If you're still in two minds about whether to push ahead with a clean tech or healthcare project, take comfort from the latest VC investment figures. Funds are definitely out there to back good ideas - and record amounts of cash are now being poured into some sectors.
Data released by Dow Jones VentureOne over the weekend indicates that US VC firms pumped $590m into energy investments in the third quarter of 2007, a leap of 28 per cent over the same period last year. Investment in advanced specialty materials and chemicals companies - another substantial subset of the clean tech equation - doubled from the previous year to $277m. UK investment trends don't slavishly follow the US, of course, but with Silicon Valley emerging as a leader in clean technologies, the figures give some indication about where investment preferences might swing in the UK and elsewhere going forward.
Alongside green concerns, of course, healthcare remains a big talking point in the US and has also proved to be fertile ground for entrepreneurs. Earlier this month, the first Baby Boomer, a retired teacher, applied for social security - and as VentureOne points out, there are 76m other Boomers waiting to follow suit. Aside from the impact on social security funds, all of these new retirees are going to need medical care - which helps explain why overall investment in the healthcare sector grew four per cent. The medical devices sector in particular continues to grow strongly - while the number of actual deals fell, total investment climbed 19 per cent to $830m, taking the sector to record annual figures with just three quarters gone.
Elsewhere, traditional information technology investment slipped a little, with ten per cent fewer deals and five per cent less overall investment in the third quarter. It remains, however, the largest VC investment area overall with $3.77bn of investment. Not surprisingly, the information services category - which includes Web 2.0 companies - now accounts for around a quarter of overall IT funds. Significantly, some 60 per cent of IT deals went to second and later round companies, a trend that was borne out across the whole VC arena. While the level of early-stage investment remained steady, this later-stage focus helped push median deal sizes to a new record of $7.92m.
Finally, if you ever decide to seek out US investment, bear in mind that just like house prices, location is everything. New England and New York both saw healthy growth on the East Coast - but it's hard to argue with California, which alone accounts for a staggering 44 per cent of all US VC activity in the third quarter. While the Bay Area's share fell slightly, Southern California saw its biggest deal volume since 2001 - suggesting that we'll have to wait a while before any other state makes a serious challenge for the number one slot.
By Keith Rodgers
For South African Business Invetment Opportunities and Capital check out SA Investors Network
Wednesday, June 24, 2009
Growing your business exponentially
Want to know how to grow your business 20,000 per cent over the next three years? Take a look at the September issue of US entrepreneur's magazine Inc., which contains this year's list of the fastest growing private companies in America.
The ludicrously high headline figure (20,128.9 per cent, to be precise) comes from a company called MemberHealth, which struck it rich in the US health market prior to agreeing a tasty $630m buyout offer earlier this year. But while it leads Inc.'s highly-respected Top 500 listing, it's just one of many companies enjoying super-quick growth. Companies from a broad cross-section of industry have made it into the ratings, and as always, the tech sector has a fair showing.
One point that stares you in the face on the listings is just how big a part luck plays in making silly money. After MemberHealth, the second fastest-growth company on Inc.'s list this year is a telephone switch supplier that happened to get a big break from a deal with a large US cable company. Net result? Three-year growth of 14,853 per cent with current revenue of $68.1m.
But while luck matters, good ideas still count. In the software field, Turning Technologies is the highest ranked company at number 18 - it develops software and hardware extensions to Microsoft PowerPoint which allow members of the audience to interact with a presenter using handheld devices. If the thought of presenting in public makes you break out in a cold sweat, this is probably the last thing you want to get involved with, but the software clearly has applications in education and other fields.
Other noteworthy representatives from the software sector include SPADAC at number 32, which makes predictive geospatial software - the sort of stuff governments use to predict where terrorist infrastructure attacks might take place, and the stuff companies use to work out where they should locate. And then there's TopCoder, 45th in the growth stakes with revenue of $14.8m and three-year growth of 2,459 per cent. This is a company that really is breaking the mould with its software coding competitions, where companies - including blue-chips - submit coding problems to a network of over 115,000 freelances, who compete to provide answers. The set-up works well for everyone: the customers get some relatively cheap development work, while prize money for freelances can reach a cool $100k.
Inevitably, though, the success of some of the top-performers is less about technology and more about its creative application. Take Bill Me Later, number six in the list with three-year growth of 8,650 per cent, revenue of $53.6m and 100 employees. It provides an online billing system that eases consumer concerns about entering credit card details over the internet by using purchasers' birth dates and part of their social security number. As its name implies, consumers also get billed later, which definitely helps get them excited.
And good ideas don't have to be ground-breaking ideas either. Position number 34 in Inc.s' list is held by a company that sells software for medical practice billing and record-keeping, and brings in revenue of $38.2m in the process. Likewise, TaxStream, which makes accounting software for large public companies, comes in at 51.
