How to Attract Investors Enterprise Tuesday – February 10 th 2009 “Show Me the MONEY !$$$$!”...
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Transcript of How to Attract Investors Enterprise Tuesday – February 10 th 2009 “Show Me the MONEY !$$$$!”...
![Page 1: How to Attract Investors Enterprise Tuesday – February 10 th 2009 “Show Me the MONEY !$$$$!” Laurea University of Applied Sciences Professor Alan Barrell.](https://reader035.fdocuments.in/reader035/viewer/2022062715/56649db25503460f94aa1538/html5/thumbnails/1.jpg)
How to Attract InvestorsHow to Attract Investors
Enterprise Tuesday – February 10Enterprise Tuesday – February 10thth 2009 2009
“Show Me the MONEY !$$$$!”
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 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 ?
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Eye on the World’s Financial Crisis – What’s changed ?
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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 Jefferson 1778
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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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What do investors look for ? A team like this….? They too started in a recession….
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Investors look for performance performance and $$$$$$$ returns$ returns
Microsoft Corporation, 1978
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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 IPONetscape IPO33rdrd largest in largest inNasdaq HistoryNasdaq History
Amazon.com IPOAmazon.com IPO
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
To
tal I
nv
est
ed (
$ m
illio
n)
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Stay Cool!Stay Cool!
Dilbert - Scott Adams
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Stay Cool!Stay Cool!
Dilbert - Scott Adams
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Stay Cool!Stay Cool!
Dilbert - Scott Adams
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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
CRIL Generics Prelude 3i
ICT
Life Sciences Avlar
FNIVenture Capital
Merlin
Amadeus
PrimeTechnologyVentures
Pall MallVentures
Alta Berkeley
ETCapital
SiemensVC
Abingworth
CreateVentures
CambridgeGateway
TTPVentures
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Is there any risk?……Everything is relative….
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“You look at things and ask - why?
but I dream of things that never
were and ask -
George Bernard Shaw
why not?”
What do investors look for in an Entrepreneur ?Entrepreneur ?
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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
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What else do investors like to see?....
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Einstein on IMAGINATION….
“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! – Where can we find Show me the MONEY! – Where can we find investors hanging out ?....investors hanging out ?....
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“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?”
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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
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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.
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Our Entrepreneur has heard
Investors like BUSINESS PLANS !
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The Investor doesn’t seem to appreciate this one…..
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Not the most perceptive entrepreneur…..
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Sources Of Business Finance – A Reminder
Maturity
Risk
“Our Money”“Our Money”
Family and Friends and FoolsFamily and Friends and Fools
Business AngelsBusiness Angels
Early Stage VCEarly Stage VC
Expansion CapitalExpansion Capital
B
A
N
K
F
I
N
A
N
C
E
??
Seed FundsSeed Funds
Pre-IPOPre-IPO
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Show me the“Softer Money” – Grants etc – they are investors….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
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Thinking Of Angels! – How did they get that name ?
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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
7
Those who bring addedvalue – in one or all of….
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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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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
£ - - - -
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There are not many like Vijay ….
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See how excited our entrepreneur is making him ?
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VCs will be poker faced and tough on Valuation
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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 !
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 – 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!
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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
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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 SnyderGrapeshot
Richard Green Ubisense
Walter de BrouwerFounder
of Starlab