Forbes - Interview with Nicole Junkermann
Article originally published in Forbes. Copyright - Forbes and Bianca Barratt
Nicole Junkermann learnt about business at a young age. As a girl, she’d be taken into meetings by her father and offered an insight into the companies he worked with. Whilst it gave her a taste of the inspirational side of business—the flare, the passion and creativity—it also gave her insight into the practical—the careful recipe of pragmatic ingredients it takes to set up, run and sustain a profitable business.
Many businesses are unlikely to have faced difficulties like those that now stand before them. The latest Business Impact of Coronavirus Survey (BICS) published indicated as of April 5 2020 that 25% of U.K. businesses are currently not in operation and of those continuing to trade, 37.5% said their turnover was substantially lower than normal.
For a lot of founders, the question isn’t, “what will the future look like for my business?,” it’s “will my business have a future at all?”
Through her international investment firm NJF Holdings which was launched in 2012, Junkermann has invested in early and later stage companies across a range of industries throughout Europe, the U.S. and Asia. NJF Capital—the venture capital arm of the business—now oversees a portfolio of more than 30 startups. Though now primarily focused on the healthtech, fintech and deep tech sectors, Nicole has worked across a range of specialisms, all of which have given her an instinct for identifying the qualities needed for a business to have longevity—to become a market leader.
Female-led businesses are notoriously underrepresented in venture capital investment. As it stands, just 1% of VC funding currently goes to startups run solely by women. What little representation there is stands to be diminished further if women are not given the support they need to navigate an uncertain economic future.
Junkermann believes the responsibility of securing this future falls, in part, to organisations and industries that support and nurture them. “For many businesses, how they can protect themselves will depend on how the crisis is affecting their industry and how robust their business plan is. Together with education, industry, and government organisations, we need to have the correct ecosystem in place to really encourage and support existing female-founded businesses [at this time].”
Female-led businesses in particular are facing a tough road ahead when it comes to surviving and thriving after 2020. For those seeking investment, this will be particularly true, with many investors, including Junkermann, predicting a tightening of investor purse strings:
“It will be difficult for new businesses, especially the early-stage companies which are not yet proven in their fields, to raise money. Even if there is no reduction in the available investment capital, I think we will see changes whereby: the risk appetite of investors is more conservative and the market for the top entrepreneurial talent will likely be more competitive than ever.”
It’s not all bad news, though. “Businesses that are adaptable and flexible, which are essential traits of all successful early-stage companies, should remain as attractive as ever to investors. As always, money will follow the best entrepreneurs with the best ideas.”
Based on her years of experience as both an entrepreneur and investor, here Nicole shares the qualities that make young businesses attractive to investors and how they can best safeguard their longevity in the future.
Have a bold, clear vision
Fostering an ambitious yet targeted vision for your business is an absolute must if you want it to be successful. LinkedIn’s Imperative initiative found that purpose driven companies foster employees that are 54% more likely to remain loyal long-term and 30% more likely to perform highly. Richard Branson, though recently under fire for his damage limitation response to the virus, is known for being one of the most popular large-scale employers around thanks to his “Weconomy” philosophy—a quick flick through the comments on his social media accounts will leave you in no doubt of the esteem in which his “Virgin family” holds him in.
Having a “bold vision” is what sets apart an extraordinary founder from an ordinary one, says Junkermann. Knowing exactly what it is you are looking to achieve and how you are going to do this differently—and, most importantly, better—to market competitors is of paramount importance. A “lack of focus” or inability to “execute on a clear vision” is one of the most common mistakes Junkermann sees in young businesses. “When investing, I generally look for companies which have the potential to shape and define their industries. This is where, historically, we have had real success—nurturing and guiding early-stage companies which are disrupting traditional business models by doing things differently and challenging the norm.”
Be open to collaboration
“Believing in your vision whilst still being willing to accept different points of view is key to business longevity,” Junkermann explains. “Early stage businesses must be flexible and respond quickly to their market and environment. This happens when you are willing to learn from, and implement the advice of, others who have already been through what you’re going through. My experience and the lessons I’ve learned mean I can really help and guide the early-stage companies we invest in through their challenging times.”
No matter how watertight your business plan feels or how much you truly believe you know what is best for your business, the fact remains that you are not immune to subjectivity. This is not a failure—none of us are.
When you’ve poured your passion and hard work into a vision, project or goal, it is almost impossible to be objective—you’re just too close to be able to see what isn’t working or what could be improved. This is why you need to find others you can trust to provide this objectivity for you. In fact, SCORE, the largest volunteer mentorship program in the U.S., found that startups that had been mentored were 12% more likely to remain in business after a year compared to national averages. Every business, no matter how seemingly successful, will go through highs and lows so finding mentors who have been there, done that and survived with the t-shirt in hand is one of the most useful things you can do to safeguard your business.
Recent events have proven that those businesses unwilling or unable to pivot or be flexible suffer the most during hard times, so flexing your collaborative muscles early on will only serve as good practice for an unknown future.
Investors form an integral part of this collaboration. Aside from having a vested interest in the health of your balance sheet, they’re also usually a source of great business expertise.
Be practical
Junkermann believes that if the current situation teaches business owners anything, it should be to “focus on protecting their balance sheet—especially their liquidity and cash reserves.”
The future of the world economy remains uncertain and those young businesses that have yet to generate a regular loyal customer base will be feeling the pinch the most right now.
“The immediate questions that businesses, especially early-stage companies such as those in our venture portfolio, need to be asking now, are: what is our burn rate and runway, how can we cut costs in the short and medium term to be as lean as possible, what will our future operating model look like, and how long will our business be affected?”
Though perhaps not particularly glamorous, remaining practical, Nicole advises, is one of the most important things businesses can do right now to ensure their longevity in the future. Another mistake seen time and again, according to Nicole, is that of “overpromising”:
“Although enthusiasm, optimism, and hope are definitely to be encouraged, founders must always be cautious and conservative with their business plants to maintain the trust of both their investors and their customers.”
The way companies are choosing to conduct themselves right now is under a lot of scrutiny and will be remembered—whether favourably or not—for years to come.
Though you may feel pressure to make waves or grand gestures right now to garner short term praise and awareness, it’s far better to remain steadily dependable if you want to foster brand trust (something essential for business longevity) in the long run.
Act like a founder
“In my experience, you’re either an entrepreneur or a manager and I think the two are very, very different,” says Junkermann. “One isn’t necessarily better than the other but what sets entrepreneurs apart is this characteristic of curiosity.”
Chris Zook and James Allen, authors of The Founder’s Mentality, discovered three main qualities as those that separate some of the world’s most successful business owners from the rest: firstly, that they have a “sharp, insurgent mission” to help the underserved in some way; secondly, that they maintain a clear understanding and fixated interest in what is happening at the front line of their businesses and lastly, that they foster an “owner’s mindset” by taking responsibility for both their actions and cash flow and by showing a continuing willingness to take calculated risk.
Almost all of the world’s successful companies have strong, memorable founders at the helm, all of whom display these qualities.
“The founders,” she explains, are “what really makes for a solid investment. When I invest, I am primarily investing in the people behind the businesses.”
Nicole Junkermann is an entrepreneur and investor and founder of NJF Holdings.