Alistair Crane: Maximising Value of your Tech Start-up

THE MAN

Alistair Crane left school with nothing more than a few GCSEs. At the age of 21 he had started work for NAVTEQ, a digital mapping subsidiary of Nokia. By 23 he had co-founded the mobile app developer, Grapple. Grapple designed and created the mobile applications for global brands from McDonalds to Pfizer. It was subsequently sold in 2013 to AIM-listed company Monitise, world leading mobile payments company, for a tidy sum close to £40m. And Alistair’s take on both his personal and company’s journey is .... "It’s only just the beginning".

Alistair was kind enough to share with Abchurch some of his top tips to enhance a technology company’s journey from start-up to a mature and established industry profile.

START RIGHT

First off for start-ups? Start right. Alistair admits that the early days can be more than a little bit daunting but if you prioritise your short term goals, a plan of action can become much clearer, surprisingly easily.

THE TEAM

This starts with choosing the right people for your team. Alistair personally recruited the vast majority of his staff so that he can always guarantee that he is surrounded by trustworthy people who are passionate about the company and product. He believes there is freedom for everyone to be on their own journey, whilst contributing to the Company’s goals. Consistent belief in the product will ensure that at crucial yet turbulent moments in a business’s life-cycle, the CEO won’t need to have all the answers, as the insight and passion will come from within. In terms of leadership, there just needs to be a gesture towards how things may play out and people will be on board. There can be no grey areas in the team’s enthusiasm for the journey – you’re all in it together.

THE EXIT

Whilst Alistair is a firm believer that it is not always necessary for the CEO to hold all the answers, he believes you have a firm focus of what you ultimately want to achieve with the business; profitability, expansion or even an exit. Be that through a trade sale or an eventual IPO, you need to have an eye on the future so that you can optimise the present. More often than not this can involve positioning yourself in a certain light in-front of target audiences. When Grapple turned down all VC funding, they knew their financial position would come under scrutiny, so they had to be clever with the way they communicated their business growth.

THE BRAND

Development of both personal and corporate brands ensures that what the company does and how they do things is clearly communicated. The personal brand that Alistair has developed is undoubtedly a key factor in the growth and development of his start-up. In his own words, if he was a brand, he would be Ronseal…doing exactly what he says he will do. Such steely determination is likely a shared attribute amongst many start-up CEOs – although not all may choose the right words to describe what they do. Alistair’s choice? .... "I’ll just keep smashing through walls for as long as I can!”

Alistair is adamant that there must always be positivity surrounding the brand. Whether it’s current or ex-employees, clients, future clients or investors, they always need to think you are good people with something of value to say and do. His own experiences have taught him to be conscious of past, present and future relationships at all times and sometimes this can be down to something as simple as just offering some help.

THE HELP

It’s not all smashing through walls though, and Alistair explains that his experiences have taught him that value is subjective - an art not a science. He feels that start-ups must come to appreciate this if they want to make the transition to a more established industry presence. The stakeholders and influencers that can affect the financial credentials of the company may have a different perception of value to the CEO and team. Ultimately, their view can directly affect the long term trajectory of the company. He suggests that CEOs need to have partnerships with people who can both understand the value proposition and advise about how to position it. Sometimes you need a little help along the journey.

Here’s where PRs come in – they are on a journey too, and want to be good people and help. Companies like Abchurch can advise start-ups on what their content should include and how to communicate it. This includes positioning firms in front of the right investors, analysts and media, so that key audiences gain a clear insight into your company’s model and the future value you hold.

In the words of the American novelist, Don Williams jr. ...

“The road of life twists and turns and no two directions are ever the same. Yet our lessons come from the journey, not the destination.”

Stephanie Watson

Follow Alistair Crane on Twitter @AdFundAl

2013: Cautiously Optimistic

As the City starts to come back to life following some excellent festive parties and a much needed break, the outlook seems to be improving for small businesses in 2013.

Access to capital

2012 was a struggle for many businesses with access to capital remaining tight and budgets being cut in an atmosphere of extreme economic uncertainty. So called “zombie companies” became apparent, just about breaking even and able to service debts due to low interest rates, but without enough capital to grow realistically. However a more stable global economy thanks to the Eurozone and US fiscal cliff deals alongside measures by the UK government to support small businesses could mean 2013 is a much more promising prospect for those that made it through 2012.