Finally, if you're of a creative bent, take comfort from the fact that style can indeed win over substance. The consumer products field is led by one of last year's listed firms, Digital Lifestyle Outfitters, which makes a range of accessories, including cases, for iPods and other handhelds, and was recently bought out. No mystery there about the cause of its success - although with revenue of $98.6m and just 70 employees, it definitely fits into the 'wish I'd thought of it first' category.
By Keith Rodgers
The ludicrously high headline figure (20,128.9 per cent, to be precise) comes from a company called MemberHealth, which struck it rich in the US health market prior to agreeing a tasty $630m buyout offer earlier this year. But while it leads Inc.'s highly-respected Top 500 listing, it's just one of many companies enjoying super-quick growth. Companies from a broad cross-section of industry have made it into the ratings, and as always, the tech sector has a fair showing.
One point that stares you in the face on the listings is just how big a part luck plays in making silly money. After MemberHealth, the second fastest-growth company on Inc.'s list this year is a telephone switch supplier that happened to get a big break from a deal with a large US cable company. Net result? Three-year growth of 14,853 per cent with current revenue of $68.1m.
But while luck matters, good ideas still count. In the software field, Turning Technologies is the highest ranked company at number 18 - it develops software and hardware extensions to Microsoft PowerPoint which allow members of the audience to interact with a presenter using handheld devices. If the thought of presenting in public makes you break out in a cold sweat, this is probably the last thing you want to get involved with, but the software clearly has applications in education and other fields.
Other noteworthy representatives from the software sector include SPADAC at number 32, which makes predictive geospatial software - the sort of stuff governments use to predict where terrorist infrastructure attacks might take place, and the stuff companies use to work out where they should locate. And then there's TopCoder, 45th in the growth stakes with revenue of $14.8m and three-year growth of 2,459 per cent. This is a company that really is breaking the mould with its software coding competitions, where companies - including blue-chips - submit coding problems to a network of over 115,000 freelances, who compete to provide answers. The set-up works well for everyone: the customers get some relatively cheap development work, while prize money for freelances can reach a cool $100k.
Inevitably, though, the success of some of the top-performers is less about technology and more about its creative application. Take Bill Me Later, number six in the list with three-year growth of 8,650 per cent, revenue of $53.6m and 100 employees. It provides an online billing system that eases consumer concerns about entering credit card details over the internet by using purchasers' birth dates and part of their social security number. As its name implies, consumers also get billed later, which definitely helps get them excited.
And good ideas don't have to be ground-breaking ideas either. Position number 34 in Inc.s' list is held by a company that sells software for medical practice billing and record-keeping, and brings in revenue of $38.2m in the process. Likewise, TaxStream, which makes accounting software for large public companies, comes in at 51.
Finally, if you're of a creative bent, take comfort from the fact that style can indeed win over substance. The consumer products field is led by one of last year's listed firms, Digital Lifestyle Outfitters, which makes a range of accessories, including cases, for iPods and other handhelds, and was recently bought out. No mystery there about the cause of its success - although with revenue of $98.6m and just 70 employees, it definitely fits into the 'wish I'd thought of it first' category.
By Keith Rodgers
Saturday, May 30, 2009
Business Finance: Deals for May 09
Some of the interesting venture funding deals and almost deals for May included the following:
Facebook, the social networking site, has held meetings with a bevy of private equity firms to explore raising another round of financing, The New York Post reported. Facebook held “valuation discussions” with Providence Equity Partners, General Atlantic, Bain Capital and Kohlberg Kravis Roberts, among others.
Associated Content, an online publishing start-up, has rounded up $6 million in funding, one month after it named a new chief chief executive, former CBS Interactive executive Patrick Keane, PaidContent.org reported. The latest round comes from existing investors including SoftBank Capital, Canaan Partners and AOL chief executive Tim Armstrong, the publication said. The additional cash brings the company’s fund-raising total to $21 million.
Marin Software, a provider of search marketing technology, said it raised $13 million in a third round of funding led by DAG Ventures.
EveryZing, a publisher-based search engine, has nabbed $8.25 million in a third round of financing. NBC Universal’s Peacock Equity provided $3 million of the total, while existing investors Fairhaven Capital, Accel Partners, General Catalyst Partners and BBN Technologies also participated.
Apparently Apple, with $29 billion in cash burning a hole in its pocket, was mulling a deal to buy Twitter for about $700 million. Putting aside the will-they-won’t-they chatter started by a report from Valleywag, PaidContent.org trains its sights on the price tag.
Slacker, a maker of portable musical devices, has taken in $9.6 million of a $10.2 million round, PaidContent.org reported, citing a regulatory filing released Thursday. The financing came from nine undisclosed investors, the publication said. Previous backers of Slacker include Centennial Ventures, Rho Ventures, and Austin Ventures. The new capital brings Slacker’s total funds raised to $68.7 million, PaidContent said.
