Space and early-stage companies

No, I’m not talking about Elon Musk’s deep desire to travel to Mars (or Boeing’s apparently deep desire to beat him there), although I’m keenly watching to see whether we’re going to see a re-enactment of The Martian in my lifespan.

My interest lies in the terrestrial use of space technology – a particular pertinent question to RIG, given one our clients is a cross-over from the space industry, transitioning from a particularly specialised application into a wide variety of terrestrial uses.

When people talk about the cost of space research and how the money could be spent better solving problems on Earth, I often find myself scratching my head – not only is a huge amount of the research applied terrestrially, it’s also quite a significant revenue generator. Space is worth approximately £11.3 billion to the UK economy, with plans to see this value expand to around £40 billion over the next 20 years. It’s currently allocated £370.5 million. In the US, for every dollar spent on space the US economy receives about $8 worth of economic benefit.

As to solving problems on Earth: everything from CAT scanners to LED lighting to solar energy can trace their beginnings to space-led research. Sworn at your smoke detector recently? You can blame NASA for that one.

More recent use of space technology has been led by both large and small companies – a research project in the UK is currently assessing the use of Sentinel 1 radar data to study crop growth. Space algae is being used to fight malnutrition in Congo, software is being used to drive down costs for offshore oil and gas, and sensors are being developed to track the Earth’s atmosphere.

From our own experience, we’ve found that there’s a vast array of potential applications for technology that can be ‘crossed over’ – there’s a lot of excitement in the office around advanced materials at the moment.

Given the return on investment seen and the technology that emerges from it, I find that my real question can’t be ‘why are we spending money on space’ – it’s ‘why aren’t we spending more?’

 

 

The Value of Brand

By now the vast majority of people will have heard of the new Pokemon game – Pokemon GO, an Augmented Reality game playable on smart phones. For the sake of some of my confused colleagues (and naming no names) I’ll offer a brief explanation:

It’s a location-based game where you wander around trying to catch little creatures called “Pokémon” by throwing balls at them. Eventually, you will force these little creatures to battle against each other to conquer “gyms”, typically locations of some geographic interest, and stick your team flag on top of it. The three teams are in constant warfare to conquer – and hold on to – as many gyms as possible.

The game itself isn’t the interesting part for this blog post however (whatever my feelings are on the inevitable victory of Team Instinct and the domination that awaits us). The interesting part is the game that was (and still is) the precursor to Pokémon GO – Ingress.

The roots of Ingress are much the same as Pokémon GO – it’s a location-based game where you walk around trying to capture points of geographical interest (“portals”) with your team. There’s some different mechanics around the portals – gathering several allows you to form a triangle that cannot easily be broken by the opposing team – but fundamentally, it’s very similar. This is to the point where Niantic – the developer for both games – has simply ported over locations and pathways from Ingress to Pokémon GO.

Pokémon GO has had an estimated 75 million downloads in the 20 days it’s been available, with an estimated 26 million players active (logging in daily) in the US alone. Ingress has 400,000 active players (logging in at least once a month) and 10 million downloads in the 4 years it’s been available. The observant of you may notice a slight difference in those numbers.

The gameplay is relatively similar (although Ingress doesn’t have the advantage of enslaving adorable miniature animals to do your bidding in battle). The company is the same. The locations and the data are the same. And yet we’re talking about over seven times the downloads and over sixty times the number of active players. What’s prompting the difference?

The answer is, of course, the brand attached. Ingress is a new game with no brand attached, Pokémon GO the follow on to a twenty year, wildly popular series. Despite a number of flaws in the new game, most notably server downtime, people are willing to tolerate it for the sake of a brand they loved as a child (it is interesting to note that the vast majority of Pokémon GO players seem to be between 25 and 30). The value of the name attached far overpowers the value of the game itself.

This can be seen in a number of large companies worldwide – Coca-Cola’s brand is valued at around $58.5 billion, over a quarter of its market cap at $197.14 billion. Apple’s brand is valued at $154.1 billion. Toyota values its brand at $42.5 billion. Disney, $39.5 billion. The brand can make the company.

Start-ups often focus on product, and on shipping as fast as possible. It’s worth remembering though that your brand is one of the most valuable parts of your business that you’re building – and will last you through any number of products, markets, and countries.

More water, less wind?

The government’s ‘pause’ on feed-in tariff registration (from between January 15th 2016 through to February 8th 2016) is now over and registration should now be restarting. What kind of feed-in tariffs should you expect for your renewables now, and how has this changed from the 2015 tariffs?

