How to Attract Investors Fifth Annual Conference of the Technopolicy Network. Halifax, Nova Scotia, Canada September 2008 “Show Me the MONEY !$$$$!” Professor Alan Barrell
Attracting Investors - Some Issues….There will be more…. • WHO – might be the investors? Types and motivations • Knowing their Goals and Criteria • Innovative Regions and Sub-Regions - special conditions • “Investment Readiness” – A big issue…. • Preparation, Support and Presentation • What do Investors look for? How to find out? • Connecting with Investors – importance ofNetworking • The “rock and hard place” of Valuation • The issues of “Matching” – it isn’t just the money! What else do we get ? • The Investment Climate !!!!
Microsoft Corporation, 1978 What DO Investors look for ?
$6,000 $5,000 $4,000 $3,000 Total Invested ($ million) $2,000 $1,000 $0 When a market “BOOMS” - Venture Capital Investments in E-Commerce (U.S.A.) “When Greedovercame Fear”. We are still recovering in the aftermath…. Netscape IPO 3rd largest in Nasdaq History Amazon.com IPO Source: Venture Economics
Stay Cool! Dilbert - Scott Adams
Stay Cool! Dilbert - Scott Adams
Stay Cool! Dilbert - Scott Adams
What do investors look for in an Entrepreneur ? “You look at things and ask - why? but I dream of things that never were and ask - why not?” George Bernard Shaw
And they look for “change agents” Joseph Schumpeter (1911) “Entrepreneurs blow gales of creative destruction.” • Role of the entrepreneur in transforming economies by developing: • New products • New methods of production • New ways of organizing • Untapped raw materials • Enhanced competitive performance
Einstein on IMAGINATION…. “Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world” Albert Einstein 1879 - 1955
If at first you don’t succeed….try again….but learn from the mistakes! Can RISK be eliminated ?
All international phone calls 1971 All airline passengers 1975 All mobile phones 1984 All emails 1992 All SMS 1998 Continuous Technology Revolution “Survival of the Fastest”Compared to an average DAY in 2003…. Source: Analysys, World Bank and ITU
BIO TECHPharmaceuticalsDiagnosticsResearch/InfoToolsIndustrial INFO TECHHardwareSoftwareCommunications GenomicsBioinformaticsProteomics BiosensorsBiochips BioelectronicsMicrofluidicsNanobiotechnologyDrug Delivery NanodevicesNanosensorsNanoelectronics NANO TECHElectricalStructuralBiomedicalEnergy & Environment Three Converging RevolutionsThree Pervasive Technology Platforms – connecting and networking across boundaries
Characteristics for High Technology Regions – and potential for talent and $$$$ to meet • Universities and centres of academic excellence • Entrepreneurs with marketable ideas and products • Business angels and established seed funds • Sources of early stage venture capital • Core of successful large companies • Quality management teams and talent • Supportive infrastructure • Affordable space for growing businesses • Access to capital markets • Attractive living environment and accommodation • Social and Business Networks - Connectivity source :- Gibbons - Stanford University 1998
Sources Of Business Finance – A Reminder “Our Money” B A N K F I N A N C E ?? Family and Friends and Fools Business Angels Seed Funds Risk Early Stage VC Expansion Capital Pre-IPO Maturity
“Softer Money” – Grants etc – they areinvestors…. • A World of its own • Can be a deep well • Can be bureaucratic and “rule ridden” • Finding and getting it can require art, skill and patience – different from equity investing mentality • Understanding the processes and the motivations of grant givers. Connecting…. • Excellent Example – UK R and D Grants • Tax Credits and similar schemes
“Show Me The Money!”- More Questions for Entrepreneurs • Basics – Investment Readiness • How organised are we ? • Company structure ? • Management Team? • Intellectual Property? • Vision, Purpose,Plans and Positioning Ideas? • Advisors ? “Greyhairs and Wisdom” ? Basics – eg Accounts and Controls ? • “Rumsfeld Questions” – “What we DON’T know?”
The Early Stage Business Balance – what do investors look for? Do the entrepreneurs know ? Inspired Leadership Management Creativity Enthusiasm Research & Analysis Process Bullshit Market Knowledge Courage Caution Vision Optimism Financial Control The role of Chairman and NXDs
Valuation – how and why? – Destroying the myths – “Valuations to die for….” • Why do we need it ? -To indicate value to potential investors • What is a company worth? - What someone will pay for it • What is this determined by? • Other investment choices (there are usually MANY !)
Connecting Investors to Entrepreneurs Two Way Experiences in “The Cambridge Cluster and an Enlightened Europe” From – “Poacher and Gamekeeper “…. Alan Barrell Entrepreneur in Residence – University of Cambridge
How and Where do Investors and Entrepreneurs find each other and get connected ??
