Kate Pritchard is managing editor of Real Business
“We’d written what I still think was a fairly decent business plan but, in reality, we were just two people with an idea that didn’t really have any meat on it,” admits Wray. “Ten venture capitalists said ‘thanks, but no thanks’.”
So instead, Wray got out his little black books of City contacts and made appointments to pitch the Betfair idea to his investment banking friends. He knew when their bonus payments were announced and when they were paid and made sure he visited people in between the two dates.
One of Wray’s pals worked for global law firm Linklaters which, at the time, was offering free legal advice to startups in return for a small stake. Wray signed up. Linklaters worked out that Betfair qualified for the Enterprise Investment Scheme (EIS), which helps small companies raise finance by offering tax relief to investors who purchase new shares in those firms.
“If our investors lost money, they’d essentially get half of it back,” says Wray. “That meant people were much more willing to dip their hands into their pockets.”
By February 2000, they’d raised £1m from friends and family. The two co-founders also invested £50,000 of their personal savings. “It was important to us both to have real skin in the game,” says Wray.
The pair hired a small office in Putney, built a prototype of the website and started advertising for developers to build it.
A decade on, Betfair is a £239m money-making engine, processes tens of millions of transactions each day and has just signed up its two-millionth customer.
Those VCs must be kicking themselves.
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