Start-up help for businesses with X-factor

Justin Whitston, who ran a car rental firm before selling it to a private equity house three years ago, insists no-one is born an entrepreneur and said he wants to offer advice, loans and equity to "people with ideas".

He said Venturelab, situated in the centre of Leeds, will also be more candid than public sector rivals with would-be entrepreneurs whose ideas are flawed.

Mr Whitston, 37, from Bradford, said: "I want to build a better eco-system for investors in start-ups. I felt what was there already was pretty awful."

To do this Mr Whitston spent 180,000 on a base for Venturelab in Hunslet Road, Leeds, near Carlsberg brewery, where young businesses – although owners don't have to be young – can join as members for free.

He said he would make 2m available over the next three years and and will begin by offering 25,000 in loans or equity to six businesses start-ups. Firms interested can submit business plans online.

"It will give them the basis to get their business off the ground and, hopefully, get to market. We are not a 'pay to pitch' scheme – these schemes have not worked – it is a membership-focused seed investment programme," Mr Whitston said.

"I need to do this as I have a lot to give back and it's one of the only ways we will get this economy back on track – create successful entrepreneurs and you create the jobs and growth of tomorrow."

He will start investing in November. After firms have worked with Venturelab for six months, they will discuss whether to bring the product to market – if they have not done so already – obtain more funding from Mr Whitston or put the business out to attrack further financial backing from high net worth individuals.

Venturelab's own income stream will come mainly from its investments – profits, dividends and eventually the revenue from exiting a business – as well as separate member services, such as a business plan review, an entrepreneur masterclass and consultancy on internet and IT strategy.

Mr Whitston likened his offering to television talent shows.

"Susan Boyle would not have made it as Susan Boyle without Simon Cowell. I am not saying Venturelab is The X-Factor, but we don't (currently) have that platform in the UK for ideas.

"There is not a practical funding platform where you can come and develop a business."

Mr Whitston, who is also a non-executive director of The Young Persons Enterprise Forum, also said he was acting out of a desire to help start-ups which had been hit by the credit drought, saying it had even affected him.

"If you are a new company out there looking for funding, it is pretty hard at the minute. It is very, very tough. People are not wanting to take the risks these days that they could a number of years ago."

Mr Whitston's investments will not be "target-driven", which he said had been a problem in some of the public sector seedcorn funds.

"We are privately funded. It's a much more dynamic way of creating and funding business start-ups in Yorkshire.

"It's about being able to encourage people with ideas to come forward and telling them whether they have a good idea or not because a lot of people don't do that."

The deadline for the first round of applications is September 2.

Justin Whitston's success story

Justin Whitston set up his previous firm, Nexus Vehicle Management, in Leeds, in 2000.

He started with just 15,000 of borrowed money and grew it into a multi-million-pound turnover business before selling it in 2007.

Mr Whitston, who is married and lives in Ilkley, also ran three websites selling arts and crafts materials, which he sold in 2006.

He has also built up a portfolio of flats and commercial property in West Yorkshire which is worth

about 10m.