Upload
others
View
2
Download
0
Embed Size (px)
Citation preview
© 2014 Deloitte & Touche
23 January 2014
TMT Predictions Building & monetising the future
Welcome
Joan O’Connor
Harry Goddard
TMT Predictions 2014
© 2014 Deloitte & Touche
The converged living room:
A plateau
approaches
© 2014 Deloitte & Touche
eVisits: The 21st Century house call
© 2014 Deloitte & Touche
Wearable technology : The eyes have it
© 2014 Deloitte & Touche
One became many : The tablet market stratifies
© 2014 Deloitte & Touche
Broadcast sports rights : Premium plus
© 2014 Deloitte & Touche
Performance rights lift recorded music revenues: let the
music play… and the money roll in
© 2014 Deloitte & Touche
Short messaging services versus instant messaging
services : Value versus volume
© 2014 Deloitte & Touche
The smartphone generation gap : Over 55?
There’s no app for that.
Susan Kearney Share Schemes
© 2014 Deloitte & Touche
Share Schemes Looking at the corporate journey
© 2014 Deloitte & Touche
Recent Trends in Reward
• There has been an increased trend towards long term incentive
plans, with clients focussed on retaining key employees into the
future.
• Trends also see a move to performance based reward rather
than service based basic pay increments.
• This trend has seen an increase in interest in share based
reward which links employee/executive remuneration to
corporate success.
© 2014 Deloitte & Touche
Share based reward at start-up stage
© 2014 Deloitte & Touche
Corporate Motivations: Start-Up
• Staff engagement: Shared Ownership
• Combined Reward where Market Salaries are not in budget
• Encourage staff retention at start up: Make or break a business
© 2014 Deloitte & Touche
Key components of a start-up plan
Plan Rules
• Purpose and eligibility;
• Available stock and types of awards;
• General provisions to governance, transferability,
withholdings, acquisition, sale and definitions.
Stock Option Agreement
• Share plan participant agrees to plan rules;
• Notification of the amount of shares, vest date
and vest/exercise conditions;
• Agreements often plan for start up goals –
flotation or sale and define implications on share
options/share awards
© 2014 Deloitte & Touche
Share Based Reward at Start-Up
• At start up level, many companies will try and implement a simple
but effective share plan – lower consultant and legal fees;
• Most plans will include Share Options (a right to purchase a
share at a fixed price at a future date) and a Share
Award/Restricted Stock element (an award of a share that will
vest to an employee at a fixed future date with no cost price);
• Shares can have a conditional vesting date (e.g. sale or flotation)
or a fixed time vest date (after 3 years)
• Income Tax/USC and Employee PRSI apply.
© 2014 Deloitte & Touche
Considerations on Sale
• Due diligence prior to acquisition is often
under taken;
• Correct Accounting, Corporate Tax, Income
Tax implications are normally examined as
well as legal framework;
• Consider implications upfront: Accelerated
vestings, right to repurchase shares etc.
• Can impact on balance sheet and company
value!
© 2014 Deloitte & Touche
Considerations on Flotation
• Plans should be designed
with potential institutional
investors in mind;
• Consider whether the
private company share plan
is fit for purpose post IPO;
• Implications should be clear
for plan participants to
understand;
© 2014 Deloitte & Touche
Multinational Corporations
© 2014 Deloitte & Touche
Multinational Corporations : A Closer
Look
• Company Success =
Employee Wealth
• Key component of most
reward schemes in the
MNC Tech Sectors;
• Focus on maximising tax
efficiency through
Revenue approved share
plans, particularly at
executive level;
• Greater budgets for
sophisticated share
based reward schemes;
• MNC Share Schemes
include Restricted
Shares, Revenue
Approved Sharing
Schemes, Save As You
Earn Schemes,
Restricted Stock Units
and Market Value
Options
© 2014 Deloitte & Touche
Technical Overview
© 2014 Deloitte & Touche
Technical Overview contd.
• Employer PRSI exemption still exists on all
share based remuneration!
• Employee Income Tax, USC and PRSI
payable on transfer of beneficial ownership
of shares;
• Certain Revenue approved share plans will
attract tax exemptions for employees (e.g.
an approved profit sharing scheme);
• In general corporate tax deduction
available when shares become liable to
income tax. Need to also consider the
accounting treatment – can be complex!
Bryan Clarke R & D Tax
© 2014 Deloitte & Touche
Research and Development
Tax Credits
25% tax back on eligible R&D expenditure.
© 2014 Deloitte Touche Tohmatsu
Refund
€100,000
X 0.25
€25,000
© 2014 Deloitte & Touche
How do I
get it
back?
1. Less Tax
2. Cash Refund
© 2014 Deloitte & Touche
Qualifying R&D?
