Transcript How to Attract Investors

How to Attract Investors
Enterprise Tuesday – February 10th 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
 “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 ?
 But FIRST – The Investment Climate – What about
the Recession ?
Eye on the World’s Financial
Crisis – What’s changed ?
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”
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 Jefferson 1778
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”
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
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
What do investors look for ? A team like
this….? They too started in a recession….
Investors look for performance and
$$$$ returns
Microsoft Corporation, 1978
600
$6,000
$6,000
500
$5,000
$5,000
400
$4,000
$4,000
300
$3,000
$3,000
200
$2,000
$2,000
100
Netscape IPO
3rd largest in
Nasdaq History
$1,000
$1,000
Amazon.com IPO
$0
$0
0
94
95
96
97
Number of Companies
Source: Venture Economics
98
99
Total Invested
TotalInvested
Invested($($million)
million)
Total
Number of Companies
When a market “BOOMS” - Venture Capital Investments
in E-Commerce (U.S.A.) “When Greed overcame Fear”.
We are still recovering in the aftermath….
Stay Cool!
Dilbert - Scott Adams
Stay Cool!
Dilbert - Scott Adams
Stay Cool!
Dilbert - Scott Adams
A Financial Cluster follows The
Technology Cluster at “boom time”
Prime
Technology
Ventures
Siemens
VC
FNI
Venture
Capital
Alta
Amadeus
Berkeley
ICT
CRIL
ET
Capital
Pall Mall
Ventures
Create
Ventures Generics
Life
Sciences
Prelude Cambridge
Avlar
Less than £1.0 million
Gateway
TTP
Ventures
Abingworth
3i
Merlin
More than £3.0 million
INVESTMENT SIZE
- Cambridge Region only
- UK only
Cambridge Venture Capital Scene – Estimated total
- UK and Europe
value of funds: in excess of £1.5 billions
And then there were the Angels….
Is there any risk?……
Everything is relative….
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
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
If at first you don’t succeed….try again….but learn
from the mistakes! Can RISK be eliminated ?
Show me the MONEY! – Where can we find
investors hanging out ?....
“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?”







The Early Stage Business Balance –
what do investors look for? Do the
entrepreneurs know ?
Inspired
Leadership
Creativity
Vision
Enthusiasm
Bullshit
Courage
Optimism
Management
Research &
Analysis
Caution
Process
Market
Knowledge
Financial Control
The role of Chairman and NXDs
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.
Our Entrepreneur has heard
Investors like BUSINESS PLANS
!
The Investor doesn’t seem to appreciate this
one…..
Not the most perceptive
entrepreneur…..
Sources Of Business Finance – A Reminder
“Our Money”
B
A
N
Family and Friends and Fools
Risk
Business Angels
K
Seed Funds
Early Stage VC
Expansion Capital
Pre-IPO
Maturity
F
I
N
A
N
C
E
??
Show me the“Softer Money” –
Grants etc – they are 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
Thinking Of Angels! – How did they get
that name ?
The Business Angels we help Entrepreneurs
look for….Cambridge Mentors Database









Technical Expertise
Marketing Expertise
Those who bring added
Contacts & Networks value – in one or all of….
Decision Making skills
Presentation skills
Dealmaking skills
Money-raising skills
Other Financial skills
Possible exit routes and practical help
with exit – international focus
7
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 !)
A Search for Fair Value – see any
Science here?
Issue date Value at
issue
1 Year On
Bookham
April 2000 £1.2
billion
£231
million
Lastminute.
Com.
March
2000
£571
million
£54
million
Orchestream
June 2000 £212
million
£52
million
Just2clicks
Feb 2000
£----
£130
million
There are not many like Vijay ….
See how excited our entrepreneur is
making him ?
VCs will be poker faced and tough on
Valuation
“ 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
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
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!
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
CfEL’s Entrepreneurs in Residence
Alex van
Someren
Alan Barrell
Library House
nCipher
Walter de
Brouwer
Founder
of Starlab
Jack Lang
Serial
Entrepreneur
Dan Roach
Avlar
Bioventures
Richard Green
Ubisense
Ann Cotton
Camfed
International
John Snyder
Grapeshot
Phil O’ Donovan
Camrivox
Thank you for your attention….
More on my website –
www.alanbarrell.com
E-mail – [email protected]