 

Feed-in Tariff

 

Description Legend
Anaerobic digestion with total installed capacity of 250kW or less

 

A
Anaerobic digestion with total installed capacity greater than 250kW but not exceeding 500kW

 

B
Anaerobic digestion with total installed capacity greater than 500kW

 

C
Combined Heat and Power with total installed capacity of 2kW or less

 

D
Hydro generating station with total installed capacity of less than 100kW

 

E
Hydro generating station with total installed capacity greater than 100kW but not exceeding 500kW

 

F
Hydro generating station with total installed capacity greater than 500kW but not exceeding 2 MW

 

G
Hydro generating station with total installed capacity greater than 2 MW

 

H
Solar photovoltaic (other than stand-alone) with total installed capacity of 10 kW or less – Higher Rate

 

I
Solar photovoltaic (other than stand-alone) with total installed capacity of 10 kW or less – Middle Rate

 

J
Solar photovoltaic (other than stand-alone) with total installed capacity of 10 kW or less – Lower Rate

 

K
Solar photovoltaic (other than stand-alone) with total installed capacity greater than 10 kW but not exceeding 50kW – Higher Rate

 

L
Solar photovoltaic (other than stand-alone) with total installed capacity greater than 10 kW but not exceeding 50kW – Middle Rate

 

M
Solar photovoltaic (other than stand-alone) with total installed capacity greater than 10 kW but not exceeding 50kW – Lower Rate

 

N
Solar photovoltaic (other than stand-alone) with total installed capacity greater than 50 kW but not exceeding 250kW  – Higher Rate

 

O
Solar photovoltaic (other than stand-alone) with total installed capacity greater than 50 kW but not exceeding 250kW  – Middle Rate

 

P
Solar photovoltaic (other than stand-alone) with total installed capacity greater than 50 kW but not exceeding 250kW – Lower Rate

 

Q
Solar photovoltaic (other than stand-alone) with total installed capacity greater than 250 kW but not exceeding 1 MW

 

R
Solar photovoltaic (other than stand-alone) with total installed capacity greater than 1 MW

 

S
Stand-alone solar photovoltaic

 

T
Wind with total installed capacity of 50kW or less

 

U
Wind with total installed capacity greater than 50kW but not exceeding 100 kW

 

V
Wind with total installed capacity greater than 100 kW but not exceeding 1.5 MW

 

W
Wind with total installed capacity exceeding 1.5MW

 

X
EXPORT TARIFF

 

Y

 

The export tariff has remained the same as previous years. Anaerobic digestion has barely been touched but small hydro power has taken a battering – with tariffs for under 100kW coming down from 14.43p/kWh to 8.54p/kWh and under 500kW coming down from 11.4p/kWh to 6.14p/kWh. The government has come out in favour of large hydro power generation, however, with tariffs increasing from 2.43p/kWh for generation over 2MW to 4.43p/kWh – nearly doubling the available feed in tariff. This is in contrast to wind which has been reduced across the board, falling by over 50% in the case of large wind and 20-30% for small wind.

The government expects to revisit these tariffs on the 31st of March.

Angel Investors and SEIS – is it working for the UK?

What’s SEIS?

SEIS (Seed Enterprise Investment Scheme) is the UK’s answer to the funding gap that often exists for early-stage start-up – when they’re past that £5,000 grant from Innovate UK but are still a fair bit off the million or two that most venture capital funds are interested in. It’s a set of tax breaks designed to incentivise the individual investor who’s looking to put in somewhere under £100,000.

This scheme has been operating in the UK since April 2012 and was made permanent in the 2014 Finance Bill.  In this time, what’s it actually accomplished?

The Data

In total, over £250 million in investment has been raised since April 2012 and over 2,900 individual companies have received funding.

 

SEIS Investment    *

The average investment per company in 2013-2014 was £82,000.

Is your company eligible for SEIS funding?

For your company to be eligible for the SEIS you must:

  • Have fewer than 25 employees
  • Be resident in the UK
  • Raise less than £150,000 through SEIS
  • Have gross assets worth less than £200,000 at the time of shares being sold
  • Have been incorporated for less than 2 years
  • Spend at least 90% of the money raised on qualifying business activities within three years of issuing the shares

You must also not be on the list of excluded trades (see here). Sorry to all the shipbuilders out there – looks like you’re out of luck!

 

*Chart Source:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/448308/July_2015_Commentary_EIS_SEIS_Official_Statistics.pdf

 

Hardware funding in the UK and Ireland

Funding is the bane of most founders’ lives – with what can seem like never-ending rounds of meetings with people who nod and smile and say nice things and then never get in contact again. It can be even worse for founders of hardware start ups who have proportionally far fewer funding sources to approach than the more widespread mobile app/social platform/retail funding availability.