Solving
technological
uncertainty
Achieving
technological
advance
In a systematic
& scientific
manner
© 2014 Deloitte & Touche
What does that really mean?
Did it take months to solve?
Is it really hard
to solve?
Is the
solution
new?
© 2014 Deloitte & Touche
But I am doing?
Web Design
New Video Processing Algorithms
Complex System Development
© 2014 Deloitte & Touche
Does your R&D hit the target?
Complex System Development
Video Processing Algorithms
New Website Design
© 2014 Deloitte & Touche
So how much qualifies?
Requirements Design Development Test
Uncertainty
Start Uncertainty
End Qualifying
R&D
Primary colors
R 0
G 39
B 118
R 0
G 161
B 222
R 60
G 138
B 46
R 114
G 199
B 231
R 201
G 221
B 3
R 146
G 212
B 0 What will qualify?
• Staffing costs
• Sub-contracting
• R&D expenses
• R&D equipment
• General overheads
Primary colors
R 0
G 39
B 118
R 0
G 161
B 222
R 60
G 138
B 46
R 114
G 199
B 231
R 201
G 221
B 3
R 146
G 212
B 0
Lots!
What do I
do next?
Do I have
any R&D
projects?
Lots
How much
engineers
time was
spent on
them?
Did I buy
any R&D
equipment?
Is the potential
claim large enough to proceed?
Lots Too much! That thing in the corner
Paul Murray
Atlantic Bridge Ventures
Dublin | London | Silicon Valley Private and Confidential
Funding Trends in the Irish Tech Sector
Paul Murray
Atlantic Bridge
23 January 2014
38 38
Private and Confidential
Atlantic Bridge Introduction
Leading Irish Technology investors with a global perspective
• Founded in 2004 and currently investing out of second fund Abven II
• Growth Stage Technology Investors – Series A and on
Multidisciplinary team of 12 who have founded 8 global companies
themselves
• All with operational and entrepreneurial tech experience
• Have launched 50% of Irish IPOs on NASDAQ
146 spin out companies from
39 39
Private and Confidential
Atlantic Bridge Value Add Strategy
Local presence with Global outlook
Operational and Hands On approach to maximise opportunity
Over 40 co-investment partners in Asia, Europe and the US
Senior relationships at all Tier 1 Technology companies including
Dublin London Palo Alto
40 40
Private and Confidential
Recent Irish Tech Funding Activity
€49m seed
funding €163m Funding
+26%
+41%
Since 2008
€2Bn VC funding raised by Irish SMEs
2013 Tech Investment to Q3
41 41
Private and Confidential
Growth of Irish Tech Sector
362 Seed and
early Stage investments by EI
supported funds in 2012
VC Funding is creating
new ventures
IVCA estimates
follow on funding required
€1.5Bn
42 42
Private and Confidential
Future funding to scale companies
Seed and venture
Capital Program
IFI Fund
Development
Capital Fund
Strategic
Investment Fund
€6-700m in
total funds
Cornerstone investors in
Irish funds
43 43
Private and Confidential
Attracting foreign VC Investment
€1.8-€2Bn
Funding can be
leveraged to attract
foreign Capital
Investment
3x
Essential to build companies
of scale
44 44
Private and Confidential
Evolution of Irish
Investment
Landscape
45 45
Private and Confidential
Early stage investing is evolving
Accelerators becoming more focused
-Gives clustering effect
Successful entrepreneurs acting as value add Angel Investors
46 46
Private and Confidential
Irish Technology investing is evolving
VC Funds becoming more
focused on specific domains
Greater emphasis on attracting foreign capital and smart money
47 47
Private and Confidential
Value Add VCs
VCs have deeper knowledge of sectors
More specialisation in funds
Assists companies to compete globally
Emphasis
on VCs
bringing value
add becoming
more important
48 48
Private and Confidential
Connected VC brings extensive network
Network is key
differentiator
Customers, Partners and key hires
Building out Management Team
Potential Investors and acquirers
49 49
Private and Confidential
Connected Capital crucial to scaling
To scale globally Irish companies need foreign VC investment
$10m Foreign
investors
$6m
investment
from Irish
VCs
Act as anchors for follow on investment rounds
Attracted
additional
Irish VC investment leveraged up to 3X
50 50
Private and Confidential
Fund launched on 17th January 2014
China Ireland Growth Technology Fund
Invest in scaling Irish
SME companies in
China
Chinese companies
planning to establish a
presence in Europe via
Ireland
First China Europe technology fund sponsored by CIC
$100m fund
sponsored
by NPRF
and CIC
51 51
Private and Confidential
China Ireland Growth Technology Fund
Will be co-managed by
a team from West
Summit and Atlantic
Bridge
Fund will invest in
technology companies
with established
revenues
Sectors such as
internet, software, semiconductors, cloud,
Big Data, Clean technology,
Food, Medical, Agricultural
and Financial Sectors
Global team
of 40
Offices in
Dublin, London,
Beijing, Hong
Kong and Palo
Alto
52 52
Private and Confidential
Corporate Venture Investment increasing
Corporates invest strategically to keep at front of innovation curve
Gives a first look at new and emerging technologies and trends
Spurs innovation internally
