HPSU presentation 14 march 2011

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Transcript of HPSU presentation 14 march 2011

  • DRAFT

  • Enterprise IrelandHigh Potential Start Ups (HPSU)

    PRESENTATION TO INDONESIAN DELEGATION

    John ConverySenior Development AdvisorHPSU

    Monday 14th March 2011

  • AGENDAEnterprise Ireland Mission

    Our Client Base

    High Potential Start Ups Background

    High Potential Start Ups How we operate

    High Potential Start Ups Assistance

    Measurement of Progress

    Start Ups Common Mistakes and lessons learned

  • Enterprise Ireland Mission To accelerate the development of world-class Irish companies to achieve strong positions in global markets, resulting in increased national and regional prosperity.

  • ENTERPRISE IRELAND CLIENT BASE

  • E.I. Client Base Segmented by Stage of DevelopmentHigh PotentialStart-Ups

    Entrepreneursstarting companieswith the ability tocompete in world markets

    Scaling

    Ambitious companieswith the ability togrow to scale andachieve significant global successTotal E.I. Client base ~ 3,500 companies 148,000 employees

  • HIGH POTENTIAL START Ups

    BACKGROUND

  • What is a HPSU ?A company must be :

    Recently established (between 0-4 years from first employee)

    Innovative (operating in a growth sector).

    Capable of generating at least :

    10 full time jobs (in Ireland) - by end of year 3

    Annual revenues of 1.M - by end of year 3

    Export focused.

    Irish Owned and located in Ireland.

  • Who we work with .Typically

    Key functional managers within existing businesses with new business ideas.Experienced Managers looking at MBOs.Irish ex-Pats, returning to Ireland with new business ideas.Individuals involved in 3rd level research, with an interest in commercialisation.Serial or repeat entrepreneurs.Promoters who identify an opportunity and want to start an export business.

    - The majority of original promoters of start up companies EI supports have strong technical background / qualifications.

  • E.I. HPSU Activity1,200 start-up enquiries received p.a. Of those ~ 400 can be classified as eligible as E.I. clients

    E.I. approves equity funding packages for ~70 HPSUs p.a.

  • Where do entrepreneurs come from?Sourcing people with new ideas.

  • High Potential Start Ups

    - How we operate

  • How we operateOne division responsible for all start ups.Organised along sectoral lines.Each new prospective client is assigned a Development Advisor or account executive.The full range of EI resources for an individual / company is accessed through that advisor.All clients are handled both on a one to one basis AND are involved in relevant sectoral initiatives.

  • E.I. approach to start-upsWhat Does the HPSU Dept. Provide?

    - A Dedicated Start-up Team.- Technology- Finance- HRD- Sales - Marketing

    Start-Up Business Consultancy for New High Potential Client, followed by

    Assessment of and Investment in New High Potential Business

  • High Potential Start Ups

    - Assistance

  • Some detail on assistance from EI1. Advice and mentoring

    Funding from EI

    Identifying customers and securing export sales

    4. Infrastructure Incubation space - Business Innovation Centres

  • 1. Advice and mentoring Getting startedEnterprise Start Programmes (over 6 weeks) and Enterprise Platform Programmes (over 12 months with part salary support).

    Initial idea / project evaluation Feasibility study grant (50%).

    Advice and help in development of a business plan;

    Assistance with product / market validation;

    Challenging of assumptions, projections etc help fill the gaps.

    Advice and help in building a balanced, management team;

  • 1. Advice and mentoring Getting startedMentor panels

    Fit for market seminars

    Investor readiness seminars

    Information on potential investors

    Networking receptions (clients, advisers, investors)

    Introductions (investors, business partners, consultants)

  • 2. FUNDING

    How E.I. Funds High Potential Start Ups1. Funding the Concept (Category One Funding)

    2. Funding the Business Plan (Innovative Funding)

  • 1. Funding the Concept (Category One)

    Mentor, Bus. Accelerator

    Strategic Consultancy

    Feasibility

    Recruiting Key PersonMax E.I. Funding is 110K (over 2 years)Based on 50% grantInnovation Vouchers (max. 5,000)Overall Objective : Move the project toward a full Business Plan

  • 2. Funding the Business Plan Innovative FundingEvaluation of the Business Plan (which includes Cash Flows)

    E.I. will invest by way of Equity(usually Cum, Conv Pref. Shares

    E.I. will invest based on identified cash need per the Business Plan

    Typical first investment is - 300,000 with additional sums based on achieving agreed milestones.

    E.I. will always look for co-investors (BES, VCs, Promoters)

  • How is E.I.s Investment Structured?100 % equity package

  • Other Common Funding Sources: BES/Seed Capital SchemeBESMax investment in any one company is 2M (or 1.5M in any 12 month period).

    Relief of 150,000 per investor per annum at marginal rate of tax.

    Scheme expires December 2013.

    Commutation Rules could reduce other State Aids by 20%.Seed Capital SchemeProvides refund (under certain conditions) for PAYE paid over previous 6 years.

    Relief of 100,000 per investor.

    Refund is limited to PAYE paid subject to a max income of 100K pa

    Investment must be in shares in the company and is claimed as a refund of that investment

  • 3. Identifying Customers and securing export salesAccess to an international network of overseas officesOverseas incubation spaceAssistance in identification and securing overseas key reference customersFinancial assistance towards costs associated with attending international trade fairs, fact finding missions etcAccess to overseas market intelligence and researchIntroductions to overseas industry experts

  • Measurement of Progress

  • Volume and Impact EI assisted HPSUs since 1999

  • HPSU review 1989 - 2008:Status of EI client companies in 2008

  • Trading Performance Trading PerformanceE.I. assisted HPSUs since 1998.

    For these firms trading in 2008:Total annual sales : 1.3 billionTotal employment : 10,500

  • START UPs- Common mistakes and lessons learned

  • Start Up - Lessons LearnedSome of the more common start up mistakes we typically see..

  • Some common start up mistakes Value proposition is not clearly defined. Technically brilliant product but does it deliver VALUE to the customer?

    Inability to identify and qualify the customer.

    Our product has no competitors !

    Unbelievable numbers (revenue projections and costs).

    Unrealistic expectations on raising cash (time needed and valuations). It will take 3-6 months. Plan conservatively.

    Inability to manage cash high burn rate.

  • Some common start up mistakes (contd)Inability to identify clear and achievable milestones.

    Unbalanced Management team dominant CEO with little commercial experience. Recruiting a good CEO costs money - and equity.

    Weak (non commercial) Board. Securing a hard-nosed, no nonsense, commercial Chairman is invaluable.

    Inability to plan for contingencies (they will happen !!).

    No exit strategy (an absolute must for VC funding).

  • Thank You.