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 isn’t 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
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
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
Do investors really like Risk ?
If at first you don’t succeed….try again….but learn
from the mistakes! Can RISK be eliminated ?
Continuous Technology Revolution “Survival
of the Fastest”
Compared to an average DAY in 2003….
1971
All international phone calls
1975
All airline passengers
1984
All mobile phones
1992
All emails
1998
Source: Analysys, World Bank and ITU
All SMS
Three Converging Revolutions
Three Pervasive Technology Platforms – connecting
and networking across boundaries
BIO TECH
Pharmaceuticals
Diagnostics
Research/Info
Tools
Industrial
INFO TECH
Hardware
Software
Communications
Genomics
Bioinformatics
Proteomics
Biosensors
Biochips
Bioelectronics
Microfluidics
Nanobiotechnology
Drug Delivery
Nanodevices
Nanosensors
Nanoelectronics
NANO TECH
Electrical
Structural
Biomedical
Energy & Environment
Characteristics for High Technology
Regions – and potential for talent and $$$$
to meet


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
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
??
“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 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
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 ??
But I work in The East of England Region –
and in France
Map of Silicon Valley inset
Cambridge
source: Cambridge
2020 report - 1998
Greater Cambridge Partnership Area –one of nine
“Sub-regional Development Partnerships”
2001 GC Estimates
Population: 635,000
Jobs: 359,000
GVA: £12.2bn
Littleport
A10
A1(M)
FENLAND
(PART)
Chatteris
Ramsey
EAST
CAMBRIDGESHIRE
HUNTINGDONSHIRE
FOREST HEATHA11
(PART)
Mildenhall
A10
Huntingdon
A1
A1
4
A14
Bury St Edmunds
St Neots
CAMBRIDGE
A14
ST EDMUNDSBURY
(PART)
A11
SOUTH CAMBRIDGESHIRE
A10
Haverhill
NORTH HERTFORDSHIRE
(PART)
M11
Royston
UTTLESFORD
(PART)
Saffron Walden
Trinity College’s 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
Cambridge
Cambridge
Interactive
System
University
MRC
Laboratory
of Molecular
Biology
Sinclair
Radionics
1960
CCL
CAD
Centre
Sinclair
Research Ltd
Barclays Bank
1970
Cambridge
Science Park
Analysys
Glaxo
PA
Technology
Acorn
Seiko Epson
Research
Lab
Olivetti Research
Laboratory
(acquired by
AT&T in 1999)
Toshiba
Cambridge
Research
Laboratory
1980
Judge Institute of
Management
Studies
St. John
Innovation
Centre
Cambridge Research and
Innovation Ltd (CRIL)
Scientific
Generics
The Technology
Partnership
TTP
1990
Unilever Cambridge
Centre for Molecular
Informatics
Cambridge
Network
Nickerson
Biotech
Laboratory
Eicon
Research
Ltd
Institute of
Biotechnolog
y
Hitachi
Cambridge
Laboratory
Cantab
Pharmaceuticals
Amadeus Capital
Partners
Institute of
Manufacturing
2000
Entropic Research
Laboratory (acquired
by Microsoft in 1999)
BP
TTP Ventures
Glaxo Institute
of Applied
Pharmacology
The emergence of high-technology
clusters in Greater Cambridge
50,000
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….
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
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
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
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!
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
CfEL’s Programmes all
connect with investors
I want to
learn...
What entrepreneurship
is all about
I’m a CU student
and want
Entrepreneurship
as part of my
degree
Undergraduate and
Postgraduate Assessed
Programmes
I’m a student or
member of staff or
local
entrepreneurial
individual
Enterprise Tuesday
(Term 1)
I’m a student
Enterprisers
I’m a Solo
Entrepreneur with
a technology idea
I’m a Corporate
Intrapreneur or
Entrepreneurial
Manager
I’m an
entrepreneur or an
entrepreneurial
academic
Some new
knowledge and
skills in business
planning
How to get my idea
started
How to
survive and
grow in the
early stages
How to develop
and grow
companies
How to teach
entrepreneurship
Enterprise Tuesday
(Term 2)
Summer School
‘Fast Tracking
Innovation to
Commercial Success’
Senior
Managers’
Programme
Summer
Forum
Helping Entrepreneurs turn Ideas into Reality and
find sources of finance….developing as a
community….
• 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.,
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 –
www.alanbarrell.com
E-mail – alan@alanbarrell.com