Facebook, the social networking site, has held meetings with a bevy of private equity firms to explore raising another round of financing, The New York Post reported. Facebook held “valuation discussions” with Providence Equity Partners, General Atlantic, Bain Capital and Kohlberg Kravis Roberts, among others.Associated Content, an online publishing start-up, has rounded up $6 million in funding, one month after it named a new chief chief executive, former CBS Interactive executive Patrick Keane, PaidContent.org reported. The latest round comes from existing investors including SoftBank Capital, Canaan Partners and AOL chief executive Tim Armstrong, the publication said. The additional cash brings the company’s fund-raising total to $21 million.
Marin Software, a provider of search marketing technology, said it raised $13 million in a third round of funding led by DAG Ventures.
EveryZing, a publisher-based search engine, has nabbed $8.25 million in a third round of financing. NBC Universal’s Peacock Equity provided $3 million of the total, while existing investors Fairhaven Capital, Accel Partners, General Catalyst Partners and BBN Technologies also participated.
Apparently Apple, with $29 billion in cash burning a hole in its pocket, was mulling a deal to buy Twitter for about $700 million. Putting aside the will-they-won’t-they chatter started by a report from Valleywag, PaidContent.org trains its sights on the price tag.
Slacker, a maker of portable musical devices, has taken in $9.6 million of a $10.2 million round, PaidContent.org reported, citing a regulatory filing released Thursday. The financing came from nine undisclosed investors, the publication said. Previous backers of Slacker include Centennial Ventures, Rho Ventures, and Austin Ventures. The new capital brings Slacker’s total funds raised to $68.7 million, PaidContent said.
Sunday, May 24, 2009
The Power of Marketing
Are you making the most of the web to build your business? With the right combination of classic marketing principles and clever techniques, even the smallest companies can reach a big audience
Type 'treatment abroad' into Google and the top four non-sponsored results take you to a site run by Berkhamsted-based Intuition Communication. 'Private health' produces the top two results for Intuition. And for 'breast implant' and 'cosmetic surgery', its private healthcare website appears in a prime spot at the top of the second listings page. Intuition is only a small company and it doesn't pay a penny in banner ads or pay-per-click advertising, but there it is topping the most popular method of finding services on the web. That's the power of internet marketing.
'We have a search engine optimisation expert and every month of his life is spent optimising our content for the search engines,' says Intuition managing director Keith Pollard. 'We have around 2,000 search terms which we target and our average position on Google is 6.2. The reason that's important to us is not only for our own sake, but also our clients, who advertise with us because of our positioning.'
For many entrepreneurs, internet marketing will be less about driving traffic to the site and more about establishing their business's credentials in a particular area - a marketing brochure to the outside world. But lessons from internet businesses still provide useful pointers. Using the internet as part of the marketing mix is an extremely cost-effective way of getting your message out there. It's also a good way of targeting a particular audience, since visits, clicks and links are so transparent on the web. The internet marketer has a number of tools to help - including the site itself, blogs, forums, links, and of course search engine optimisation. But it's important to bear in mind that some of these are more effective than others.
To a certain extent, the four Ps of marketing hold true in the web domain - product, place, price and promotion are still the most important considerations. It's relatively easy, for example, to drive some level of traffic to your website, but if visitors don't find what you've promised them when they arrive, they'll soon go elsewhere. Equally, you could spend a lot of time and effort promoting your website through articles on other sites, blogs, and links, but if there's not a compelling reason to visit right now, then you won't pull people in.
Creating the right site
So what ranks as a good website from a marketing perspective? It's the combination of strong content, good design and clear, easy navigation that scores highly, according to the Web Marketing Association. It recently released its 2007 web awards report, which features a decade of data on what its judges decided were the best websites across a wide range of industries since it started in 1997. The sites are scored by independent judges against seven criteria: design, innovation, content, technology, interactivity, copywriting and ease of use. Although the competition is largely US-based, UK sites did well, rated the best in Europe.
Industry-wise, the airlines came out best, scoring above average every year and achieving the highest average score in 2006. The judges noted that airline sites were moving from being purely transactional sites where you could book flights to providing in-depth travel information on destinations. The top pick was the American Airlines site.
In the technology space, biotech was slightly better than average, using design and copywriting well, including flash presentations to convey complex ideas. Cara Therapeutics, a New York-based drug development company came out on top in 2006. Computer hardware meanwhile, was also a high performer, with HP.com voted the best site for the three years before this year, when the accolade was handed to Broadcom. It's easy to see why HP's site scores so highly, with a clear demarcation as to where its different audiences should navigate and strong offers encouraging visitors to take further action.
Misunderstanding the audience and poorly targeting offers are the most frequent mistakes firms make in internet marketing. But another advantage of the web as a marketing medium is it's relatively easy to test, monitor and continually improve sites based on audience feedback. Studying visitor stats can show which elements of the site are most popular, and where visitors are experiencing difficulties finding what they're looking for.
