Qi3 – Quality, Insight, Integrity & Innovation - UNITING TECHNOLOGY & MARKETING

Tag: investment process

Join the angels

If you’ve ever thought of becoming an angel investor, the new Be an Angel web site, launched today, is hosted by the British Business Angels Association, and has been designed to provide you with the information and resources you will need before making your first investment.

The launch of the Be  an Angel web-site coincides with the launch of Lord Young’s Enterprise report “Make Business Your Business” being launched today and a new £82m loan scheme for young people seeking to set up a new company.

It’s aimed at raising awareness  and encouraging individuals to become Business Angels,  giving detailed information and advice about the overall angel investing process and identifying the risks and rewards. The site also includes new downloadable fact sheets  on due diligence as well a  newly revised legal precedent documents and a new revised guidebook on technical and regulatory issues related to Angel investing. It also includes quotes from angels (including yours truly)  about why they became angel investors and encouraging others, as well as entrepreneurs that have received angel investment.

I’m welcoming of this online initiative, together with the enthusiasm that the government is showing for upping the rate of formation of new businesses.  In the end though, it’s up to us as individuals to decide whether we want to back these businesses with our hard-earned cash.

Why we’re passionate about High Value Manufacturing

After this week’s announcement of the Qi3 Accelerator Bootcamp, friends are asking me why we’re doing it.  Are we mad? How will we make money? And, above all, why High Value Manufacturing (HVM)?

The simple answer is that we’re doing it because we see the need!  After reviewing nearly 400 prospects, we see a common set of areas in which businesses need to improve if they wish to attract investment.  Let’s be clear here, I’m not just talking about seed stage ideas.  I’m expecting that the bootcamp will be most attractive to young established businesses looking for early or expansion stage capital.  We’ll be helping on all aspects of engineering businesses, from managing technology and product development, go to market strategy, finances and Intellectual Property.

When I attended the NESTA Startup Factories conference  last summer, it became obvious to me that, whilst Accelerator Programmes were flourishing in the software and Internet space, few people had tried them in ‘harder tech’.  When we set up the partnership with Cambridge’s ideaSpace, it seemed natural to run a bootcamp as a one-off pilot to test our evaluation process and the concept of such a programme.  We aim to support 8 businesses with tough love through an intensive 3-day process, and we’ve attracted a range of top notch coaches and mentors to get the best out of this short, sharp shock.

But above all, it’s about having fun working with ambitious people in the field I love.  I grew up at Oxford Instruments, a mid-sized engineering company where the customer was king and the love of technology and manufacturing was deeply ingrained.  I’ve spent my life selling and marketing other people’s technical inventions around the world.  For me, HVM means making real engineered products, be they destined for environmental sustainability, healthcare, industry or defence.  My pleasure as an investor is seeing engineering and commercial jobs created here in the UK, and products exported across the globe.

We’ve been fortunate to attract partnership from ideaSpace, sponsorship from Harrison Clark, Williams Powell, Synergy Energy and Wren Capital, and support from NESTA and the Technology Strategy Board.  Bootcamp participants will have to contribute a token amount towards their accommodation in Cambridge’s lovely Madingley Hall, and we’ll make up the balance of the costs ourselves.  We are not seeking equity stakes in the companies that participate, although we’ll naturally be keen to see if they are attractive investments at the end of the process.

So are we just do-gooders?  Well perhaps.  I see it as a superb experiment, an opportunity to help some great businesses, committed entrepreneurs, and work with experienced mentors whilst having great fun.

To join the bootcamp apply here.  It’s a one-off; entries close on 4th May and the bootcamp will be held on 23rd – 25th July.

My next posting will be the one about the aubergine…

Who invests in High Value Manufacturing? We do…

Readers of Qi3 Accelerator Insight will know that we’re absolutely passionate about investing in UK technology businesses.  We’ll soon be making announcements about deals that have closed, or are about to close.  It’s been an exciting few months for us, working as a team to evaluate some exciting companies and working with a range of investors to form syndicates.

Meanwhile, I’m pleased to open the first call of 2012 for proposals for Qi3 Accelerator.  See the news item for details, and please take the time to read through this blog and the rest of the Qi3 Accelerator web site before sending us your proposals.

Why good people make all the difference…

… and when to move outside your sector comfort zone

Our first statement of sector interests included security, environmental sustainability / cleantech and instrumentation. Apart from anything else, it’s only fair to provide guidance to people about the sectors in which we’re keen to invest, and by implication, the areas in which we’re less keen.

My industrial career provides a backdrop to my investment interests, a set of overlapping comfort zones within which I understand market dynamics, technologies and have contacts that may be valuable to investees. I’m keen to develop a portfolio of risks, whilst maintaining an explicable intellectual coherence.

But this tidy approach has always troubled me and it’s coming to life with some specific opportunities in our pipeline. The issues are:

  • Great teams: We recently saw a presentation in a business somewhat outside our declared sector interests. But there were three passionate and experienced individuals each contributing to a coherent team. How could we dismiss this opportunity given the primacy of team credibility in our investment criteria?
  • Mates: We have seen over a dozen pitches from people we’ve known, in some cases over many years. Surely that personal knowledge must count for something, regardless of sector?
  • Stonking opportunities: Whilst we love whacky early stage technologies, it’s far less risky and more financially justifiable to invest in propositions that seek acceleration for growth and offer significant, short to medium term returns.

In summary, ‘comfort zone’ is important, and it affects the degree to which one’s personal experience and contacts can be brought to the aid of an investee. But good people and great investment prospects are ultimately what this game’s all about.  I won’t be having sleepless nights over a diversified portfolio of superb businesses.

 

Leave those NDAs alone!

Some people seem to miss the touchy-feely part of engagement between entrepreneur and investor. They insert the dark menace of a Non-Disclosure Agreement (NDA) in the space between the first handshake and a cup of coffee.  Just when you want to attract an investor, you raise his hackles.

From the entrepreneur’s perspective, it’s important to protect yourself from the risks of disclosing the ‘crown jewels’ of your technology.  This particularly applies where you meet people who are previously unknown to you.  Disclosure to people other than lawyers and patent attorneys unless within the terms of an NDA may also prevent you from later securing a patent.

Some people have an overdeveloped view of what constitutes confidential information and thus come across as overly secretive and even shifty when asked simple questions.  It’s not a healthy start to a relationship. By putting an NDA in front of a potential investor, you are asking for a legal commitment at a very early stage and risk scaring him off.

Now think about it from an investor’s perspective.  We really don’t want a drawer full of NDAs, especially as we are scouting in a pool of technology investment prospects that may overlap. So we (a) follow a written ethical code, (b) follow professional practices and (c) generally only sign NDAs at Stage 3 (technology and market due diligence) in our investment process.  We really don’t want to know anything secret at these early stages. We’re primarily interested in what makes you stand out from the crowd – the commercial impacts of your whizzy technology rather than the essence of your invention.

So what’s the resolution?  Spend a few minutes considering our evaluation process, and considering what public domain information you can release. This may then be included in the marketing information and business plan.  Confidential information available on exchange of an NDA can be listed in the business plan and released for the purposes of due diligence at a later stage.

This all has a practical effect.  In the past year, I have refused to bring four businesses into our evaluation process simply because the founders wouldn’t provide sufficient detail for a Stage 1 evaluation.

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