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How to Attract Investors. Enterprise Tuesday – February 10 th 2009 “Show Me the MONEY !$$$$!” Laurea University of Applied Sciences Professor Alan Barrell. Attracting Investors – Some of the Issues……. WHO – might be the investors? Types and motivations Knowing their Goals and Criteria

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How to Attract Investors

Enterprise Tuesday – February 10th 2009

“Show Me the MONEY !$$$$!”

Laurea University of Applied Sciences

Professor Alan Barrell


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Attracting Investors – Some of the Issues……

  • WHO – might be the investors? Types and motivations

  • Knowing their Goals and Criteria

  • “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 ?

  • But FIRST – The Investment Climate – What about the Recession ?



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Who said these words and When

“I believe the banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered”


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Who said these words and When

“I believe the banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered”

Thomas Jefferson1778


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And what about these…

“The budget should be balanced, the Treasury should be replenished, Public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest our Nation become bankrupt. People must again learn to work, instead of living on public assistance”


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And what about these…

“The budget should be balanced, the Treasury should be replenished, Public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest our Nation become bankrupt. People must again learn to work, instead of living on public assistance”

Marcus Cicero 55 BC


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Good time to start a business ?...... What about The Recession?

“I started the Cobra Beer Company in a deep Recession – and it proved to be the best time for me….introducing something innovative and exciting changed the way people thought about Indian food and Beer”

Lord Karan Bilimoria

Founder – Cobra Beer



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Microsoft Corporation, 1978 started in a recession….

Investors look for performance and $$$$ returns


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$6,000 started in a recession….

$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


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Stay Cool! started in a recession….

Dilbert - Scott Adams


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Stay Cool! started in a recession….

Dilbert - Scott Adams


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Stay Cool! started in a recession….

Dilbert - Scott Adams


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A Financial Cluster follows The Technology Cluster at “ started in a recession….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


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Is there any risk?…… started in a recession….Everything is relative….


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What do investors look for in an started in a recession….Entrepreneur ?

“You look at things and ask - why?

but I dream of things that never were and ask -

why not?”

George Bernard Shaw


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And they look for started in a recession….“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


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What else do investors like to see?.... started in a recession….


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Einstein on IMAGINATION…. started in a recession….

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

Albert Einstein 1879 - 1955


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



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“Show Me The Money!”- Questions for Entrepreneurs out ?....

  • 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 ?

  • Presenting Ourselves….can we ??

  • “Rumsfeld Questions” – “What we DON’T know?”


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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


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Presenting Ourselves for? Do the entrepreneurs

  • Research and Preparation – WHO are we meeting ?

  • “Elevator Pitch” – enagaging and getting the first meeting

  • Executive Summary

  • Presentation – to suit the investor – check this out

  • The Business Plan

  • People Factors.





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Sources Of Business Finance – A Reminder for? Do the entrepreneurs

“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


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Show me the“Softer Money” – Grants etc – they for? Do the entrepreneurs 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



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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


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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 !)






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“ Where is the money ? Or the $$$$ trail ?” 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


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US Angels – The REAL early stage funders ! and Information Points and principles

  • 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.


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“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


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Our Centre for Entrepreneurial Learning – in and from CambridgeInvestment 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!


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Want my money $$$$ ?....Show me …. in and from Cambridge

  • VISION and PASSION ++++++

  • Clear sense of PURPOSE

  • A MONSTER MARKET to Exploit

  • A PRODUCT that has KILLER Applications

  • A Clear BUSINESS MODEL

  • A PLAN to understand believe in….

  • A TEAM to rely upon – Faith that they can DELIVER

  • A $$$$ Supply Chain that makes sense

  • A well considered EXIT STRATEGY


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CfEL’s Entrepreneurs in Residence in and from Cambridge

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


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Thank you for your attention…. in and from Cambridge

More on my website –

www.alanbarrell.com

E-mail – [email protected]


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