Driving traffic
Once your site is as strong as it can be, you need to think about driving traffic back to it - but it's important to consider first what sort of traffic you want. Pay-per-click advertising - where you're only charged when a user clicks back to your site - is offered by various online agencies and can be a good way of targeting a user with a particular interest. Fees can be high though, particularly for popular keywords or titles and you may have to bid for a particular spot. Equally, banner ads can help drive targeted traffic to your site - and since each page on your site can serve a different banner, you can ensure your message is targeted to a particular niche. However, static banner ads can seem outdated now, and you're not guaranteed a specific number of clicks.
The sort of viral marketing that led to much of the early excitement about the web is perhaps more relevant, particularly in terms of mentions and links from other sites on the internet, which also help guarantee good ranking in the search engines. No one knows the exact algorithms Google uses to determine the relevance of sites, but links from other sites are part of the equation, along with regularly updated content and longevity.
'The fact that we've been around 10 years makes us an established presence, an authority in the eyes of Google,' says Intuition's Pollard. 'The fact that our content is changing daily, has 6,000 pages and over 1,000 other websites linking to us says to Google this is a fresh, interesting and important site. All these factors are in our favour and we make the most of that by tweaking content, and title tags.' Pollard recommends ensuring URLs are search engine friendly - those delivered out of a database with odd characters like question marks will not necessarily be spotted by the search engines.
And the results are impressive - at least for Pollard's business. 'Across all our sites, we probably had around 450,000 visits last month and all of that activity comes from natural visibility on search engines. We don't advertise, buy pay-per-click or promote ourselves through other sites.'
Finally, it may be that your ultimate goal isn't to drive traffic back to your site. An equally valid strategy for some companies would be to contribute blogs and articles elsewhere which simply establish your expertise in a particular area. It's curious to note that the worst performing sites in the web awards report were those you might expect to score higher, but which have no real reason to be out there in the full public glare: credit unions (where members just input transactions), brokerages (which simply facilitate trading for existing clients) and, the backbone of the internet (but mostly behind the scenes), ISPs.
By David Longworth, Webster Buchanan Research
For South African Business Invetment Opportunities and Capital check out SA Investors Network
Type 'treatment abroad' into Google and the top four non-sponsored results take you to a site run by Berkhamsted-based Intuition Communication. 'Private health' produces the top two results for Intuition. And for 'breast implant' and 'cosmetic surgery', its private healthcare website appears in a prime spot at the top of the second listings page. Intuition is only a small company and it doesn't pay a penny in banner ads or pay-per-click advertising, but there it is topping the most popular method of finding services on the web. That's the power of internet marketing.
'We have a search engine optimisation expert and every month of his life is spent optimising our content for the search engines,' says Intuition managing director Keith Pollard. 'We have around 2,000 search terms which we target and our average position on Google is 6.2. The reason that's important to us is not only for our own sake, but also our clients, who advertise with us because of our positioning.'
For many entrepreneurs, internet marketing will be less about driving traffic to the site and more about establishing their business's credentials in a particular area - a marketing brochure to the outside world. But lessons from internet businesses still provide useful pointers. Using the internet as part of the marketing mix is an extremely cost-effective way of getting your message out there. It's also a good way of targeting a particular audience, since visits, clicks and links are so transparent on the web. The internet marketer has a number of tools to help - including the site itself, blogs, forums, links, and of course search engine optimisation. But it's important to bear in mind that some of these are more effective than others.
To a certain extent, the four Ps of marketing hold true in the web domain - product, place, price and promotion are still the most important considerations. It's relatively easy, for example, to drive some level of traffic to your website, but if visitors don't find what you've promised them when they arrive, they'll soon go elsewhere. Equally, you could spend a lot of time and effort promoting your website through articles on other sites, blogs, and links, but if there's not a compelling reason to visit right now, then you won't pull people in.
Creating the right site
So what ranks as a good website from a marketing perspective? It's the combination of strong content, good design and clear, easy navigation that scores highly, according to the Web Marketing Association. It recently released its 2007 web awards report, which features a decade of data on what its judges decided were the best websites across a wide range of industries since it started in 1997. The sites are scored by independent judges against seven criteria: design, innovation, content, technology, interactivity, copywriting and ease of use. Although the competition is largely US-based, UK sites did well, rated the best in Europe.
Industry-wise, the airlines came out best, scoring above average every year and achieving the highest average score in 2006. The judges noted that airline sites were moving from being purely transactional sites where you could book flights to providing in-depth travel information on destinations. The top pick was the American Airlines site.
In the technology space, biotech was slightly better than average, using design and copywriting well, including flash presentations to convey complex ideas. Cara Therapeutics, a New York-based drug development company came out on top in 2006. Computer hardware meanwhile, was also a high performer, with HP.com voted the best site for the three years before this year, when the accolade was handed to Broadcom. It's easy to see why HP's site scores so highly, with a clear demarcation as to where its different audiences should navigate and strong offers encouraging visitors to take further action.
