How to Attract Investors Fifth Annual Conference of the Technopolicy Network. Halifax, Nova Scotia, Canada September 2008 Show Me the MONEY !$$$$! Professor.

How to Attract InvestorsHow 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 of

Networking 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 !!!!

Would you invest in this team ?

What DO Investors look for ?

Microsoft Corporation, 1978

When a market “BOOMS” - Venture Capital Investments in E-Commerce (U.S.A.) “When Greed

overcame Fear”. We are still recovering in the aftermath….

Source: Venture Economics

Netscape IPONetscape IPO33rdrd largest in largest inNasdaq HistoryNasdaq History

Amazon.com IPOAmazon.com IPO

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

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nv

est

ed (

$ m

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Stay Cool!Stay Cool!

Dilbert - Scott Adams

Stay Cool!Stay Cool!

Dilbert - Scott Adams

Stay Cool!Stay Cool!

Dilbert - Scott Adams

“You look at things and ask - why?

but I dream of things that never

were and ask -

George Bernard Shaw

why not?”

What do investors look for in an Entrepreneur ?Entrepreneur ?

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

What else do investors like to see?....

Einstein on IMAGINATION….

“Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world”

Albert Einstein 1879 - 1955

Do investors really like Risk ?

If at first you don’t succeed….try again….but learn from the mistakes! Can RISK be eliminated ?

Continuous Technology Revolution “Survival of the Fastest”astest”

Compared to an average DAY in 2003….

All international phone calls1971

All airline passengers1975

All mobile phones 1984

All emails 1992

All SMS1998

Source: Analysys, World Bank and ITU

Three Converging RevolutionsThree Pervasive Technology Platforms – connecting

and networking across boundaries

BIO TECHPharmaceuticals

DiagnosticsResearch/Info

ToolsIndustrial

GenomicsBioinformatics

Proteomics

INFO TECHHardwareSoftware

Communications

NANO TECHElectricalStructural

BiomedicalEnergy & Environment

BiosensorsBiochipsBioelectronics

MicrofluidicsNanobiotechnology

Drug Delivery

NanodevicesNanosensors

Nanoelectronics

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

Characteristics for High Technology Regions – and potential for talent and $$$$

to meet

Sources Of Business Finance – A Reminder

Maturity

Risk

“Our Money”“Our Money”

Family and Friends and FoolsFamily and Friends and Fools

Business AngelsBusiness Angels

Early Stage VCEarly Stage VC

Expansion CapitalExpansion Capital

B

A

N

K

F

I

N

A

N

C

E

??

Seed FundsSeed Funds

Pre-IPOPre-IPO

“Softer Money” – Grants etc – they are investors….investors….

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 ?

The role of Chairman and NXDs

Inspired Leadership

Enthusiasm

Bullshit

Courage

OptimismVision

Creativity

Management

Research & Analysis

Caution

Process

Financial Control

Market Knowledge

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 How and Where do Investors and Entrepreneurs find each other and get connected ??find each other and get connected ??

Cambridge

source: Cambridge 2020 report - 1998

But I work in The East of England Region – and in France

Map of Silicon Valley inset

Ramsey Chatteris Littleport

Mildenhall

Bury St Edmunds

Haverhill

Saffron WaldenRoyston

St Neots

Huntingdon

HUNTINGDONSHIRE

SOUTH CAMBRIDGESHIRE

CAMBRIDGE

NORTH HERTFORDSHIRE(PART)

ST EDMUNDSBURY(PART)

FOREST HEATH(PART)

EAST CAMBRIDGESHIRE

FENLAND(PART)A

1(M)

A14

M1

1A14

A10

A14

A11

A11

A10

UTTLESFORD(PART)

A10

A1

Greater Cambridge Partnership Area –one of nine “Sub-regional Development Partnerships”

2001 GC EstimatesPopulation: 635,000

Jobs: 359,000GVA: £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

1960

1970

MRC Laboratory

of Molecular Biology

CADCentre

Sinclair Radionics

CCL

Barclays Bank

1980

Cambridge Interactive

System

Cambridge Science Park

Acorn

PA Technology

Eicon Research

Ltd

Sinclair Research Ltd

1990

Analysys

Olivetti Research Laboratory

(acquired by AT&T in 1999) Judge Institute of

Management Studies

St. John Innovation

Centre

Scientific Generics

The Technology Partnership

TTP

Cambridge Research and Innovation Ltd (CRIL)

Institute of Biotechnolog

y

Cantab Pharmaceuticals

Hitachi Cambridge Laboratory

Nickerson Biotech

Laboratory

Glaxo

2000

Toshiba Cambridge Research

Laboratory

Seiko Epson Research

Lab

Unilever Cambridge Centre for Molecular

InformaticsCambridge

Network

Institute of Manufacturing

Amadeus Capital Partners

TTP Ventures

Entropic Research Laboratory (acquired by Microsoft in 1999)

Glaxo Institute of Applied

Pharmacology

BP

The emergence of high-technology clusters in Greater Cambridge

1971 1981 1991 2001 The future?