While the LSE’s junior market, AIM was down narrowly in 2012 compared with 2011, we are already seeing signs that 2013 is picking up for PLCs with a good growth story. Away from the public markets, there is a lot of interest in private companies with the EIS and VCT schemes making it easier for investors to get a slice of the action in companies that wish to remain private. In addition, if an exit within the next 12 months is viable and visible, institutional investors seem to be more willing to consider bridging the gap between private equity and public markets, providing businesses with the capital they need to grow and enjoying the upside of getting in before IPO.

Growth areas

Many advisers strengthened their natural resources teams toward the end of 2012 so we could expect to see growth in this sector, indeed four of the top five AIM companies by market cap are in this area. In addition, clean energy also remains important with the constant threat of global warming as evidenced by many of the freak weather conditions we saw last year. We are also seeing increased interest in medical devices, particularly diagnostics which could improve efficiency in a vast number of areas from drug development to day to day health management. We can also expect huge growth in technology and the shift to mobile has created a significant number of entrepreneurs from tech savvy youngsters with a great idea for a new app.

Just under a third of companies that joined AIM in 2012 were international and we expect China, Russia and other emerging markets to boost growth in 2013, with more international companies looking to the UK for investment.

Outlook

With David Cameron urging G8 countries to work together “firing up economies and driving prosperity” and business leaders believing the threat of a triple dip recession is receding, we could be in a position to capitalise on last year’s modest growth in 2013. We won’t have the expense of the Jubilee or Olympics (which nonetheless both went a long way to lift the public’s spirits in a difficult year) and begin the year in a much more settled and positive global economy. Confidence has been low over the last few years but the current business conditions and sheer will for things to improve means surely things are looking up for 2013.

Simone

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Impact Investment: Doing good whilst making a profit

The launch of Social Impact VCT, enables investors to invest “with both their heads and their hearts” in a tax-advantaged vehicle.

 

 

Yesterday afternoon at our offices we saw the launch of the Social Impact VCT. The fund aims to make use of the existing tax incentive scheme to create a pool of readily available investment capital immediately deployable among socially driven companies in the UK.

 

 

Social Impact VCT features:

1. Support the growth of socially motivated companies which make a distinct positive contribution to improving UK society
2. Capital preservation and predictable cash flows due to focus on established companies and companies whose revenue streams are wholly or partially underpinned by delivery contracts
3. 30% income tax relief in year of investment, tax free dividend and capital gains.
4. Planned Exit: return of capital planned for years 6,7 and 8
5. Dividend planned from year 2 onwards.

The VCT will be managed jointly by FSE Fund Managers and Social Finance. It will focus on profitable and/ or growth companies delivering measurable social impact. As part of the launch we heard from the following two socially motivated companies.

CREATE Foundation is a company aimed at providing a place where people can rebuild their life and hope, in the form of work. It is a “for more than profit” company, this means they run a great business, but profits are ploughed back into training, work experience and jobs for people who need them most. In January 2011, they became only the second company to be awarded a Big Society Award by David Cameron.
CREATE is a social enterprise, and this means that it applies “capitalist strategies to achieving philanthropic goals.” The government defines social enterprises as businesses with social objectives whose surpluses are reinvested in the business or in the community, rather than maximising profit for shareholders and owners.

Another example of a social enterprise is Bromley Healthcare, a new community interest company founded of 800 people who will deliver a wide range of NHS Services to people of all ages. From health visiting to district nursing, school nurses to specialist nurses, their nursing services help new parents to care for new born children and older people to continue living at home through care and support. In addition to this broad range of nursing services they also have a wide range of therapy services for adults and children. This includes speech and language therapy, physiotherapy and occupational therapy.

Both Create and Bromley Healthcare are examples of companies that would benefit from Social Finance’s VCT and would in return offer duel level benefits for the investors (both financial and social).

This is a relatively new asset class, but it is growing. However there is still a problem surrounding the understanding of it. What is needed is the development of a clear message to outline to potential investors the financial returns available from social investments as well as the social benefits delivered. It is not philanthropy, but investment with “twice” the return both financially and socially.

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Gorkana Breakfast Briefing with Martin Barrow, Health Editor, The Times

With a growing stable of life science and med tech clients, the thoughts and general musings of the person responsible for The Times newspapers health and social care coverage was bound to be, not only interesting but relevant to many of our clients. The two Olivers, Oli and Olly made the journey across town to the West End and the fantastic lecture hall at the Royal Institute of British Architects (RIBA) to hear what Martin had to say.