Misunderstanding the audience and poorly targeting offers are the most frequent mistakes firms make in internet marketing. But another advantage of the web as a marketing medium is it's relatively easy to test, monitor and continually improve sites based on audience feedback. Studying visitor stats can show which elements of the site are most popular, and where visitors are experiencing difficulties finding what they're looking for.
Driving traffic
Once your site is as strong as it can be, you need to think about driving traffic back to it - but it's important to consider first what sort of traffic you want. Pay-per-click advertising - where you're only charged when a user clicks back to your site - is offered by various online agencies and can be a good way of targeting a user with a particular interest. Fees can be high though, particularly for popular keywords or titles and you may have to bid for a particular spot. Equally, banner ads can help drive targeted traffic to your site - and since each page on your site can serve a different banner, you can ensure your message is targeted to a particular niche. However, static banner ads can seem outdated now, and you're not guaranteed a specific number of clicks.
The sort of viral marketing that led to much of the early excitement about the web is perhaps more relevant, particularly in terms of mentions and links from other sites on the internet, which also help guarantee good ranking in the search engines. No one knows the exact algorithms Google uses to determine the relevance of sites, but links from other sites are part of the equation, along with regularly updated content and longevity.
'The fact that we've been around 10 years makes us an established presence, an authority in the eyes of Google,' says Intuition's Pollard. 'The fact that our content is changing daily, has 6,000 pages and over 1,000 other websites linking to us says to Google this is a fresh, interesting and important site. All these factors are in our favour and we make the most of that by tweaking content, and title tags.' Pollard recommends ensuring URLs are search engine friendly - those delivered out of a database with odd characters like question marks will not necessarily be spotted by the search engines.
And the results are impressive - at least for Pollard's business. 'Across all our sites, we probably had around 450,000 visits last month and all of that activity comes from natural visibility on search engines. We don't advertise, buy pay-per-click or promote ourselves through other sites.'
Finally, it may be that your ultimate goal isn't to drive traffic back to your site. An equally valid strategy for some companies would be to contribute blogs and articles elsewhere which simply establish your expertise in a particular area. It's curious to note that the worst performing sites in the web awards report were those you might expect to score higher, but which have no real reason to be out there in the full public glare: credit unions (where members just input transactions), brokerages (which simply facilitate trading for existing clients) and, the backbone of the internet (but mostly behind the scenes), ISPs.
By David Longworth, Webster Buchanan Research
For South African Business Invetment Opportunities and Capital check out SA Investors Network
Thursday, April 30, 2009
Venture funding: some deals for April
There were a few interesting business funding deals and almost deals in April. Here are a few:
HyTrust, a virtualization start-up, launched its flagship product Monday with $5 million from its backers, VentureBeat reported. Trident Capital led the round, which included participation from Epic Ventures. HyTrust’s launch partners include VMWare, Symantec, Cisco and Citrix, the publication said. The start-up aims to enable the broader adoption of virtualization software by companies, by cutting down on security risk and aiding compliance.
Teradici, a Canadian start-up that is developing chips to deliver a PC-like experience over a network, said it completed a $17 million Series C round of venture funding. The investors included the venture arm of Telus, as well as Alloy Ventures, GrowthWorks Capital, Skypoint Capital, BDC Venture Capital and Alta Berkeley Venture Partners, Teradici said in a press release.
Facebook’s chief executive, Mark Zuckerberg, after a board-level conversation, has declined a funding offer that would value the social network firm at $4 billion, VentureBeat reported. VentureBeat, citing sources, said the company rejected the funding because it doesn’t need it.
Twitter is talking to big Internet companies about forming partnerships with them, but not looking to sell itself, a Twitter investor and board member, Fred Wilson, told the Bits blog.
Stoke, a mobile broadband start-up, has landed $15 million in a fourth round of financing, VentureBeat reported. New investor Net One Systems, Japan’s leading networking and systems integration provider, provided money as did previous investors, including Reliance Technology Ventures Limited, Sequoia Capital and Kleiner Perkins Caufield & Byers, VentureBeat said.
FreeWheel, an online video advertising broker, has nabbed $12 million in a third round of funding, VentureBeat reported. Funding for the start-up, founded by former DoubleClick executives, was provided by Foundation Capital and Battery Ventures.
HyTrust, a virtualization start-up, launched its flagship product Monday with $5 million from its backers, VentureBeat reported. Trident Capital led the round, which included participation from Epic Ventures. HyTrust’s launch partners include VMWare, Symantec, Cisco and Citrix, the publication said. The start-up aims to enable the broader adoption of virtualization software by companies, by cutting down on security risk and aiding compliance.
Teradici, a Canadian start-up that is developing chips to deliver a PC-like experience over a network, said it completed a $17 million Series C round of venture funding. The investors included the venture arm of Telus, as well as Alloy Ventures, GrowthWorks Capital, Skypoint Capital, BDC Venture Capital and Alta Berkeley Venture Partners, Teradici said in a press release.
