Growing a company from start-up to business

2nd September 2010

Introduction

• Rapid Innovation Group

• Case study one – choosing your customers

• Case study two – the discipline of funding

Case study one – choosing your customers

• Client background and initial market focus

• Strategy development

• Market engagement

• Next steps

Client background – initial market focus

Defining our strategy

• Choose your customer

• Narrow your focus

• Dominate your market

Choose your customer

• Greatest value from solution

• Generate return you require

• Generate return within acceptable timeframe

Circumstance-based categorisation

Attribute-based categorisation

Narrow your focus – market selection

Narrow your focus – market research

• Current methods and processes– Advantages and disadvantages– Costs and risks

• Industry trends and drivers of change

• Competition

Dominate your market – articulate a compelling proposition

• What part of a key business process is being improved?

• How does your solution directly address their objectives?

• What are the different benefits– Quantifiable– Unquantifiable– Anticipated (but currently unproven)

The market development model for new technologies

Innovators Early adopters Early majority Late majority Laggards

Dominate your market – utilise market dynamics

LaggardsLate majorityEarly majorityEarly adoptersInnovators

Yorkshire Water• £750m• 2200

United Utilities• £1.3bn• 4830

Wessex Water• £360m• 1200

Scottish Water• £1bn• 3590

Anglian Water• £910m• 3670

Severn Trent Water

• £1.2bn• 5150

Thames Water• £1.4bn• 5120 Northumbrian Water

• £580m• 2550

South West Water• £370m• 1300

Welsh Water• £580m• 160

Southern Water• £580m• 1700

Dominate your market – utilise networks

LaggardsLate majorityEarly majorityEarly adoptersInnovators

Yorkshire Water• £750m• 2200

United Utilities• £1.3bn• 4830

Wessex Water• £360m• 1200

Scottish Water• £1bn• 3590

Anglian Water• £910m• 3670

Severn Trent Water

• £1.2bn• 5150

Thames Water• £1.4bn• 5120 Northumbrian Water

• £580m• 2550

South West Water• £370m• 1300

Welsh Water• £580m• 160

Southern Water• £580m• 1700

Mott MacDonald Bentley

H2O Water

Morrisons

Mouchel

Balfour Beatty

Laing O’Rourke

WSP Group

Barhale

Costain

STS Integra

Next steps – engaging reference-able markets

Water

Electricity

Gas

Telecoms

Construction

Highways

The Discipline of Funding

The burning questions

• How can I get money?

• How much do I need?

• How much equity should I give away?

Funding – the view over the whole journey

time

company

size

Self funding

Friends & family

Angel

Angel

VC

VC VC

EXITfunding

round size

Articulating the vision

• Need to agree and define what constitutes meaningful progress

Funding and milestones

time

company

size

Self funding

Friends & family

Angel

Angel

VC

VC VC

EXITfunding

round size

prototype,proof of concept

markettraction

marketleadership

Using a financial model to articulate your case

• Makes key drivers and assumptions explicit

• Shows the development of the business over time

• Allows drivers and timings to be easily varied

• Captures the most material financial and operational elements

…and to let you and investors share a view of the road ahead

Cumulative cashflow generated

time

£

…and to let you and investors share a view of the road ahead

Cumulative cashflow generated

time

£

Points to remember

• Articulate your next milestone clearly

• Show how you will get there– Strategically

– Financially

– Contingency planning

• The final destination must feel both exciting and achievable