Very Important in certain sectors such as semiconductors
25% of all deals now involve a corporate Investor
Engaging early with corporate VCs starts relationship
with a potential acquirer
53 53
Private and Confidential
Debt Funding re-emerging
Companies with strong cash flows
and solid business can access debt financing
Situation not back to normal but is improving
54 54
Private and Confidential
Technology
trends driving
investment
55 55
Private and Confidential
Mobile devices maturing
Smartphone penetration saturating in developed economies
62% smartphone
penetration
in the US
53% smartphone
penetration
in the
Ireland
•Cameras
•Intelligent Sensors
•Battery lifetime
Handset manufacturers
looking to differentiate
through advanced
features
Enables new functionality
and enhanced user
experience
56 56
Private and Confidential
Vertical integration
Mobile platform players vertically integrating •Keep control of hardware differentiation
•Acquisition opportunities for hardware and software companies
acquires
acquires
acquires
Maintain control of hardware differentiation
Acquisition opportunities for hardware and software companies
57 57
Private and Confidential
Internet of Things going mainstream
Entire new eco system required for IoT Convergence of mobile, sensor, cloud, and Big Data
58 58
Private and Confidential
Hardware and software converging
Internet of Things and vertical integration
changing the Technology landscape
Opportunities in Hardware and Software
acquiring $3.2Bn
Shows trend and potential
Knowledge and
application of both
becoming key
differentiator
59 59
Private and Confidential
Traditional business model disrupted by Cloud & SaaS
Disrupting industries
with SaaS model
Capital efficiency
allowing new
companies to scale
quickly and with less
funding
IT resources sold as a
service:
Opex rather than Capex
Business models
changing and
incumbents losing to
startups
60 60
Private and Confidential
Big Data
Enormous volumes of data being produced – 2800 Exa Bytes in 2012
Provide actionable insight and
Context to data
Insights need to move
from data scientist to
end user
Mobile
Internet
IoT
Cloud
Understanding and
Insight will unlock
value
61 61
Private and Confidential
VC Investment Criteria
Strong tech
with high
barriers to
entry
Large
addressable
markets
Strong
mgmt team
with
relevant
industry
experience
Initial
customer
validation
Identified
route to
market
Ability to
build strong
global
position
Alignment
with
investment
themes and
strategy
Criteria
62 62
Private and Confidential
Attracting scale up funding
Build relationships
early with investors
and strategics.
Work with VCs that
understand your
domain and can add
value
Use international
partners to
scale early.
US presence
essential for tech
companies
63 63
Private and Confidential
Building Irish Companies of scale
Serial entrepreneurs
building on previous
experience
Evolution of Silicon
Valley type eco
system in Ireland
Access to later
stage capital to
continue to scale
company beyond
initial success
64 64
Private and Confidential
Conclusion
Seed and early stage funding has created platform for major growth
in Irish indigenous tech sector
Funding essential to scale Irish companies globally
VCs that can bring value add and domain specific insight
Ability to leverage investment with foreign capital is crucial
Internationalise early to build
Irish Tech companies of scale
65 65
Private and Confidential
+353 1 6044456
For Further Information Contact
ATLANTIC BRIDGE
www.abven.com
© 2014 Deloitte & Touche
Thank You
Please see our website for further information
www.deloitte.com/ie/tmtpredictions
#Deloittepredicts
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a private company limited by guarantee, and its network of
member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ie/about for a detailed
description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.Deloitte’s 1,200 people in Dublin, Cork
and Limerick provide audit, tax, consulting, and corporate finance to public and private clients spanning multiple industries. With a
globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality
service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s approximately
200,000 professionals are committed to becoming the standard of excellence.This publication contains general information only,
and none of Deloitte Touche Tohmatsu Limited, Deloitte Global Services Limited, Deloitte Global Services Holdings Limited, the
Deloitte Touche Tohmatsu Verein, any of their member firms, or any of the foregoing’s affiliates (collectively the “Deloitte Network”)
are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or
services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision
or action that may affect your finances or your business. Before making any decision or taking any action that may affect your
finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible
for any loss whatsoever sustained by any person who relies on this publication.
© 2014 Deloitte & Touche. All rights reserved