Facebook’s chief executive, Mark Zuckerberg, after a board-level conversation, has declined a funding offer that would value the social network firm at $4 billion, VentureBeat reported. VentureBeat, citing sources, said the company rejected the funding because it doesn’t need it.
Twitter is talking to big Internet companies about forming partnerships with them, but not looking to sell itself, a Twitter investor and board member, Fred Wilson, told the Bits blog.
Stoke, a mobile broadband start-up, has landed $15 million in a fourth round of financing, VentureBeat reported. New investor Net One Systems, Japan’s leading networking and systems integration provider, provided money as did previous investors, including Reliance Technology Ventures Limited, Sequoia Capital and Kleiner Perkins Caufield & Byers, VentureBeat said.
FreeWheel, an online video advertising broker, has nabbed $12 million in a third round of funding, VentureBeat reported. Funding for the start-up, founded by former DoubleClick executives, was provided by Foundation Capital and Battery Ventures.
Friday, April 24, 2009
Investors are Still Keen to Invest
We may all be mired in economic uncertainty, but if you’re looking for funding, there’s no need to be unduly discouraged by the current slowdown. Getting funded has never been a pushover, but the current economic uncertainties don’t seem to be stopping the right people with the right product.
In recent weeks there have been a plenty of upbeat messages from funding groups - it’s just that the reassuring words tend to be couched with more caveats these days. One venture capitalist told me that business plans were being scrutinised more closely in 2008, especially market forecasts, growth estimates and profit margins. As he succinctly put it: “The dumb money has long gone. The smart money is still there. We back favourites, not the long shots.” Or as David Giampaolo of Pi Capital says: “We are still looking at plenty of deals – but we are in no rush”.
So if funding is still available for the right people with the right ideas – even if they might have to wait longer and it costs them more – how can you make sure you’re first in the queue? One thing to bear in mind is that VCs are looking for more than just a good product, and a compelling business case: it’s also about how you structure your company, how you make it responsive in changing times, and what people you surround yourself with. The latter is often the hardest for entrepreneurs. You know you need someone on your team who’s done it all before – but where do you find them?
For some start-ups, the answer lies with one of the biggest growth areas in the UK in recent years – organisations offering management consultants, business advisors and non executive directors to help young businesses to grow and thrive. It’s not surprising that so many of them are successful – nor that so many are successfully finding funding themselves – since in the main they’re owned by people with a long track record in business advice.
Hiring a non executive director or a business advisor can be a daunting task, but approach it in the same way as you would hire a new employee. Ask them about their experience, to make sure it’s relevant, and establish what they expect to be able to contribute. Start them on a definable task, to see if your ways of working are compatible, and measure their results carefully against their fees. If you feel comfortable with the advisor, and you can see there’s a quantifiable benefit, involve them in more activities. Some advisors will be part of larger networks, offering specialist skills and experience when it’s required. There’s lots of information about what these experts can bring on sites like http://www.non-execs.com/.
Working with a business advisor or a non executive director isn’t just about what they bring to your business – it also sends a clear signal to the investment community that you’re serious about what you’re trying to achieve. It doesn’t guarantee success, of course – but at least you’ll be one of the favourites rather than one of the long shots.
By George Fletcher, Webster Buchanan Research
In recent weeks there have been a plenty of upbeat messages from funding groups - it’s just that the reassuring words tend to be couched with more caveats these days. One venture capitalist told me that business plans were being scrutinised more closely in 2008, especially market forecasts, growth estimates and profit margins. As he succinctly put it: “The dumb money has long gone. The smart money is still there. We back favourites, not the long shots.” Or as David Giampaolo of Pi Capital says: “We are still looking at plenty of deals – but we are in no rush”.
So if funding is still available for the right people with the right ideas – even if they might have to wait longer and it costs them more – how can you make sure you’re first in the queue? One thing to bear in mind is that VCs are looking for more than just a good product, and a compelling business case: it’s also about how you structure your company, how you make it responsive in changing times, and what people you surround yourself with. The latter is often the hardest for entrepreneurs. You know you need someone on your team who’s done it all before – but where do you find them?
For some start-ups, the answer lies with one of the biggest growth areas in the UK in recent years – organisations offering management consultants, business advisors and non executive directors to help young businesses to grow and thrive. It’s not surprising that so many of them are successful – nor that so many are successfully finding funding themselves – since in the main they’re owned by people with a long track record in business advice.
Hiring a non executive director or a business advisor can be a daunting task, but approach it in the same way as you would hire a new employee. Ask them about their experience, to make sure it’s relevant, and establish what they expect to be able to contribute. Start them on a definable task, to see if your ways of working are compatible, and measure their results carefully against their fees. If you feel comfortable with the advisor, and you can see there’s a quantifiable benefit, involve them in more activities. Some advisors will be part of larger networks, offering specialist skills and experience when it’s required. There’s lots of information about what these experts can bring on sites like http://www.non-execs.com/.
