How innovative start-up Erudine made it

Technological superiority alone does not sell a start-up...

 “You can either work in the business or on the business”, says Martin Rice, CEO of innovative young company Erudine, which has overcome a horrendous few years of pain to break through successfully into the corporate environment.

“A technologist might think think that because he is clever in one field that he can be clever in another field. But technologists don't understand the classic fear factors that stop new technology from being adopted,” he explains.

The core reason for Erudine's success is that it is led by a businessman.  Martin has 20 years experience running his own marketing business. His brother Philip is the innovative technologist who has broken new ground and created a revolutionary new approach to rapid application development which which enables a step change in speed, cost and accuracy of building software.

Philip, a former academic, developed this new paradigm while working in the nuclear industry devising ways of controlling repair robots working inside nuclear reactors. Martin took the reins in 2002, when Philip wanted to start his own business to make a commercial success from his ideas.

Once the underlying logic of Philip's technology was proven, the brothers pulled out all the stops to self finance but also prepared themselves for the long haul.

An old hand, Martin recognised that technological superiority alone does not sell a start-up and that he would have an uphill struggle.  He realised that IT directors in large corporates are generally unwilling to take risks and that the corporate procurement and due diligence structures mitigate against small start ups. “There is a classic Catch-22,” he says. “A prospective corporate customer will ask me to prove I will be around in a year's time. I say give me a contract and can guarantee I will.” In practice small innovative companies depend on finding a champion within a large organisation prepared to put their job on the line and take a risk to back them.

The brothers didn't take half measures. By re-mortgaging their homes and taking out personal loans they raised an initial £700,000, and when that ran out they turned to credit cards. They spent more than average on lawyers and on networking, sponsoring major industry events.

Martin recognised that however friendly relations are with contacts within a multinational company you do have to invest in good lawyers when you start talking in earnest to the corprate procurement department. “Big companies take advantage of little companies if they want something,” he said. “Once you get to procurement, pay for very good legal advice. I'd never thought I'd say lawyers are a good thing!”

While Philip developed and refined the technology, Martin cast his net widely in the industry, always punching above his weight in senior circles, joining industry bodies, sponsoring national conferences and senior user networking groups, and taking on many speaking engagement. This networking paid off – he got to understand the corporate mindset, built trusted networks of individuals, and became known widely among industry influencers.

An academic link of Philips with global engineering company EADS started the ball rolling for Erudine and after over two long and uncertain years of cost and heart ache on proof of concepts and pilots in 2006 Erudine secured a minority stake from EADS which valued the company at about £12m. That gave a great boost to Erudine's credibility, and with EADS prepared to share a measure of case studies and due diligence helped attract other prospective corporate interest.
The story is not over, but Erudine has moved into profitability and the family credit card debts are repaid and the mortgages relieved, and turnover is expected to exceed £10m this year.

Martin likes to say: “we got lucky”. But through his heavy investment in going the extra mile, whether with lawyers, investments, and networking, plus dogged persistence, enthusiasm and belief in the technology, he helped create his own luck. His overriding conviction is that technology start-ups must be led by businessmen. 

Aware just how precarious it is for technology start-ups in today's UK, Martin set up UK Innovation Initiative to help get innovators past the basic pitfalls to at least first base. He is using his networking to good stead by initiating and orchestrating a wide national debate on the need for innovators to up their game and for corporates to reduce the barriers to taking on innovation. He has the T shirt – and the scars beneath – to succeed in here too on behalf of all innovators.