The value of entrepreneurial partnerships

A group of Scandinavian entrepreneurs caught my eye this year. So when I was in London the other week, I decided to look them up, as they have a local office above a shop in the fashionable shopping area around the Bond Street tube station. They were a fascinating group, who seem to have built a working partnership model for entrepreneurial endeavours.

The mechanics were described to me as:

1. It’s all in; you don’t have activities on the side. Which means the partners are aligned on putting energy into the best projects.
2. For each year you work, you accrue around 2,080 partnership points (52 weeks x 40 hours). So if you take six months off, you only accrue 1,040 points that year.
3. Distributions of profits are based on the percentage of the total partnership points you have accrued.
4. Every time there is a distribution to the partners, your partnership points are reduced by the same ratio (eg. 50% of NTA distributed, means a 50% reduction in your partnership points).
5. Once you leave, your partnership points stop increasing (ie. you have a smaller ratio) and get reduced with each distribution. When your points drop below a set amount, you are automatically bought out for a pre-agreed amount (because you can’t get to zero when you are getting reduced by fractions).

The group then meets formally four-plus times a year, and agrees which projects to put seed capital into, and which projects to kill. They also communicate daily over Skype Yammer and email, to draw on the unique skills sets of each member.

The result is that each partner:

• Is the CEO of their own start-up.
• Gets a peer review on whether they should start, pivot or kill their project.
• Gets to access the skills of the team that includes marketers and capital raisers.
• Gets the freedom to take time off, which is costed into the model.
• Share the risk and reward.
• And probably more than anything else, they get to reduce the loneliness.

Apparently the nine partners were chosen carefully from the many that have applied. They also believe that this is about as big as they can get.

But does it work? So far they have generated 14 new businesses, sold two and have killed off three, so it’s looking pretty good so far. Plus, I believe a book on the group, called Rainmaking, will be out soon, so I will get a chance to delve deeper into what they have learnt.

Brendan Lewis is a serial technology entrepreneur having founded: Ideas Lighting, Carradale Media, Edion, Verve IT, The Churchill Club and Flinders Pacific. He has set up businesses for others in Romania, Indonesia, Hong Kong and Vietnam and is the sole Australian representative of the City of London for Foreign Direct Investment. Qualified in IT and Accounting, he has also spent time running an Advertising agency and as a Cavalry Officer with the Australian Army Reserve.