Working with a business advisor or a non executive director isn’t just about what they bring to your business – it also sends a clear signal to the investment community that you’re serious about what you’re trying to achieve. It doesn’t guarantee success, of course – but at least you’ll be one of the favourites rather than one of the long shots.
By George Fletcher, Webster Buchanan Research
Learning from the academics
Accessing research skills is easier than you might think through business-university collaboration schemes. But beware - it's not 'free' R&D, and you need to be crystal clear about your objectives
If you're looking for first-mover advantage, you can't do much better than tap into the UK's research talent. Our talent base is up there with the best - a recent report shows that we produce nine per cent of the world's scientific papers and receive 12 per cent of all citations. But accessing academic research isn't simply a case of ringing up your nearest University, and it doesn't necessarily come cheap.
In fact, with some 200 technology departments at around 50 universities in the South East alone, it can literally be a case of sticking a pin in a UK-shaped map. And when you do find that elusive expertise, somebody is probably going to have to pay for it, since universities are becoming more and more aware of their commercial value. The good news, though, is that there's a host of schemes available that can help you navigate your way round and gain funding.
The UK has always had a good track record of collaboration between its research base and industry. A study by Warwick University showed that UK universities generate one spin-off company for every EURO 25m of research budget (as compared to one per EUR 87m in the US). They also disclose one invention for every EUR 2m (compared to EUR 3m in the US) and form one spin-off for every 13 disclosures (29 in the US). Technology transfer success can't just be measured in the number of spin-offs, however - starting an ill-conceived spin-out that crashes and burns is far worse than striking a licensing deal with an established company.
Brian Graves, director of engineering technology transfer at Imperial Innovations, which floated on the AIM market a year ago, says: '[The success of spin-outs] is one measure. But having a good flow of Intellectual Property into the business is also a key factor, as well as being able to find the appropriate route to commercialisation. Another key to our success is investment activity and getting exits around our investments, and finally, building up a licence portfolio that generates a good revenue stream.'
Graves says 'brokering activity' - building relationships between business and academia - is a relatively new activity for Imperial Innovations. And while Imperial covers a wide range of subject areas, the company is particularly focused on two: incubating low-carbon technologies with funding from the Carbon Trust, and recycling technologies funded by the Waste and Resources Action Programme (WRAP).
'This is an important route of access for the [small and mid-sized business]. We can help in developing their business strategy, help with marketing requirements, IP protection issues - anything that's necessary in getting the technology into a fit state for commercialisation.' Graves points out that Imperial Innovations tends to get involved later in the research cycle, for example in Proof of Concept trials to develop technology and bring it to market as a product.
The London Development Agency supports four Proof of Concept funds which divide the capital's 24 universities into groups, one led by Imperial. These provide funding of between �5,000 and �25,000 and are intended to feed into the g2i programme. Another government-funded research programme is the Knowledge Transfer Partnerships (KTPs). Formerly known as the Teaching Company Scheme, KTPs celebrated their thirtieth anniversary last year and are currently responsible for more than a thousand projects where knowledge, technology and skills in various sectors are transferred from academia to businesses. With an average project size of �60,000, businesses with less than 250 employees should expect to contribute a third of this cost.
Aside from these government schemes, the London Technology Network provides access to over 6,000 academics from diverse research centres in the South and East, from Cranfield University to Cambridge. It's also responsible for the London arm of the Innovation Relay Centre, which collates research projects from Universities around Europe. Peter Reid, chief executive of the LTN, says: 'If companies are adopting new technologies they often need external help, which is often available in universities. University departments are either developing new technology or new applications for it and are involved in design, influencing how a product looks so consumers want to engage with it.'
The LTN, like many of the universities themselves, has a structured process for enabling companies to interact with academia, starting with a technology audit of their requirements. Reid says companies are sometimes unclear about what they need, or how a university might be able to help. 'Our job is to help create a market, so first we help businesses understand what the problems are that universities can help them address.'
LTN holds networking events focused on specific technology sectors - upcoming events focus on nutrition and health, grid technology and digital content - to help create these connections. It then passes a short statement of need to various university contacts, which come up with different ways they could help through consulting, training or skills transfer. Once a company chooses which offer it wants to take up, the LTN will also help in framing a contract.
Those who have been involved in business-university collaboration point out that it's important to clearly state the expected outcomes. Kevin Davey, director at The Innovatory, says MBA students can be particularly helpful for a small business and can arrive on placement while they complete a dissertation or carry out a project as part of their course. But he adds: 'It can be something complex and high-level they work on, such as developing a marketing plan or a patent strategy, but it has to be a clearly defined project with boundaries and measurement in terms of the outcomes.'
