Market Views

12/11/12

“I want clients that have the potential to exit at $100m”: An interview with Sameer Pal

Sameer Pal has been with RIG almost since its inception. Previously he was with Mercer Management Consultants. Sameer is a RIG partner. A citizen of the world, he was educated in India, Botswana, and the United States. Not a convert (yet) to the religion of blogging, he was interviewed by RIG Principal, Shields Russell.

Sam, why did you join RIG?

I did the big consulting practice. I wanted stay in consulting but to do something entrepreneurial. RIG is an entrepreneurial project in its own right and we work with entrepreneurs. I like seeing the fruits of my labour becoming something real and tangible. The beauty of young companies is that you are starting with a fairly blank slate.

How would you describe what you do?

Well, to be blunt, we help companies (our clients) figure stuff out and get stuff done and we do it better than anyone else. Our value lies in strategy and intelligent execution. We are not afraid to get stuck in and I have no hesitation in saying we are good because we are really smart and we have a strong bias for execution.

Tell us about the most successful client in your current portfolio

Let’s start with revenues won because ultimately that’s what matters. In two years, they have gone from being a single customer vendor to a company with more than 25 major customers. This year (2012) we have closed nearly $6m. That’s what matters. I, and the RIG team, have worked with the CEO to close deals in 5 continents, 17 countries, working in several time zones. And we have done deals in multiple languages including Spanish, French, Chinese, and Portuguese. All our consultants speak more than one language fluently. All, of course, except you Shields.

Describe your ideal client?

First thing, they must have global ambitions and that means they must be targeting a big market.

Second, the product doesn’t eat anyone else’s lunch and can compete in the market based on its technology rather than any business model or accompanying service.

Third, there must be a very capable, professional CEO who has deep expertise and understands their own and the company’s limitations. Someone who is willing to engage with us in a continuous feedback loop. That really matters to me. Someone who is not a micro-manager but trusts us to get the job done in the company’s best interests. And they must not be cheap. By which I mean that they are willing to pay us well because they recognise that when we do our job well we are adding significant equity and cash value.

Accountability is the last point I would make. It has to operate both ways.

Since you aren’t going to be working for them, describe a client you absolutely won’t work with?

The serious nightmare is a company that has a recipe that in my view adds up to nothing but a hard slog and low growth prospects: a company working in commoditised marketplaces where the competitive differentiation is on the margins and value based pricing is near impossible to extract. And it is all made worse when you have a CEO in these circumstances who believes they have a breakthrough product. What you have there is the delusional entrepreneur with misplaced expectations. I am also uninterested in working with companies that have a narrow geographic focus.

What’s it like working at RIG?

We are all different. We are all smart but in markedly different ways. We are a small boutique firm really. Very flat. Producers matter. Can’t produce means you will leave. In that sense, we are an up-or-out company. We are a pretty outspoken bunch. We have a lot of freedom as long as we look after our clients and each other. Teaming really matters for us, both with clients and colleagues. It is a negotiated workplace and that is a good thing. That is the basis of our culture. We don’t always get it right but we know whom to look at when we get it wrong.

What sort of people are you looking to add to your team?

I am not demanding. I just want sharp people with the ability to develop a quicksilver commercial nous. I want people with a genuinely global outlook who aren’t of the nine to six variety. I don’t mean people who taught English in the jungle on their gap year.

What are your ambitions in the next two years?

I want to create an ass-kicking team focused on IP-rich companies with a global market and a product that is truly differentiated and a team of bright ambitious people who are seriously focused on building equity value. And I want clients that have the potential to exit at $100m. That’s fun. That’s a trip. I haven’t manage this yet but I wouldn’t bet against achieving that goal in the next 24 months.

And lastly, why don’t you blog?

My portfolio clients come through reference. I don’t need to blog and I don’t have the time to blog.

 

 

Posted by Sameer Pal on November 12, 2012 at 1:00 am in About RIG, Blog, Entrepreneur Viewpoint, Management Tips, Market Views | Permalink | Comments (0) | Trackback (0)

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30/07/12

Smart Connections – Networking with Shhmooze

Shhmooze is a smartphone app that makes networking at events and conferences fast, smart and effective. Michelle Gallen, founder and CEO at Shhmooze, explains how every event junkie out there can benefit from Shhmooze and why she admires founders.

