The Call Britannia Bust Up
Firstly, it sounds quite heated, and tempers seem to be running high. Also, I once worked with Bridges’ Antony Ross, and like and admire him, so it could be that I might be seen as biased in favour of him and the VCs involved (he and Ed Siegel, of BII, backed Call Britannia). But as we trudge through another week of conferences on social enterprise, one key issue which emerges is how to get the social investment sector to move toward maturity. I am afraid a falling out between a CEO and VCs is part of the maturation process, so I feel as an event its importance should be noted and a few points drawn out.
First, the differences of opinion must have been serious. Darby, before running Call Britannia, was CEO of Simply Switch, the best returning asset in Bridges Ventures first fund (over 20 times capital returned!!) and was helpful as a success story in raising their second fund. Such successful CEOs are like gold dust to VCs–they do not just chuck them out because they get a bit bored with them. I imagine things must have become very serious–especially given that the transition was in only six months!
Second, Darby clearly lost the support of her Board. Boards do not always back the VC, I have learned from past experience. One odd twist to this tale is that the Chair and another Board Member were reported to have bought a majority stake in Call Britannia out of administration. Nevertheless, when you lose the support of your Board, you are out–this is an essential part of UK corporate governance and should be understood by the sector. It emphasises the importance of boards and board processes; an essential part of investment, social or otherwise.
Finally, Darby is quoted in Social Enterprise Live as saying, “The venture capitalists at some stage decided not to back me, they believed in Call Britannia but not in me but I was the one who risked it all, I’m the one who put my hands in my pocket, I was obsessed with the mission and people were buying me – it was far too soon to step aside from the business, I’m a hands on person, I wanted a hands-on role.” This is a telling comment. She is not the only one who took risks, and I am not sure I understand what she means when she says she “risked it all”. Nevertheless, that things broke down so quickly suggests that parties were not really on the same page at the beginning. This is a breakdown all of us in the sector can learn from.
Darby notes that it is “buyer beware” when taking in capital investment, and this is certainly correct. Social businesses need to understand the terms of an institutional investment and sadly it takes widely publicised events like this one to remind the industry of the nature of the game. I hope that all parties involved will move on to bigger and better things and learn from this experience. But we in the sector should avoid getting too emotional about this single incident. Furthermore, we should not let the social nature of the enterprise, and the emotional resonance this may create, cloud the picture.
As our sector grows we will have more stories like this. These are the growing pains of our movement–a sentiment also captured well by David Floyd in his 11/11/10 piece in Beanbags and Bullshit blog.