Ultimately, the key to success in any business-university relationship is to provide benefits for both sides. Graves says the days of companies expecting universities to provide skills or consulting for free are gone: 'There's a greater awareness now that universities deal on a commercial basis and it's all about finding a deal with fits for both sides. It's important to look for mutual inputs.'
For South African Business Invetment Opportunities and Capital check out SA Investors Network
If you're looking for first-mover advantage, you can't do much better than tap into the UK's research talent. Our talent base is up there with the best - a recent report shows that we produce nine per cent of the world's scientific papers and receive 12 per cent of all citations. But accessing academic research isn't simply a case of ringing up your nearest University, and it doesn't necessarily come cheap.
In fact, with some 200 technology departments at around 50 universities in the South East alone, it can literally be a case of sticking a pin in a UK-shaped map. And when you do find that elusive expertise, somebody is probably going to have to pay for it, since universities are becoming more and more aware of their commercial value. The good news, though, is that there's a host of schemes available that can help you navigate your way round and gain funding.
The UK has always had a good track record of collaboration between its research base and industry. A study by Warwick University showed that UK universities generate one spin-off company for every EURO 25m of research budget (as compared to one per EUR 87m in the US). They also disclose one invention for every EUR 2m (compared to EUR 3m in the US) and form one spin-off for every 13 disclosures (29 in the US). Technology transfer success can't just be measured in the number of spin-offs, however - starting an ill-conceived spin-out that crashes and burns is far worse than striking a licensing deal with an established company.
Brian Graves, director of engineering technology transfer at Imperial Innovations, which floated on the AIM market a year ago, says: '[The success of spin-outs] is one measure. But having a good flow of Intellectual Property into the business is also a key factor, as well as being able to find the appropriate route to commercialisation. Another key to our success is investment activity and getting exits around our investments, and finally, building up a licence portfolio that generates a good revenue stream.'
Graves says 'brokering activity' - building relationships between business and academia - is a relatively new activity for Imperial Innovations. And while Imperial covers a wide range of subject areas, the company is particularly focused on two: incubating low-carbon technologies with funding from the Carbon Trust, and recycling technologies funded by the Waste and Resources Action Programme (WRAP).
'This is an important route of access for the [small and mid-sized business]. We can help in developing their business strategy, help with marketing requirements, IP protection issues - anything that's necessary in getting the technology into a fit state for commercialisation.' Graves points out that Imperial Innovations tends to get involved later in the research cycle, for example in Proof of Concept trials to develop technology and bring it to market as a product.
The London Development Agency supports four Proof of Concept funds which divide the capital's 24 universities into groups, one led by Imperial. These provide funding of between �5,000 and �25,000 and are intended to feed into the g2i programme. Another government-funded research programme is the Knowledge Transfer Partnerships (KTPs). Formerly known as the Teaching Company Scheme, KTPs celebrated their thirtieth anniversary last year and are currently responsible for more than a thousand projects where knowledge, technology and skills in various sectors are transferred from academia to businesses. With an average project size of �60,000, businesses with less than 250 employees should expect to contribute a third of this cost.
Aside from these government schemes, the London Technology Network provides access to over 6,000 academics from diverse research centres in the South and East, from Cranfield University to Cambridge. It's also responsible for the London arm of the Innovation Relay Centre, which collates research projects from Universities around Europe. Peter Reid, chief executive of the LTN, says: 'If companies are adopting new technologies they often need external help, which is often available in universities. University departments are either developing new technology or new applications for it and are involved in design, influencing how a product looks so consumers want to engage with it.'
The LTN, like many of the universities themselves, has a structured process for enabling companies to interact with academia, starting with a technology audit of their requirements. Reid says companies are sometimes unclear about what they need, or how a university might be able to help. 'Our job is to help create a market, so first we help businesses understand what the problems are that universities can help them address.'
LTN holds networking events focused on specific technology sectors - upcoming events focus on nutrition and health, grid technology and digital content - to help create these connections. It then passes a short statement of need to various university contacts, which come up with different ways they could help through consulting, training or skills transfer. Once a company chooses which offer it wants to take up, the LTN will also help in framing a contract.
Those who have been involved in business-university collaboration point out that it's important to clearly state the expected outcomes. Kevin Davey, director at The Innovatory, says MBA students can be particularly helpful for a small business and can arrive on placement while they complete a dissertation or carry out a project as part of their course. But he adds: 'It can be something complex and high-level they work on, such as developing a marketing plan or a patent strategy, but it has to be a clearly defined project with boundaries and measurement in terms of the outcomes.'
Ultimately, the key to success in any business-university relationship is to provide benefits for both sides. Graves says the days of companies expecting universities to provide skills or consulting for free are gone: 'There's a greater awareness now that universities deal on a commercial basis and it's all about finding a deal with fits for both sides. It's important to look for mutual inputs.'
For South African Business Invetment Opportunities and Capital check out SA Investors Network
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