Could you start by explaining what Shhmooze is about?

It comes from the fact that we felt that networking really sucks, it’s hard work, it’s painful, it’s time consuming, and most of us are actually pretty rubbish at it. However, networking is really important when you are in business and even more so when you are in the startup world. I have been in this space for quite some time now, and I felt that there has been a need for a service like Shhmooze.

Shhmooze is a smart phone app that allows you to make smart connections by helping you to check-in to events, both massive conferences like Le Web as well as smaller meet-ups like Tech Club.

When you check-in with Shhmooze, it will show you who is at the event. This is done by analysing a lot of publicly available social media and network data, and as a result we don’t only tell you who is at the event, but also who you already know there, and more importantly, we provide you with smart recommendations of who you should talk to. In conclusion, Shhmooze helps you make smart connections so that you can have fantastic conversations at any event you go to.

How did you come up with this idea? Was it because you went to so many events and got frustrated that you couldn’t connect with people in a better way?

I am definitely an events junkie but it’s a little bit more interesting than that. In my early 20’s I had a brain injury and I basically went from having a fantastic job, working on Regent St, being super happy and active – to being sent home to my parents in a wheelchair. I had to spend a lot of time learning how to do a lot of basic skills again, such as learning how to walk, and how to read and write. I spent a lot of time working with technology to support my learning process. I had memory problems and I needed to often look things up when I was out, so when the first smart phone came on to the market I jumped on it. This made me realise very early on that mobiles could help my brain.

I love to go to events and to meet new people. However, as a result of my brain injury I have prosopagnosia, which means that I really struggle to recognise names and faces. So when I was looking at my mobile one day, I thought about how my phone actually has information about where I have been, as well as information on where all these other people have been via Twitter etc. Therefore the phone can basically scan the room for me, and let me know who I know. It is something which can really help me on a personal level but actually, it also helps a lot of other people since many of us struggle with networking.

How long have you been working on this idea?

The company was formed in April 2010. The technology was built over two years in order to be really solid. We wanted to make it right, and not turn it into a service that is about shouting out that you are in a room and that there are 50 other people there too. We wanted it to be about creating an understanding to why someone would be at a particular event, understanding to what level they want to be connected and to understand what they might want to talk about. We want to make things happen in the real world.

What is the market like for an app like Shhmooze?

I am going to be generalist about this. I think maybe 95% of the competition consists of generic conference apps that are based around the conference organisers’ needs. Sometimes these apps only work at one event since the conference organiser pays for them. There is also another section of apps, which are more about discoverability and work to inform you that this friend of a friend is having pizza at the same restaurant as you are.

I think the difference is that when I go to a conference, I am switched on and I am there with a purpose, that’s when I want to know whom to talk to. I don’t think that there are a lot of apps in this space, and I don’t feel like a lot of people have done the same deep thinking as we have.

What is your strategy for monetisation?

We have a freemium service that anyone can use, but if you are a power networker, then you can purchase additional features. We also work with conference organisers. We offer to upload schedules and speaker profiles for free, but for a certain fee, give them to possibility to have their own brand on the app.

Considering the fact that you seem to be a very avid conference-goer it would be interesting to get your point of view on the startup community in London. Is there a community, especially in regards to Tech City, and if so does it provide any support?

I think it is kind of like the music scene, at first you have an underground scene and for a while, everyone thinks it is cool and then it goes mainstream. I think what Tech City has done is that they have identified a scene, and they are now trying to find a way to consolidate it.

To have the government behind you is very powerful, even if it’s not the only solution to sustain London’s tech community. I think we need a more solid support and slower voices – and you also need the renegades and the anarchists, the people that are out there pushing it. I think Tech City is just part of an interesting support system that is happening. The one thing that I am little bit concerned about when it comes to Tech City is that it seems to be such a focus on geography. I think it we would be great if we get over spatting over geographical boundaries and instead focused on the amount of amazing tech startups that we actually have here.

I know you have been involved in the entrepreneurial scene for quite some time now and I was just wondering what it is that you personally find to be the most appealing factor with this choice of career?