ScientificInstruments

Nanomaterials

Drugs delivery

Sensors/actuators

Informatics

Instrumentation

Medical engineering

LEPs

Drug modelling

Bluetooth

Sentient computing

Telecoms

Industrial inkjet

Biosciences

Computing

Software

ScientificInstruments

Wirelesscommunications

Telecoms

Industrial inkjet

Computing

Biosciences

Software

ScientificInstruments

Hi-tech 20,200 25,100 34,900 46,200jobs:

Computing

Software

ScientificInstruments

Industrial inkjet

1971 1981 1991 2001 The future?

ScientificInstruments

Nanomaterials

Drugs delivery

Sensors/actuators

Informatics

Instrumentation

Medical engineering

LEPs

Drug modelling

Bluetooth

Sentient computing

Telecoms

Industrial inkjet

Biosciences

Computing

Software

ScientificInstruments

Telecoms

Industrial inkjet

Biosciences

Computing

Software

ScientificInstruments

Wirelesscommunications

Telecoms

Industrial inkjet

Computing

Biosciences

Software

ScientificInstruments

Wirelesscommunications

Telecoms

Industrial inkjet

Computing

Biosciences

Software

ScientificInstruments

Hi-tech 20,200 25,100 34,900 46,200jobs:

Computing

Software

ScientificInstruments

Industrial inkjet

Computing

Software

ScientificInstruments

Industrial inkjet

50,000

Cambridge Venture Capital Scene – Estimated total value of funds: in excess of £1.5 billions

And then there were the Angels….

A Financial Cluster follows The Technology Cluster at “boom time”

- UK and Europe

- Cambridge Region only- UK only

Less than £1.0 million

More than £3.0 million

INVESTMENT SIZE

CRIL Generics Prelude 3i

ICT

Life Sciences Avlar

FNIVenture Capital

Merlin

Amadeus

PrimeTechnologyVentures

Pall MallVentures

Alta Berkeley

ETCapital

SiemensVC

Abingworth

CreateVentures

CambridgeGateway

TTPVentures

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

Thinking Of Angels! – we keep referring to them !

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

7

Those who bring addedvalue – in one or all of….

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

Alan Barrell Library House

Phil O’ Donovan Camrivox

Alex van Someren

nCipher

Jack Lang Serial

Entrepreneur

Dan Roach Avlar Bioventures

Ann Cotton Camfed International

John SnyderGrapeshot

Richard Green Ubisense

Walter de BrouwerFounder

of Starlab

CfEL’s Programmes CfEL’s Programmes allall connect with investorsconnect with investors

Senior Managers’Programme

How to develop and grow companies

Summer School‘Fast Tracking

Innovation to Commercial Success’

I’m a Corporate Intrapreneur or Entrepreneurial Manager

I’m a Solo Entrepreneur with a technology idea

Summer Forum

I’m an entrepreneur or an entrepreneurial academic

EnterprisersI’m a student

Enterprise Tuesday(Term 2)

Enterprise Tuesday(Term 1)

I’m a student or member of staff or local entrepreneurial individual

Undergraduate and Postgraduate Assessed Programmes

I’m a CU student and want Entrepreneurship as part of my degree

How to teach entrepreneurship

How to survive and grow in the early stages

How to get my idea started

Some new knowledge and skills in business planning

What entrepreneurship is all about

I want to learn...

Senior Managers’Programme

How to develop and grow companies

Summer School‘Fast Tracking

Innovation to Commercial Success’

I’m a Corporate Intrapreneur or Entrepreneurial Manager

I’m a Solo Entrepreneur with a technology idea

Summer Forum

I’m an entrepreneur or an entrepreneurial academic

EnterprisersI’m a student

Enterprise Tuesday(Term 2)

Enterprise Tuesday(Term 1)

I’m a student or member of staff or local entrepreneurial individual

Undergraduate and Postgraduate Assessed Programmes

I’m a CU student and want Entrepreneurship as part of my degree

How to teach entrepreneurship

How to survive and grow in the early stages

How to get my idea started

Some new knowledge and skills in business planning

What entrepreneurship is all about

I want to learn...

• 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.,

Helping Entrepreneurs turn Ideas into Reality and find sources of finance….developing as a community….

Developing “Enterprisers”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 protected]