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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


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    1. How to Attract Investors Enterprise Tuesday – February 10th 2009 “Show Me the MONEY !$$$$!” Laurea University of Applied Sciences Professor Alan Barrell

    2. 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 ?

    3. Eye on the World’s Financial Crisis – What’s changed ?

    4. 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”

    5. 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

    6. 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”

    7. 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

    8. 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

    9. What do investors look for ? A team like this….? They too started in a recession….

    10. Microsoft Corporation, 1978 Investors look for performance and $$$$ returns

    11. $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

    12. Stay Cool! Dilbert - Scott Adams

    13. Stay Cool! Dilbert - Scott Adams

    14. Stay Cool! Dilbert - Scott Adams

    15. 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

    16. Is there any risk?……Everything is relative….

    17. 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

    18. 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

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

    20. Einstein on IMAGINATION…. “Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world” Albert Einstein 1879 - 1955

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

    22. Show me the MONEY! – Where can we find investors hanging out ?....

    23. “Show Me The Money!”- 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 ? • Presenting Ourselves….can we ?? • “Rumsfeld Questions” – “What we DON’T know?”

    24. 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

    25. Presenting Ourselves • 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.

    26. Our Entrepreneur has heard Investors like BUSINESS PLANS!

    27. The Investor doesn’t seem to appreciate this one…..

    28. Not the most perceptive entrepreneur…..

    29. 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

    30. Show me the“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

    31. Thinking Of Angels! – How did they get that name ?

    32. 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

    33. 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 !)

    34. A Search for Fair Value – see any Science here?

    35. There are not many like Vijay ….

    36. See how excited our entrepreneur is making him ?

    37. VCs will be poker faced and tough on Valuation

    38. “ 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

    39. 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.

    40. “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

    41. 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!

    42. Want my money $$$$ ?....Show me …. • VISION and PASSION ++++++ • Clear sense of PURPOSE • A MONSTER MARKET to Exploit • A PRODUCT that has KILLER Applications • A Clear BUSINESS MODEL • A PLAN to understand believe in…. • A TEAM to rely upon – Faith that they can DELIVER • A $$$$ Supply Chain that makes sense • A well considered EXIT STRATEGY

    43. 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

    44. Thank you for your attention…. More on my website – www.alanbarrell.com E-mail – alan@alanbarrell.com