Well, my father warned me to never gamble, as we have had gamblers in the family that had bet their entire savings on a horse. So I didn’t go into gambling, I got involved in startups – which is obviously completely different…

I left a career at the BBC to do my own thing [TalkIrish.com] and after that I just kept on going. I think you have to be somewhat of a risk taker. Personally, I had no guarantees when I left my job, I just walked. You will need a great deal of confidence in the fact that everything will work out.

I think founders are different from people that join startups. I have a massive amount of respect for individuals that have actually founded companies, the people that grind away and do a lot of deep thinking. Founders are an incredible, interesting species.

Do you think you are born a founder or do you think it involves a certain set of skills that you can learn over time? Do you think anyone can become a founder?

I think anyone could do a startup but I think that you wouldn’t be really interested if you are not a certain type of person. I think founders are usually people who are risk-takers, and people who can see potential and not resist the opportunity to do something they believe is right or try something new because they believe they can make a positive difference. There are plenty of people out there doing startups because they know that what they build will generate money, and that’s great too, but for me it has always been about creating something which will make things better, and then I try to come up with a revenue model.

Interview by Philip Gasslander

Posted by RIG Admin on July 30, 2012 at 10:00 am in Entrepreneur Viewpoint, Entrepreneurship, Market Views, Product Development | Permalink | Comments (0) | Trackback (0)

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10/07/12

“I realised how much more satisfying it is when you are able to pursue something you are truly passionate about.”

Founded in London in 2011, Payumi is an online service that makes it easier and more efficient to collect money from friends or colleagues for a wide variety of social situations where people need to share the cost. Khurram Farooq, Founder & CEO of Payumi talks to us about the different challenges entrepreneurs face during the startup process and why he believes Payumi will change the way we manage our social financial relationships.

How did you come up with the idea behind Payumi?

Given my background in technology and digital media, I was pretty set on doing something in the consumer internet space, and I had a stack of ideas that I was considering. Payumi won over the others because it is a very simple proposition that addresses a real need. People immediately got what I was talking about and so it passed the elevator pitch test 100% of the time. Thinking back to my time as a student, I remember falling out quite dramatically with a good friend over a gas bill and it occurred to me that building a solution to prevent this problem was obvious and long overdue. (Alex, if you’re reading this, you still owe me £27.50!)

Everyone I spoke to about the idea immediately shared with me some of their own furstrationsfrustrations about the process of collecting money from a group and in particular how painful and awkward it can be often leading to stress and even arguments. Through this process of talking to potential customers, we developed the product so that it could work for a wide variety of potential social situations where friends need to share the cost. It was very quickly clear that our solution needed to be flexible enough that it could be applied to just about anything.

I definitely think that the need is there. If you have lived in this city long enough, you know that sharing bills and paying for things as a group is part of everyday life, but do you think this need is big enough to facilitate the behavioural change needed for Payumi to succeed?

As people are increasingly maintaining their social relationships online, it’s astonishing that we still continue to organise group finances by emailing round bank details or worse still collecting cash and cheques. Almost all social activities involve shared expenditure and so the piece that is missing from the equation is how money fits into people’s online social life and this is where Payumi comes in. People are always looking for new, easier and better ways to do things and so I think Payumi will solve a lot of problems for a lot of people.

What was the biggest challenge you faced in the process leading up to the launch of Payumi?

There were a number of different challenges. I think the first big challenge for me was to find a good technical lead as I am not a technical guy myself, a problem which a lot of founders that are not technical often encounter. The second challenge was of course to get some funding. As a result of my background in investment banking, I had a pretty good network of founders, investors and other people that I could speak to, many of whom I had enjoyed working with before or knew through other connections, so that is how we managed to secure our initial funding. The third challenge is building the right team and I think the idea helped a lot here as some really cool and talented people were as passionate about it as me and wanted to get involved.

How has the product been received by consumers so far?

Everyone loves it! Like any new consumer internet start up our biggest challenge is to just make people aware that it exists. Pretty much everyone coming on to the site ends up ‘liking’ us or saying good things about us, so the initial reaction is thankfully a good one.. We are still building new features in response to feedback and iterating the product rapidly so the product will get better with time and soon move onto mobile as well. We are launching to the public fully next week so these are exciting times for the team. We’re confident people will finally say goodbye to using email, bank transfers, text messaging, phone calls, spreadsheets or notes on the fridge to track and manage payments from friends.

