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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

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how to attract investors
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
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 !!!!
slide5

$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
Stay Cool!

Dilbert - Scott Adams

stay cool7
Stay Cool!

Dilbert - Scott Adams

stay cool8
Stay Cool!

Dilbert - Scott Adams

what do investors look for in an entrepreneur
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

slide11

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
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
If at first you don’t succeed….try again….but learn from the mistakes! Can RISK be eliminated ?
continuous technology revolution survival of the f astest compared to an average day in 2003

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

slide19

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
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
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 are investors
“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
“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 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
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
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

slide32

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
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 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

slide35

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

slide37

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
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
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
“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
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
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
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

slide46

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
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
Thank you for your attention….

More on my website –

www.alanbarrell.com

E-mail – alan@alanbarrell.com