How to Attract Investors Fifth Annual Conference of the Technopolicy Network. Halifax, Nova Scotia, Canada September 2008 Show Me the MONEY !$$$$! Professor Alan Barrell

Attracting Investors - Some Issues….There will be more…. WHO – might be the investors? Types and motivations Knowing their Goals and Criteria Innovative Regions and Sub-Regions - special conditions 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 isnt just the money! What else do we get ? The Investment Climate !!!!

Would you invest in this team ?

What DO Investors look for ? 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

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

Do investors really like Risk ?

If at first you dont succeed….try again….but learn from the mistakes! Can RISK be eliminated ?

astest Continuous Technology Revolution Survival of the Fastest Compared to an average DAY in 2003…. All international phone calls 1971 All airline passengers 1975 All mobile phones 1984 All s 1992 All SMS 1998 Source: Analysys, World Bank and ITU

Three Converging Revolutions Three Pervasive Technology Platforms – connecting and networking across boundaries BIO TECH Pharmaceuticals Diagnostics Research/Info Tools Industrial Genomics Bioinformatics Proteomics INFO TECH Hardware Software Communications NANO TECH Electrical Structural Biomedical Energy & Environment Biosensors Biochips Bioelectronics Microfluidics Nanobiotechnology Drug Delivery Nanodevices Nanosensors Nanoelectronics

Universities and centres of academic excellence Entrepreneurs with marketable ideas and products Business angels and established seed funds Sources of early stage venture capital Core of successful large companies Quality management teams and talent Supportive infrastructure Affordable space for growing businesses Access to capital markets Attractive living environment and accommodation Social and Business Networks - Connectivity source :- Gibbons - Stanford University 1998 Characteristics for High Technology Regions – and potential for talent and $$$$ to meet

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…. 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

Show Me The Money!- More 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 ? Rumsfeld Questions – What we DONT 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

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 !)

Connecting Investors to Entrepreneurs Two Way Experiences in The Cambridge Cluster and an Enlightened Europe From – Poacher and Gamekeeper …. Alan Barrell Entrepreneur in Residence – University of Cambridge

How and Where do Investors and Entrepreneurs find each other and get connected ??

Cambridge source: Cambridge 2020 report But I work in The East of England Region – and in France Map of Silicon Valley inset

Greater Cambridge Partnership Area –one of nine Sub-regional Development Partnerships 2001 GC Estimates Population: 635,000 Jobs: 359,000 GVA: £12.2bn

Trinity Colleges History and Scientific Development – Cambridge – Science, Innovation and Invention Trinity always had a strong scientific tradition* First use of the word scientist 1835 (Whewell) First European Science Park – 1970 – Dr Sir John Bradfield *Alumni include Newton, Clerk-Maxwell, Rayleigh, Thomson, Walton, Rutherford, Aston, Lyle, both Braggs, Bohr, Hopkins, Klug, Kendrew

C ambridge University MRC Laboratory of Molecular Biology CAD Centre Sinclair Radionics CCL Barclays Bank 1980 Cambridge Interactive System Cambridge Science Park Acorn PA Technology Eicon Research Ltd Sinclair Research Ltd 1990 Analysys Olivetti Research Laboratory (acquired by AT&T in 1999) Judge Institute of Management Studies St. John Innovation Centre Scientific Generics The Technology Partnership TTP Cambridge Research and Innovation Ltd (CRIL) Institute of Biotechnolog y Cantab Pharmaceuticals Hitachi Cambridge Laboratory Nickerson Biotech Laboratory Glaxo 2000 Toshiba Cambridge Research Laboratory Seiko Epson Research Lab Unilever Cambridge Centre for Molecular Informatics Cambridge Network Institute of Manufacturing Amadeus Capital Partners TTP Ventures Entropic Research Laboratory (acquired by Microsoft in 1999) Glaxo Institute of Applied Pharmacology BP

The emergence of high-technology clusters in Greater Cambridge 50,000

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

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

Thinking Of Angels! – we keep referring to them !

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

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….

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!

CfELs 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

CfELs Programmes all connect with investors

A FREE evening programme open to students, staff and the business community Lectures on Tuesday evenings from 6pm About 1500 attended in 2006/07, coming from 50 different departments within the University of Cambridge, 10 other Universities and 100+ private businesses Close links to Cambridge University Entrepreneurs (CUE) Business Plan Competitions Investor Connections ++++ from UK and Overseas Has been copied extensively – QinetiQ; Oxford; Bedford; Essex; Sussex; UEA; France; Luxembourg; Baltic States; Auckland; Canada; Australia etc., Helping Entrepreneurs turn Ideas into Reality and find sources of finance….developing as a community….

Developing Enterprisers An intensive four day residential programme for energetic individuals, from any organisation, background or discipline.Connecting, Networking and Learning. Focus on developing fundamental entrepreneurial skills Networking opportunity – investors attend Run by facilitators, Enterprisers alumni and faculty members from universities Unlocks creativity, confidence and a can do attitude

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