Sunday, 17 February 2008

From student debt to millionaire – it can be done.

Lord Karan Bilimoria studied Law at Cambridge, but this did not stop him from an entrepreneurial career. His interest was kindled when he was unable to drink the well known gassy lagers with Indian food! He noticed that English ale was not gassy and wondered why there was no lager without gas.

He pursued this interest with Mysore breweries in Bangalore. Cobra beer was born. As volumes grew, the brewing was moved from Bangalore to Bedford, to the Charles Wells breweries. Volumes have risen at 40% per annum and from being a niche entrant to an established brand in supermarkets and restaurants. The big vision for Cobra under present management is to become a $1billion company in terms of sales!

Karan has achieved this trajectory from having a student debt of about £20,000 to building a company worth £145 million in 18 years through a very clear focus. He is so consistent about his values and vision – to aspire and achieve against all odds.

The really interesting story is how he has managed to finance the growth of Cobra over the 18 years! His training as an accountant, prior to his law degree gave him the vocabulary, but his creativity in terms of finding solutions to funding are probably innate. He has used a variety of funding sources to retain his ownership and although he has taken in equity he still owns 50% of his company.

Personal finance;
Credit cards;
Small firms loan guarantee scheme;
Bills of Exchange based on an unused over draft facility of one of his clients; Debtor finance – which means “selling your invoices” to the finance company who then advance you 80% of the money owed to you immediately and the rest after they have paid;
Convertible loans – to preference shares
And finally the use of a “payment in kind” Hedge Fund instrument which I confess is a bit beyond me to fully comprehend!

What do we learn from Lord Karan Bilimoria. The so called “soft skills” are a major strength of the man. It is perhaps the acute awareness of these skills that enables him to leverage the relationships and trust to get the support of some of the smartest people. His personal motto is to go the extra mile; to take initiative, have integrity with what you want to do and continue to be original. It is also clear that he has passion for what he does.

In addition I would say – learn the language of business and finance! It is merely another language and no more complicated than any other discipline.

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