How do you view the market for this type of service and have you identified any potential competitors?

I don’t think there is anybody in the UK market that is providing this kind of service in the same way that we are. There are a couple of companies in the US, such as WePay and Paydivvy who have tried to address the problem by becoming deposit account providers which let you create group bank accounts where one individual administers that account on behalf of the group rather than providing a direct money transfer service between friends. In fact, WePay is now much more focused it seems on pursuing smaller merchants and trying to win business off PayPal.

There are some other players in France (Leetchi) and Germany (Friendfund) but both of these work quite differently to Payumi so I think there is a real gap in the UK market where we can establish ourselves as the leading market player for direct, many-to-one peer to peer social payments. We have a unique model and while we are focused on the UK market for now, we will look to deploy it internationally in due course.

Being located at Hoxton Square, arguably the heart of Tech City, what is your experience of the east London start-up community? Do you feel like a start-up community exists here and if so, have you felt any support from it?

There is definitely a great community here, even though we didn’t locate to East London because of that reason, it was more a matter of convenience for us as we all live in the area and we were lucky to find some great office space nearby. Being part of the community is cool though as being a founder can sometimes be quite a lonely experience unless you have other founders around who you can talk to and who you know understand some of the challenges you face because they have experienced similar things themselves. Having said that, we probably haven’t leveraged the community as much as we should have because we have been very focused on building the product and the team and already had funding in place, but the community is great for keeping up to date on what’s going on in tech in Europe and for the opportunities to network, work with other start ups and share knowledge and experience.
How did you make the decision to leave your job and pursue a career as an entrepreneur?

As a corporate finance advisor focused on technology and media businesses, I used to advise entrepreneurs on strategy, raising finance and mergers and acqusitions so I was curious about doing something for myself – something which I really considered to be fun. I was always so inspired by the entrepreneurs I met who had started from scratch and turned their companies into really valuable businesses but also into great places to work, while having a lot of fun doing it. I felt that I also wanted to build something from the ground up.

So, finally I guess I just took the plunge – luck and serendipity played a part in that I was forced to take a career break to allow my wife to pursue her career in Psychiatry with a 6 month secondment in New Zealand. While I was there, I learned to fly a plane – something I had always wanted to do – and I realised just how much more satisfying it is when you are able to pursue something you are truly passionate about. When we returned to London, I was very focused on building a company and have never looked back.

Do you think there are any specific skills entrepreneurs need in order to be successful?

Persistence, passion and a belief in what you are doing. You also need to be a bit of an all rounder and be able to lead and motivate a diverse team to achieve success. No matter how stressful my day is or however complicated the situation I am dealing with, I still relish getting out of bed in the morning whereas in my corporate job I always felt a bit stifled and often wished I was doing something else.

As Steve Jobs once said in a letter to new Apple employees, There is work and then there is your life’s work – this feels like my life’s work and I am enjoying every minute of it.

Interview by Philip Gasslander

Posted by RIG Admin on July 10, 2012 at 11:53 am in Entrepreneur Viewpoint, Entrepreneurship, Market Views, Real World Lessons | Permalink | Comments (0) | Trackback (0)

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27/04/12

“Building a product that people want” – An Interview with Dragos Ilinca, CMO and Cofounder of UberVU

Dragos Ilinca is the CMO and cofounder of UberVU, a social media intelligence company with bases in London, Bucharest, and the USA. Dragos began our interview by describing the genesis of UberVU as it evolved out of a web-marketing consultancy into a social media posting platform, into a social media monitoring tool, into its current form as a social media dashboard with social media intelligence.

In your opinion, what is the most difficult part of getting a startup off the ground? Is it getting funding, working together as a team, is it actually developing the product, or something else? Or is it everything in combination?