But I work in The East of England Region – and in FranceMap of Silicon Valley inset Cambridge source: Cambridge 2020 report - 1998
Greater Cambridge Partnership Area –one of nine “Sub-regional Development Partnerships” 2001 GC Estimates Population: 635,000 Jobs: 359,000 GVA: £12.2bn
Trinity College’s History and Scientific Development – Cambridge – Science, Innovation and Invention • Trinity always had a strong scientific tradition* • First use of the word “scientist” 1835 (Whewell) • First European Science Park – 1970 – Dr Sir John Bradfield *Alumni include Newton, Clerk-Maxwell, Rayleigh, Thomson, Walton, Rutherford, Aston, Lyle, both Braggs, Bohr, Hopkins, Klug, Kendrew
Cambridge University MRC Laboratory of Molecular Biology Sinclair Radionics Cambridge Interactive System 1960 CCL Sinclair Research Ltd CAD Centre Barclays Bank 1970 Glaxo Cambridge Science Park PA Technology Nickerson Biotech Laboratory Eicon Research Ltd Analysys Acorn Hitachi Cambridge Laboratory Olivetti Research Laboratory (acquired by AT&T in 1999) BP 1980 Institute of Biotechnology Seiko Epson Research Lab Judge Institute of Management Studies St. John Innovation Centre Scientific Generics TTP Ventures Cantab Pharmaceuticals Toshiba Cambridge Research Laboratory Glaxo Institute of Applied Pharmacology The Technology Partnership TTP Cambridge Research and Innovation Ltd (CRIL) 1990 Amadeus Capital Partners Unilever Cambridge Centre for Molecular Informatics Institute of Manufacturing Entropic Research Laboratory (acquired by Microsoft in 1999) Cambridge Network 2000
The emergence of high-technology clusters in Greater Cambridge 50,000
A Financial Cluster follows The Technology Cluster at “boom time” - Cambridge Region only - UK only - UK and Europe Cambridge Venture Capital Scene – Estimated total value of funds: in excess of £1.5 billionsAnd then there were the Angels…. Siemens VC FNI Venture Capital Prime Technology Ventures Amadeus Alta Berkeley ICT Pall Mall Ventures Create Ventures CRIL Generics Prelude ET Capital Cambridge Gateway TTP Ventures 3i Life Sciences Abingworth Avlar Merlin More than £3.0 million Less than £1.0 million INVESTMENT SIZE
Connecting and Information Points and principles • Networks and Networking – importance +++++ • Business Schools and Entrepreneurship Centres Region wide and cross border • Other Entrepreneurs / Support and Mentoring Structures • Online Channels – numerous eg…. www.funded.com • “Network Nodes” – Individual referrals • Cross Border contacts • Attitudes and Culture
US Angels – The REAL early stage funders ! • In 2000 US business Angels invested more than $200billions in early stage companies • This was much more than the so called “venture capital industry” which did not reach investment levels that year of $150 billions. • In the difficult year of 2002 – when VCS “sat on hands” – Cambridge Angels kept the early stage and emerging business sector alive and well • Cambridge Angels are adopting the US success model and working more closely together.
“Syndication Nodes” and Business Angels – Connecting in and from Cambridge • Cambridge has four active Angel Groups – Cambridge Angels, Cambridge Capital Group, Equus, G.Eastern Investment Forum • MOUs and Syndication with- Other UK Angels, Sophia Angels ( France) Luxembourg BAN, B.A.of Slovenia,US Angels Networked with all known, useful VCs and Grant bodies • Joint events, Deal and Portfolio Sharing • Common Network and Portfolio Management - Angelsoft • Keeping well informed – eg. French Wealth Tax changes – Transformational impact. • Strong International VC connections
The Business Angels we help Entrepreneurs look for….Cambridge Mentors Database • Technical Expertise • Marketing Expertise • Contacts & Networks • Decision Making skills • Presentation skills • Dealmaking skills • Money-raising skills • Other Financial skills • Possible exit routes and practical help with exit – international focus Those who bring addedvalue – in one or all of…. 7
Our Centre for Entrepreneurial Learning – Investment Readiness and Connectivity Plus…. History: • 1999 - Cambridge Entrepreneurship Centre (CEC) • 2003 – Centre for Entrepreneurial Learning (CfEL) CfEL Core Activities: • To develop a portfolio of courses that inspire, and enable the start-up and growth of ventures • To respond to the needs of students, Departments and Colleges within the University of Cambridge • To share best practice with the wider community through networks and collaboration • To build a great team of teachers • To deliver excellence and investment readiness • Helping develop the Spirit of Enterprise!
CfEL’s Entrepreneurs in Residence Walter de BrouwerFounder of Starlab Alan Barrell Library House Alex van Someren nCipher Jack Lang Serial Entrepreneur Dan Roach Avlar Bioventures Richard Green Ubisense Ann Cotton Camfed International John Snyder Grapeshot Phil O’ Donovan Camrivox
Helping Entrepreneurs turn Ideas into Reality and find sources of finance….developing as a community…. • A FREE evening programme open to students, staff and the business community • Lectures on Tuesday evenings from 6pm • About 1500 attended in 2006/07, coming from 50 different departments within the University of Cambridge, 10 other Universities and 100+ private businesses • Close links to Cambridge University Entrepreneurs (CUE) Business Plan Competitions • Investor Connections ++++ from UK and Overseas • Has been copied extensively – QinetiQ; Oxford; Bedford; Essex; Sussex; UEA; France; Luxembourg; Baltic States; Auckland; Canada; Australia etc.,
Developing “Enterprisers” • An intensive four day residential programme for energetic individuals, from any organisation, background or discipline .Connecting, Networking and Learning. • Focus on developing fundamental entrepreneurial skills • Networking opportunity – investors attend • Run by facilitators, Enterprisers alumni and faculty members from universities • Unlocks creativity, confidence and a ‘can do’ attitude
Thank you for your attention…. More on my website – www.alanbarrell.com E-mail – email@example.com