How to Attract Investors

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How to Attract Investors

• Enterprise Tuesday February 10th 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 isnt just the
  money! What else do we get ?
• But FIRST The Investment Climate What about
  the Recession ?

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Eye on the Worlds Financial Crisis Whats
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 and returns
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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.
Netscape IPO 3rd largest in Nasdaq History
Amazon.com IPO
Source Venture Economics
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Stay Cool!
Dilbert - Scott Adams
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Stay Cool!
Dilbert - Scott Adams
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Stay Cool!
Dilbert - Scott Adams
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Cambridge Venture Capital Scene Estimated total
value of funds in excess of 1.5 billionsAnd
then there were the Angels.
A Financial Cluster follows The Technology
Cluster at boom time
Siemens VC
FNI Venture Capital
Prime Technology Ventures
Amadeus
Alta Berkeley
ICT
Pall Mall Ventures
Create Ventures
CRIL
Generics
Prelude
3i
ET Capital
Cambridge Gateway
TTP Ventures
Life Sciences
Abingworth
Avlar
Merlin
More than 3.0 million
Less than 1.0 million

INVESTMENT SIZE
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Is there any risk?Everything is relative.
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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
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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 dont succeed.try again.but
learn from the mistakes! Can RISK be eliminated ?
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Show me the MONEY! Where can we find 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 DONT know?

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The Early Stage Business Balance what do
investors look for? Do the entrepreneurs know ?
Inspired Leadership
Management
Enthusiasm
Creativity
Research Analysis
Process
Bullshit
Market Knowledge
Courage
Caution
Optimism
Vision
Financial Control
The role of Chairman and NXDs
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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 doesnt seem to appreciate this
one..
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Not the most perceptive entrepreneur..
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Sources Of Business Finance A Reminder
Our Money
B A N K F I N A N C E ??
Family and Friends and Fools
Business Angels
Seed Funds
Risk
Early Stage VC
Expansion Capital
Pre-IPO
Maturity
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Show me theSofter 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

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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

Those who bring addedvalue in one or all of.
7
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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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CfELs Entrepreneurs in Residence
Walter de BrouwerFounder of Starlab
Alan Barrell Library House
Alex van Someren nCipher
Jack Lang Serial Entrepreneur
Dan Roach Avlar Bioventures
Ann Cotton Camfed International
Richard Green Ubisense
Phil O Donovan Camrivox
John Snyder Grapeshot
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Thank you for your attention.

• More on my website
• www.alanbarrell.com
• E-mail alan_at_alanbarrell.com