I think it’s everything in combination. It all comes down to building a product that people want because I think everything falls into place from that. Of course in order to build that product, you need a team. We were lucky because we had known each other for a lot of years, we had started other businesses together, but I look around and a lot of people are looking for co-founders and I think that’s really, really hard, finding someone to start a business with. And once you do that, its about just building something that people want—even if it’s a minimal sort of version—because if you do that, raising money shouldn’t be difficult. If you manage to build that product, that kind of means you’ve got a team, and if you’ve got that team and product, raising money should come pretty easily. So in our case, I think it was definitely figuring out what product to build, but I see a lot of entrepreneurs who are starting with building a team, especially in places like London where developers have so many options to choose from. They could work for, you know, the finance industry, or an already-established startup, and if you’re just starting out it’s difficult to get talented people to join you.

Perhaps it’s too early to ask this question, but in terms of your experience working with social media, how do you adapt? How do you know when to stay your course with your vision for developing a product, and how do you know when to pivot? The social media world is constantly changing, so how do you adjust for that?

I don’t think there’s an easy answer to it, but it kind of comes down to traction. If nobody likes your product or buys it, you need to do something about it. If you have a few people who really, really love it, then you need to understand who those people are and why they love it, and if there’s an easy way to reach more of them, that’s your whole market. And if you’re happy with that that’s fine, but if you need a way larger market, you can potentially work with them and figure out what a dumbed-down version of that product is. I think the most difficult thing is actually making the decision. I think deep down you kind of know when things aren’t really going well, and you can stick around for three months, maybe another six months and see: make a plan, and just say we’ve got this deadline and if things don’t pick up we need to do something about it. But I think people deep down kind of know, but they’re just afraid to make a decision. You need to be able to say, “What we’ve done so far, yeah, it’s a lot of effort, but in the end, people aren’t really paying attention to us and aren’t buying the product, so tough luck. We need to start all over again.”

UberVU strikes me as a pretty advanced mechanism, integrating social media and media monitoring. Do you think the days of simplicity in application development are over? In other words, do you think the skill-level required to produce groundbreaking apps will only become higher as times goes on?

Probably. That’s probably true. Because we’re a business tool, so from that point of view, we need a lot of technology to do what we do. But look at something like Instagram, for example: there’s not a lot of technology in there. If you think of technology just in terms of code, you know, other people can build that kind of stuff in a weekend. If you think of technology as also the mechanism by which they’ve been able to build viral coefficients in it so that it spreads and that kind of stuff, then that’s very difficult to replicate by other people. So I think if you’re building consumer apps—if you know what you’re doing—you can still get away with not having a highly technical solution. But even so, if you look at Colour, they’ve got pretty hardcore technology in there, and it’s just a photo app, more or less. So even these things are becoming more and more complex, and I think the reason is that you can do so much more now with the technology and the stuff that would have been impossible to do in real time is now possible, so you can build a lot better experiences for the user; and the second thing is there are so many people looking at the tech space, that if you build something that can be replicated within a week, and you’ve got absolutely nothing else that can make you succeed, then it’s just not worth it, because other people will copy you ASAP. Just look at Groupon as an example. A lot of people think it’s the technology and they built that in a weekend and there are hundreds of clones; but actually the difficult part is the sales behind it, selling to small businesses and being able to scale and that kind of stuff. So if you think about that as sales, not really technology, but technique and strategy, then it’s very difficult to replicate it. In terms of actual code, some people can probably build that in a day. But it’s not that that makes it work.

Since you’re the CMO, I wanted to ask a marketing related question. Since uberVU and so many applications are so heavily grounded in the online world, how important is actual person-to-person interaction in marketing?

I think it’s still important to have the in-person interaction. Not all the time; we started selling online with credit card, so it wasn’t necessary to meet anyone at that point. You could, you know, make the product and the company look more human by having photos of the members of the team on the website, having a video where you present certain stuff, having a blog that’s very human, but now that we’re moving more into the enterprise space and we’re starting to get customers like NBC or the World Bank, for these sort of things it looks like it’s pretty important to meet face to face, and if you cannot do that, at least have a few phone calls. I think the higher price you charge for what you do, the more you need that sort of relationship. And it’s not just because of the person-to-person interaction; usually if you’re charging a lot of money, the solution that you’re selling, you need to really understand the customer’s use case and be able to show them how the product is really going to make an impact. And these solutions are usually pretty complex, so it’s not like a photo sharing app: you take a picture, you share it with your friends, pretty easy to understand. It can be pretty hard to articulate just from a website and understand exactly how that could be used in your organization, and understand how easy it is to use even though it’s got this breadth of features. It’s hard to make the jump from, ok I see this demo video, how could I use it for my specific use case? It’s very difficult to understand that. And people just don’t have the time and don’t want to take the effort, so instead of researching that tool for 30 minutes and not understanding, it’s sometimes more useful to say, ok let’s just have a 30 minute phone call, you’ll tell me about it and I can explain really easily how we can help or how we won’t be able to help and you’ll probably need some other tools.