To take some of the pain out of the procedure, we’ve pulled together a list of places – accelerators, angel networks, VCs, grants, loans, and so on – in the UK and Ireland that will specifically offer funding to hardware start ups. They’re arranged alphabetically below with short descriptions attached. If we’re missing any, drop me an email at helen@rapidinnovation.co.uk.

Amadeus Capital Partners

Amadeus has funded over 90 companies and have a broad swathe of interests – most interesting to us is their small portfolio of advanced materials and cleantech companies.

 

Angel CoFund

A £100 million fund investing solely in UK-based companies. Initial investments are between £100k and £1 million, which is done alongside syndicates of business angels.

 

Business Growth Fund

Their focus is on late stage investment – they’ll typically put in between £2-10 million in companies with a turnover of £5 million +.

 

Doughty Hanson Technology Fund

Their head office is in London, but they have several offices throughout Europe.  Hardware interests lie in cleantech. Late stage investment.

Entrepreneurs Fund

Investing primarily in Western Europe, they favour resource efficiency in transportation, energy and water, as well as smart materials. Typical investment is between €1-2 million, although actual range is anywhere from €250K to more than €10 million.

Enterprise Ireland

A government organisation responsible for the development and growth of Irish enterprises in world markets. They offer grants to companies in any stage of development. Solely available to companies in the Republic of Ireland.

Frog Capital

Frog Capital invests in companies based in resource efficiencies (alongside its software offerings). It’s looking for companies turning over more than €3 million, and expects to put in up to €20 million.

 

Google Ventures Europe

Google Ventures will invest in any field but they have a primary focus on machine learning and life sciences. Their European office is based in London.

Innovate UK

A government body based in the UK who will fund, support, and connect innovative businesses. They’re based in Swindon and have competitions for up to £536 million of government funding available in 2014-2015. They’ll also provide advise on EU funding available, such as Horizon 2020. Only available for UK companies.

Longwall Ventures

They’re a venture capital management with £40,000,000 behind them. They’ve got a strong interest in science and engineering based start-ups. Located in Harwell, Oxford.

Maven Capital Partners

Maven Capital has £370 million under its management. Its Scottish Loan Fund provides loans from £250,000 to £5 million to SMEs in Scotland and its Greater Manchester Loan Fund will provide loans of between £100,000 and £500,000 to businesses in the Greater Manchester region. It will also provide funding packages of £2-10 million to UK businesses valued at up to £25 million.

Octopus Ventures

Octopus Ventures invests between £250,000 and £5 million with a team of 18 people. Their focus is on renewable energy.

OION (Oxford Investment Opportunity Network)

An angel network operated by Oxford Investment Opportunity who look to invest between £20,000 and £2,000,000. They charge 5% of funds raised.

Oxygen Accelerator

They invest €21,000 per team in exchange for 8% equity as part of a 13-week programme. Open to all sectors.

Par Equity

Par Equity is based in Edinburgh. Their Par Innovation fund provides venture capital for post-revenue companies, alongside their Par Syndicate angel network.

Scottish Equity Partners

SEP invests in the technology, healthcare, and energy sectors. They predominantly invest in growth stage companies, but can make investments in earlier stage companies with outstanding potential. They tend to concentrate on companies based in the UK.

 

Summit Partners

Summit has raised over $16 billion. Although primarily based in the US, they have a London office. Hardware investments tend to be limited to energy and industrial-based start-ups.

Sussex Place Ventures

A London-based venture capital firm, they’re interested in science-based companies. They additionally have strong ties to the London Business School.

Making the leap from 'the other place'

Starting any job is a learning process but RIG’s learning curve is steeper than most. I’m two weeks in and I’ve already learnt who in the company I trust behind the wheel of a car, a distressing amount about the company’s fantasy football league, and maybe one or two things about consulting.

I’m Helen, the most recent hire. I’m twenty four, graduated from what’s known in the office as ‘the other place’ (most people just call it Oxford) and this is my first foray into consulting. My first day in the office was spent in a client meeting and all signs point to that being an entirely normal occurrence.

I’ve been working on KAMs, three month plans, sales targeting, gap analysis, ERP market analysis, and half a dozen other things that are in my to-do folder, waving at me forlornly. I’ve also been taking advantage of a wide array of skills: from Facebook stalking to excel macros to google maps (my navigational ability is dire without a handy little program telling me where to go).

I’ve spent a few days in Ireland, attended who-knows how many meetings, and presented our findings to a client with only the minor hiccup of forgetting how precisely to say the word ‘envision’. It’s a fast-paced, sink-or-swim environment – and so far, I’m loving it.