How The Slave Trade Has Been Reborn

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This week the FT ran a story that on the face of it seemed simply to be about an innovative idea that one entrepreneur has had to involve private equity investors in his life. But, if you look a little deeper into the darker side of your mind, you have to ask yourself whether it could be the start of a sinister twist on traditional funding that could have us heading towards a less emancipated future.

For hundreds of years in every powerful society in the world, slavery was a part of everyday existence. There were those with the money and power and there were those that they owned. It was just 177 years ago that the Slavery Abolition Act of 1833 finally toppled the practice throughout the British Empire, but it seems that a new wave of willing slaves could be just around the corner with their masters being private equity investors.

The FT article centred around serial entrepreneur James Layfield’s desire to raise funding to launch a new venture. He’d been knocked back by traditional funding methods (not a surprising revelation in this market), even though he’d already achieved some success with three other business ventures. Thus he decided that the best way of raising the funds he needed was to sell, in essence, himself to private equity investors.

He is looking to raise £1million for a 10% stake in all of his future earnings. Now, however you look at this, he is selling ownership of his future to someone else, so isn’t this a form of slavery, even if willingly entered into? Would his life not belong to another? Wouldn’t he need to factor his financial masters and their desire to achieve a certain worth from his efforts into his plans and aspirations? Does this mean that we can once again value a man’s worth and buy him as a commodity?

Don’t get me wrong, I appreciate that people sell their services, their skills and their time to others every day, and by seeking funding from private equity investors for your business you do become subservient to their desire to earn profit from your efforts, but this seems like a step too far for me.

On one Dragon’s Den episode there was a young racing driver who offered a percentage of all his future earnings for the investment he needed to compete, and I remember being a little sickened by the Dragons’ attempts to haggle down the worth of the investment. Because these private equity investors were bartering with the value of a man’s life it added a slightly unpalatable element to the negotiations that I found a little difficult to stomach. Somehow it was very different from the assessment of the value of a business or the potential worth of a concept.

But who is to blame for entrepreneurs turning to such extreme measures? Could it be the celebrity status of some well-known entrepreneurs who often trade on their image to win business and raise funds, in effect selling their soul to the media for the sake of their business? Could it be the private equity investors who seem willing to buy and sell people as easily as they could commodities? Or is it that after a lending drought that has lasted throughout this recession, entrepreneurs are being forced to these extreme measures simply to find the funding they need to build the businesses that we rely on for innovative products, services and employment? Personally, and this will come as no surprise to those of you who read my blogs, I feel that the blame lies squarely at the feet of the banking sector and their virtual lending shut-down and a government who have done far too little to help our small business owners.

Whatever your thoughts on the morality of private equity investors being able to buy an entrepreneur’s future, it seems that unless the banks get their fingers out and the Government makes a genuine effort to help our business sector, we’ll see more of this modern-day slavery. What are your thoughts on this?

Image © Missy & the Universe