about the overt marketing-speak nature of the copy, which he said he was behind. With relation to the bold assertion about Borkowski, he asked me who I’d say was more famous, to which I responded with Max Clifford – whether he’s a publicist or not is irrelevant, ask the man on the street for the most famous man in PR and they’ll say him (though for legal reasons I doubt we’ll be seeing much of him in the future), Lord Bell and Matthew Freud for starters – and that’s not even thinking beyond the UK, with people like Ryan Holiday. Still, far be it from me to lecture a fellow PR on embellishment; it was all well-humoured.
Grandiose descriptions aside, the concept sounds interesting and like the recent story about communications firm founder Simon Cohen giving his agency away, it is certainly headline-grabbing. Borkowski is well-known enough within the UK PR industry to raise an eyebrow and with organisations such as the PRCA, Gorkana and The Foundry behind it on the judging panel, it carries weight, too. CIPR UK President and Ketchum’s digital and social media director Stephen Waddington, somebody I have a lot of respect for in the industry, called it a ‘cracking initiative‘. The Dragons’ Den-esque pitching process hopes to uncover a business Borkowski says should be ‘fresh, deeply digital and bursting with energy’, according to this Gorkana post.
Equity – what will the winner actually get?
After I first read the site – and the subsequent posts on PR Week and Gorkana – I got to thinking. The equity being offered to the winning business pitch is between 49-70%. The judges will pick the winner and will then, through negotiation – but as the ones holding the upper-hand of the £100k and the business experience – negotiate the winner’s equity. There can be up to four people involved in the bid to win.
As an anonymous commenter on the PR Week piece said, I can’t think of a single reason I’d pitch a business idea to enter only to wind up without the controlling stake, but that’s something for the winner to ensure doesn’t happen. I asked Nick if he thought it’d be unfair for a winner to have a non-controlling stake in a business the chief owners won’t commit to on a daily basis. After a quick pause, he reiterated that the equity would be based on the plan and forecasts, stating that he thought it was entirely fair.
The £100k prize – and what it really is
The fact the PR Week piece talks about ‘cash’: ‘[The investors] are offering the cash to the team with the best business plan for a new agency’ is somewhat misleading and something I wanted to clarify before I wrote a piece promoting the competition.
I asked Nick to break the £100k prize down for me. He emailed with:
The winner will be gifted £100,000 which has to be used to buy shares in the company which will in turn be used to fund the start-up. The amount of equity on offer will range from 49 to 70% depending on the strength of the business plan. The better the forecasts, the more equity they will get. But the investors are not obliged to match the £100,000 so its’ difficult to put a valuation on it at this stage. Needless to say, the better the plan the more money will be invested if needed.
I still had a few questions including whether the £100,000 went into a pot for the business, who has authority over that money etc, so as mentioned, I called him on the number in his email. I actually got more than I expected.
The £100,000 will be given to the winner as a cheque. This cheque is then essentially the winner’s buy-in to the equity. The money will be held in a pot, to be spent solely on the business’ development.
It turns out Nick will be contributing the vast majority of the investment – somewhere in the region of 90% of it. He sighed heavily when I asked about the money, saying ‘it really will be coming out of my account, that I can assure you.’ To give a bit of background about the man, Band sold consumer agency Band and Brown for £7m – the agency is now (sort of) in existence as Citizen Relations. He’s also had a bit of an odd time post-sale, since which he’s set up virtual agency Berlin.
Will it work?
For the right person, the competition will be great, in terms of the mentoring experience and also the from-the-off PR that will no doubt attract potential client attention. Both Nick and Mark would make for interesting partners as long as they’re willing to let the founder(s) lead the way, with the former stating on the call that although he wouldn’t be devoting his time to it daily, he isn’t ‘dead in the ground yet’ and wants to ensure the agency succeeds.
I challenged him with the fact I (and others, including my former MD at 10 Yetis Andy Barr) think £100,000 is an unnecessarily large sum with which to launch an agency, saying it could be done with a good head for PR, a phone, a laptop and a website. Nick disagreed, citing employee costs and office space, something that made me consider the difference between starting a business within PR now and ten years ago. If they are truly hoping for a ‘deeply digital’ agency based on a provable return for clients, I’d suggest being open to anything and not just a traditional press office-handling, central-London offering.
How to enter
Written entries have to be submitted before 30th May, with the final face-to-face pitches taking place in July. Head to this page to get started on your entry.
Nick was upfront about his hopes – he understands that there are many with the mindset to go it alone that wouldn’t consider giving away equity and is, as such, prepared for a limited number of entries. It’s hoped that the agency will launch in September.