 

Posted by Aaron Ralby on April 27, 2012 at 1:45 pm in Demand Generation, Entrepreneur Viewpoint, Entrepreneurship, Market Views, Product Development, Real World Lessons, Strategy | Permalink | Comments (0) | Trackback (0)

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30/03/12

Counteracting threats to your business posed by offshore competition

StarBase, founded in 1992, is a London-based performance testing software consultancy with established testing expertise in a wide range of industries. We spoke to Stephen Davis, StarBase founder and MD, about the threats posed by the economic climate and off-shore competition.

What do you think will be the biggest challenge for StarBase in 2012? 

The biggest challenge is uncertainty in the current financial climate. It is uncertainty as to whether the economy is going through a slow gradual recovery or whether it’s just about to crash again. If Europe has big problems then that will obviously affect the UK and global economy and impact ‘confidence’.

There are two forces at play at the moment. The first is the recession, with the imperative to ‘do more for less’, achieve more with less money. The second driver is a return to quality; companies want to get things right where off-shoring hasn’t worked or achieved the financial savings anticipated. Some clients are motivated by both, which can cause a conflicting view: they still want quality, but at lower prices.

That is the challenge for 2012. Without the return to confidence, companies are less prepared to make long term commitments. We used to get involved in two to three year programmes; I don’t think there’s anything more than 12 months now.

How do you compete in this economic climate and faced with offshore competition?

Focusing on clients’ needs and really understanding their requirements. For StarBase, this means positioning ourselves as being people who understand what our clients need and focusing on being a knowledge-based business. This is supported by providing excellence in client management through people and communications.

Targeting higher-value niche areas that we are able to offer a better service better than off-shore providers. Testing covers a whole range of activities – functional, performance and security are the main ones, but there are approximately 20 different types of testing activity. We have decided to focus less on mainstream functional testing because it’s been picked up by off-shore providers. We decided to focus more on the more complex areas of testing such as Performance Testing and Technical Testing. These areas, require excellent technical and interpersonal skills, more domain knowledge and are also challenging.  StarBase can’t compete on day rates with off-shore providers, but by specialising in this way we are able to deliver excellent value.

Focusing on value, not price. We are not focusing on day rates, but rather on the value that we contribute to our clients. Increasingly, people are recognising that on-shore services can provide greater value without necessarily costing more than the off-shore approach. Several times we’ve found that when we’ve been in competition with off-shore providers, we cost less because we complete the project in less time and use fewer people. What we are seeing is that many organisations are beginning to bring critical functions back on-shore, and that’s the market that we’re playing in.

Posted by Jessica Tayenjam on March 30, 2012 at 3:52 pm in Entrepreneur Viewpoint, Management Tips, Market Views, Product Development, Strategy | Permalink | Comments (0) | Trackback (0)

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05/03/12

What role do universities play in the entrepreneurship ecosystem?

Entrepreneurship and innovation are being touted as a way forward for individuals faced with the challenges of the recession. We talked to Dr. Markus Perkmann, Senior Research Fellow at Imperial College Business School, about the role universities have to play in developing innovation to stimulate the economy.

What role do universities have to play related to entrepreneurship in the current economic climate?

It’s a highly contested question. A lot of people, some policy makers included, believe that universities can play a very big role in stimulating innovation, in the sense that the technologies being generated at universities could be commercialised and lead to new companies, job growth and so on. Having said that, a lot of the technologies that are generated at universities are at a very embryonic stage. Hence the value of a lot of the knowledge produced at universities, even if it’s patented, is quite low commercially speaking. The knowledge that’s being produced contributes to science, to public discussion in journals. Academics often focus their careers around publishing as much as possible,  so they are not always commercially-focused.

