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  “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….

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

When a market “BOOMS” - Venture Capital Investments in E-Commerce (U.S.A.) “When Greed overcame Fear”. We are still recovering in the aftermath…. Source: Venture Economics Netscape IPO 3 rd largest in Nasdaq History Amazon.com IPO $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Total Invested ($ million)

Stay Cool! Dilbert - Scott Adams

Stay Cool! Dilbert - Scott Adams

Stay Cool! Dilbert - Scott Adams

Cambridge Venture Capital Scene – Estimated total value of funds: in excess of £1.5 billions And then there were the Angels…. A Financial Cluster follows The Technology Cluster at “boom time” - UK and Europe - Cambridge Region only - UK only Less than £1.0 million More than £3.0 million INVESTMENT SIZE CRILGenericsPrelude 3i ICT Life Sciences Avlar FNI Venture Capital Merlin Amadeus Prime Technology Ventures Pall Mall Ventures Alta Berkeley ET Capital Siemens VC Abingworth Create Ventures Cambridge Gateway TTP Ventures

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

“You look at things and ask - why? but I dream of things that never were and ask - George Bernard Shaw why not?” Entrepreneur ? What do investors look for in an Entrepreneur ?

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

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 ? The role of Chairman and NXDs Inspired Leadership Enthusiasm Bullshit Courage OptimismVision Creativity Management Research & Analysis Caution Process Financial Control Market Knowledge

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 Maturity Risk “Our Money” Family and Friends and Fools Business Angels Early Stage VC Expansion Capital B A N K F I N A N C E ?? Seed Funds Pre-IPO

investors…. 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  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 7 Those who bring added value – in one or all of….

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 dateValue at issue 1 Year On BookhamApril 2000£1.2 billion £231 million Lastminute. Com. March 2000 £571 million £54 million OrchestreamJune 2000£212 million £52 million Just2clicksFeb 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….  “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:  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 Alan Barrell Library House Phil O’ Donovan Camrivox Alex van Someren nCipher Jack Lang Serial Entrepreneur Dan Roach Avlar Bioventures Ann Cotton Camfed International John Snyder Grapeshot Richard Green Ubisense Walter de Brouwer Founder of Starlab

Thank you for your attention…. More on my website – –