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www.heptech.org
Ian Tracey HEPTech Sec. Gen.
www.heptech.org
45 Mins
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@iantracey Image © Microsoft: Educational Fair Use
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And now…
Back row (L-R): Bob O’ Rear, Steve Wood, Bob Greenberg, Marc McDonald, Gordon Letwin, James Lane. Front row, (L-R): Gates, Andrea Lewis, Miriam Lubow, Marla Wood, Paul Allen.
Image © Microsoft
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sssss
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United
Kingdom
France
Spain Portugal
Sweden
Germany
Greece
Italy
Denmark
Switzerland
Czech Rep.
Slovakia
Hungary Romania
Bulgaria
Serbia
Greenland
Luxembourg
Israel
HEPTech Membership
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WHY DO WE NEED TECHNOLOGY TRANSFER ?
Or even Innovation ?
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BECAUSE THE GOVERNMENT HAS CHOICES
It decides where to spend its tax revenue for the best outcome for the country.
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Liverpool
Image: © Wikipedia
130 Million Government
750 Million additional local
business activity
4 Billion Private investment
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Only meaningful with hindsight
Valuations….
9
Value
Min/Max %
Discounted Cash Flow
Asset Valuation
Cost to Duplicate
Market Comparisons
Stage Valuation
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Based on shareholder rights and often used in conjunction with other methods.
Min 25%, share holder rights
Max 40% otherwise over dilute
Understood by both sides
Min/Max Percentages
10
18 months
@iantracey
Or:
one in the hand, beats two in the bush
Tends to be liked by “numbers people” - but can it really apply to such an uncertain revenue line.
Discounted cash flow
11
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Can also add in the value of grants awarded
Tends to be liked by academics, as easy to
Calculate
Investors tend to question elements like brand
Asset Valuation
12
®
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If you had to start again…
If everything burnt down and we had to re-create it all..
Less than you have spent to get to now, as you will be wiser
Does not value intangibles like connections you have made and brand values
Investors tend to discount for experience
Cost to Duplicate
13
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What have others paid for similar
Favoured by VCs and Angels
Startups struggle to find examples especially hard to locate in the early stages
Are we truly looking at similar companies and at similar stages?
Market Comparisons
14
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A simple rules approach
Stage Valuation
15
Stage of Development Estimated Company Value (£)
An exciting business idea or business plan 250,000 - 500,000
A strong management team to implement the
plan
500,000 - 1 million
Can demonstrate final product or technology
prototype, and the supply chain in place
1 million – 2 million
A range of strategic partners in place, or signs
of a relevant customer base
2 million – 5 million
Making repeat sales, clear signs of revenue
growth and obvious pathway to profitability
5 million and up
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Just one example.
I know of one start up, that has done three financing rounds and never names the price – he lets the investor decide
Everytime, it has been a higher valuation than he anticipated
Investors hate it.
Let the investor decide
@iantracey
A US Valuation calculator – I wont stick to the numbers, but the questions provide the right food for thought:
https://www.caycon.com/valuation.php
Just for fun
17
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EIR Scheme
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With no more than 50% stock owned by public investment corporations, venture capital companies, or business angels ..universities or non-profit research centres…
SME Status
< 250 people < 50 million < 43 million
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Then add in 100K on 500K pre money = 20 shares
(not an SME)
Normally
Founder 20 share
Uni 80 Shares (80 %)
Founder 20 share
Uni 80 Shares (66 %) Investor 20 share
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You can assign the IP non exclusive with an option for exclusivity for x shares e.g. 20 shares non exclusive, with 60 shares extra for exclusivity, triggered upon 1st serious raise e.g. 500 K
Alternatively
Founder 20 share
Uni 20 share
Investor 20 share
Founder 20 share
Uni 20 share
Non exclusive pathfinder
Investor 20 share
Founder 20 share
Uni 20 (10%)
Uni 60 Shares (30%)
Investor Round 2 80 Shares Exclusive IP licence
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Symposium
2016 – Romania
2017 – GSI - Germany
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Germany (GSI) 19. to 23. June 2017