While commercialization has its place – and we have the evidence to prove it – the primary long-term role of universities remains education.  It’s about educating the workforce and developing highly skilled human capital, which in the long term will lead to innovation. This is not an immediate process as it takes graduates some time to grow into their jobs and contribute to innovation and growth.  Spin-out companies are more immediate – Imperial, for example, has generated 81 so far. Even though these firms make important contributions, it’s probably too much to expect universities to single-handedly turn around the economy by looking at them as a treasure of knowledge that’s just there on the shelves waiting to be activated.

What is really important is to have good universities that produce excellent science and provide first-class education. Close interaction between universities and industry can help achieve this. Our research suggests that there is a lot of value in collaboration between universities and companies. This helps academics to find new topics, and it may provide the ground for patents or other intellectual property that may get commercialized later down the line.

Are universities making best use of their intellectual property (IP)? How do you think universities could maximize the potential of their IP?

A long time ago, universities didn’t care about IP. And then around 1980 there was a law in the US that put universities in charge of their own IP and gave them a mandate to commercialise it. Since then, a whole movement has started of professionalising IP management at universities which has resulted in the emergence of Technology Transfer Offices. More recently, a lot of universities have realised they need to reintegrate TTOs with their broader business engagement strategies, which include collaboration with industry.

Increasingly universities are realising that not all collaborations need to focus on extracting as much IP as possible. In some cases, they need to be softer on IP and focus on collaborating. There are also examples where universities are relinquishing rights to IP companies when working together with companies because the proponents believe IP is too much of an overhead.

Overall, my view is: horses for courses. In some instances where it’s about developing new drugs, it’s about IP, so that’s clear cut. However, for more upstream research and development, the value of IP may be too low. Hence it may be better to say let’s do without it and make everything open. There are some examples in pharmaceutical R&D right now. This can make collaboration faster, more effective and more impactful because more people can draw on the results which are laid open.

Posted by Jessica Tayenjam on March 5, 2012 at 4:30 pm in Entrepreneur Viewpoint, Entrepreneurship, Entrepreneurship, Market Views, Technology | Permalink | Comments (0) | Trackback (0)

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24/02/12

Interview with Ascendant: the current trends in UK tech investment

Stuart McKnight is the Managing Director of Ascendant, a technology and media focussed Corporate Finance house that specialises in growth stage companies. Ascendant also has experience in fundraising for buying and selling businesses and technology licensing deals. RIG’s Managing Director, Shields Russell sits on Ascendant’s Advisory Board.

Ascendant has tracked all growth-stage investments in technology companies in the UK and Ireland since 1996. Their definition of technology is broad – covering software, telecoms, Cleantech, semiconductors, and internet/wireless services – but excluding life sciences and most medical devices, as well as Management Buy-Outs and Private Equity deals.

What are the growth-stage investment trends that you look to cover?

“We keep track of five key questions in the growth-stage technology sector in the UK and Ireland: how much money is being invested; who’s writing the cheques; what they’re investing in; the stage of the companies; and whom they’re co-investing with – that’s very important as well.

“2011 was a very interesting year – we saw good growth in the total amount of investment (£786m up from £620m in 2010) and the capital was more concentrated – there were 193 deals greater than £0.5m in 2011 compared to 213 in 2010.

“228 different investors participated in those deals last year. That number 228 is important because if you speak to the many of the London-based VCs and ask them how many different people are investing they typically say 20-25 – or a maximum of about 40 – but nobody imagines that it’s closer to 250.

“There is a geographical locus in terms of where VCs are based but not in terms of what they invest in. Most of the most active VCs in the UK and Ireland are based in London but many look at companies throughout the UK and at deals in Europe too.

“There are also a large number of trade investors looking to invest. In 2011, there were 34 deals in which trade investors participated. So financial VCs are not the only solution.”

How do companies perceive VCs in the UK compared to overseas?

“If I had a pound for every person who came to me saying that they were looking for a US investor, I’d be a very rich man.

“Companies can spend a lot of time looking for a US investors as there is a perception that they are better at Tech investing than the Brits. For a company that’s grown well in the UK the obvious next stop is the US and so picking up a US VC whilst you are there seems like a good idea. Add the belief that there is a big pot of gold waiting for them over there and you get an army of UK companies getting on planes to head for the US.