Martin Barrow has been Health Editor at The Times since November 2011, but started working for The Times over 21 years ago. His first role at the paper was on the business desk where he worked for 12 years, followed by spells as foreign news editor and home editor before taking charge of the two person health team. With such a wealth of experience behind him the hour he was given looked unlikely to suffice.

Rather than repeating what Gorkana has very helpfully written up here it was incredibly interesting to hear what Martin covers in detail, the host of issues he is currently interested in, how he likes to work and what he looks for in a story. He also highlighted the benefits of online coverage in The Times, despite being behind a paywall, the website has over 120,000 paying subscribers who actively engage with the paper and explore new content.

Thanks again to Gorkana for organising this and a full review of the meeting can be found on Gorkana PR via this link.

Oliver Hibberd


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Sachs Forum European Life Science CEO Forum for Partnering & Investing

March 2012 - Zurich
Adam Michael and Jamie Hooper represented the Abchurch Life Sciences practice by attending the first Sachs Biotech Investment Forum of the New Year in Zurich. As always the event was excellently attended with both private and listed biotech companies, a broad spectrum of the finance community, representatives from the medical profession and the occasional PR practitioner.

The format of the Sachs Forum gives attendees the best possible chance to maximise their time in Zurich with an efficient one-to-one meeting system, themed panel discussions, and networking facilities throughout the day. With over 200 companies attending, and a strong contingent of European life science investors, delegates at Sachs were kept very busy.

The panel sessions stimulated quality debate for both the day and evening networking (over a glass wine and canapés), covering such topics as; the resurgence of platforms technologies over products; the latest interactions between big pharma and biotech; and the current popularity of the French biotech industry with investors.

The one-to-one meeting system enables delegates to pre-arrange meetings with potential collaborators and investors, or to just help increase someone’s knowledge on a particular technology. Frequently compared to speed dating the platform gives attendees a fast, sharp opportunity to interact with numerous delegates in a more structured setting than the networking hall. The half hour sessions keep meetings to the point.

While times are still tough in life sciences, with capital hard to raise, and public markets shying away from life sciences, events like the Sachs CEO Forum give companies in the sector a real opportunity to present their case to investors and partners and maintain momentum across the industry.

One thing is for certain: the Swiss venue for the conference continues to garner strong support from both the vibrant and sophisticated finance community, and the local, world-leading, pharmaceutical industry.

Jamie Hooper

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F-star – a shining example of biotech and drug discovery

The ingredients for a successful biotech company are actually much like any other early-stage business: a good product with customer interest, management skilled to commercialise the product, and the financial backing to make the project a reality. It’s the simple, TV Dragons Den formula.

The difference with biotech is in assessing the quality and robustness of the technology, finding suitably experienced management, and sourcing the weighty investment necessary to succeed---pharmaceutical companies still quote $500m per drug to market, although good biotech companies should slash these costs.

I’ve been tracking F-star (www.f-star.com) since late 2009, just before it raised €8million in an extended series A, drawing in the venture wings of two pharmaceutical plays: MerckSerono and Mitsubishi Tanabe Pharma. Yesterday (September 7th 2011) the company announced that from the early investment from MerckSerono, a product development deal had evolved worth just shy of €500m. MerckSerono is providing three drug targets in inflammatory disease to which F-star is creating antibody drug candidates through its Modular Antibody technology.

Between these two events with MerckSerono, the company has also struck a deal with Boehringer Ingelheim worth up to up to €180m for each of seven targets, and closed an additional financing round of €15m, led by SR-one, GlaxoSmithKline’s venture wing. Other investors in the business include Novo Ventures, the venture arm of Danish pharma group Novo, and a purse of established life science venture capitalists.

These events have all fallen under the leadership of Kevin FitzGerald, who took to the CEO seat just seven months before closing the €8m financing in January 2010. Along the way the company has also managed to attract the likes of Sir Greg Winter, arguably the world’s leading academic on antibodies, to head the scientific advisory board.

So, a great product with significant pharma interest; a management team that is actively (and rapidly) progressing the company’s potential; and all healthily financed in a way few biotechs are in the current cycle. F-star is fulfilling a simple business formula. It’s now probably too hot for even the fieriest of Dragons, but are there deep-pocketed investors in life science that will recognise, buy into, and further progress the F-star proposition? I sense so.


Adam Michael


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