My first million: Andrew Valentine of Streetcar

Andrew Valentine and Brett Akker made the decision to go into business together over a couple of drinks when they were both students at Durham University in the 1990s. "We thought that we might work well together. We complement each other fairly well," says Valentine. Even so, after graduating, each went his separate way, with Valentine becoming an executive with P&O. But he never gave up the dream of working for himself. In 2002, with his 30th birthday looming, he got back in touch with Akker. The only question was, what would they do?

"We went through quite a structured process." They looked at hundreds of different business ideas, before finding Zipcar. This was an American car-hire company, pitched as a cheap, convenient alternative to owning a car. Members signed up for an annual fee, then rented out a vehicle for everything from an hour to six months at a stretch. "Immediately [we] thought this is a great opportunity."

Akker and Valentine managed to raise just under £100,000 between them, using a small business loan and their own money. But getting cash together for a fleet of cars "was extremely difficult. I ended up speaking to more than 70 car funding providers before we found one that would back us to put those first eight cars on the road". Why was it so hard? "There was no track record for a business like this in the UK. It was a new idea, from two guys who hadn't run a business before [and] had no experience in adjacent markets... we were failing to tick every single box funders wanted you to tick."

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

They finally struck a deal with Volkswagen for eight Golfs. They then went around posting fliers and knocking on doors, but only in areas within walking distance of the cars. "It's a convenience thing. If you've got to walk 20 minutes to a car it isn't going to work. It's all about the network of locations." The initial business model worked in exactly the same way as it does today. The customer pays £49.95 to become a member. They then book a car over the phone or online, renting it for periods between 30 minutes and six months, with costs varying according to time.

"Once we got to the point of 100 members using those first cars and we saw a steady revenue stream coming in we did the maths. We said if we can turn those eight cars into 800 cars, how does it look then?" As they scaled up the business model, it became easier to attract external investors. Turnover has tripled in each of the last three years. It now stands at £4m and is expected to triple again next year as they expand from their base in the southeast, where they have 15,000 members in Brighton, London and Southampton. Given the enthusiastic reception they've had so far, it shouldn't be hard. "You get all the convenience of car ownership, but without the cost and hassle that normally goes with it. You can save yourself £2,000 a year versus the cost of owning a similar car and using it a couple of times a week. And you can also avoid the hassle of parking spaces, taxing, maintenance, all those things that are so difficult about owning a car."