“Initially many find that there is a lot of interest. It’s easy to get meetings in the US – anyone can line up two weeks of investor meetings of 45 minutes to an hour each. However many US investors see these as a ‘fishing trip’ to see what’s going on in the European market. But it’s much more difficult to get serious, hour-and-a-half meetings where investors are really thinking about you as an investing opportunity.

“Companies and their shareholders have to be really sure that the US is right for them They need to be realistic about the chances of getting US money – only 11 UK tech companies received money from the States last year.

“Europe’s actually been a much more fertile ground, and it’s much more enthusiastic on mobile/internet companies. The VCs in Munich, Paris, and Brussels have been active in the UK, and the Nordic funds have recovered a bit but they’re still not back to the position they were in about a decade ago.”

Which sectors are getting the most interest at the moment?

“There’s been a strong sector bias – the three primary areas of investment were Internet/Wireless services, Cleantech, and Software. We find that in many cases investors tend to hunt in the same packs: they follow the same trends and look for the same ideas. There’s a cohesion about what investors look for at a certain time.

“Cleantech is interesting because it’s still strong but we’re beginning to see it wane. I could go to a Cleantech conference every day of the week but in truth there was a dramatic drop in Cleantech deals last year, even taking a broad definition of Cleantech that includes solar, fuel cells, electric motors, and so on.

“In Q1 last year there were hardly any Cleantech deals – perhaps 2 or 3; Q2 was very busy then Q3 and Q4 were very low. There were only 31 Cleantech deals in total compared to 45 in 2010, which compares to typically 60-70 deals per year in Internet/Wireless services and 45-50 in Software.

“Investors in Cleantech are making bigger gambles on later-stage companies than they were when Cleantech started to become popular and we started tracking it in around 2004/5.

“A lot of these businesses are still effectively early-stage because they are struggling to get meaningful orders from customers or even just getting a customer even though they’ve been going for many years. For most LLP backed VCs, when an investment holding period extends beyond 5 years, the IRR on the investment starts to get difficult. Many funds are starting to realise that in some cases Cleantech can be like semiconductors in needing lots of capital and long holding periods. Hence the rapid reduction in the number of active investors in the sector.

“Cleantech companies are starting to look for other options like funding through the balance sheet investors or ‘green funds,’ and we’ve seen a larger participation from non-standard VC funds like trade funds or family funds that can take a longer-term position.”

The majority of deals last year had more than one investor. Why do firms co-invest?

“Co-investment can be a bit of a magic trick for investors and for companies. Not all investors get the same deal flow – some get a lot of high-quality deals; some get a lot of average deals; and some struggle to find the right opportunities.

“Well-established firms like Index, Balderton, and Accel see a high-quality deal flow, whereas for the others a bit further down the league table it can be a rational business development strategy to build up relationships with other investors and look to co-invest with them.

“It’s in the investors’ interest to network. The relationships between VCs are partly personal and partly corporate. The relationships are primarily personal but there is such a thing as corporate memory – people will remember joint successes and they’ll remember joint failures.

“In the UK around 60% of deals have more than one investor. This is one indicator that the market is in ‘good health.’ Just before the ‘internet bubble’ burst in 2000-1 less than 40% deals were done jointly – reflecting the misplaced sense of confidence VCs had at that time – they were so sure that they had the best deals that they did not want to share and wanted everything for themselves. Fortunately many of those folks are no longer with us.”

What advice would you give to growth-stage companies looking for funding at the moment?

“Before a company speaks to investors, they need to have a significant opportunity, a clear differentiated plan to exploit it, a good team, and realistic expectations in value and the amounts they want to raise.

“For Ascendant to take on a deal, we would need to comfortable on all these points and be certain that we could identify 30-40 potential investors who would actively consider the opportunity. We are happy to give some guidance to companies looking at funding options – it is a tricky market out there. ”

For more information on Ascendant contact Stuart McKnight at smcknight@ascendant.co.uk

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Posted by Paul Higgins on February 24, 2012 at 11:15 am in Entrepreneur Viewpoint, Entrepreneurship, Management Tips, Market Views, Technology, Venture Capital | Permalink | Comments (0) | Trackback (0)

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