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Philip Tellwright Managing Director SWAIN
SWAIN Renewable Futures: Power for Growth 11th November 2009 Philip Tellwright Managing Director
Who are we to do it? Philip Tellwright MA FCCA 3i plc Hazlewoods Director Corporate Finance Inch’s Cider FD Brissco Equipment FD
Background Commenced May 2004 Operating 5 years Support from SWRDA majority of costs Currently Phase 2 (discussing Phase 3)
Geography
Facts & Stats
Facts & stats 2%
Deal analysed by business sector (20042009) 8% 25%
8% 9%
IT Services Medical Devices Media/Communications Health Care Manufacturing Renewable/Clean Technology
11% 23% 14%
Other Technology
Deal profile 76 deals (14 deals per year); 56 businesses (66% first round); £5.5m from SWAIN investors; £23m total finance; Ave. Stake 18.5% Typical post money valuation £850k 12 failures (21%)
Investment Attractiveness Business plan demonstrating significant growth A management team -> ability to create profits (capital growth) An exit strategy A realistic valuation
Equity Returns 5 year Multiplier
/
IRR%
3F’s Angels 10/58% Regional/ University Funds
VCT
£ks
£10k’s
VC 5/38%
Plus
AIM
£100k’s
£mn’s
PE
LSE 10% -> £bn’s
Pricing Sales £2,000,000 Profit £200,000 Exit multiple 6x Exit value £1,200,000
Sales £150,000
Loss £40,000 4 years
Invest £75,000
25%
25% = £300,000
4 times return
Valuation Net assets EBITDA X
PE X Portfolio Theory CapM Modigliani Miller Shareholder value
Duckworth Lewis
Investment amount and involvement Full time exec Part time exec Non-exec No direct involvement
over £100k
0%
10%
20%
30% £50k 40% 50% to £100k
60%
£25k to £50k £10k to £25k 0%
10%
20%
30%
40%
£100K
£150K
£200K Non-exec
Board member
£250K
£50K
Involvement Executive position
Trusted syndicate
Passive
Job!
Amount per deal £000’s
SWAIN investors
Nesta report (1) Profile 53 years old 13 years with large company EIS 57% 10% of wealth is in angel investments 83% made with co-investors
Nesta report (2) Investment £ size per investor £42,000 Pre-money £875,000 15% seed 36% start up
Nesta report (3) Returns Ave hold 3.6 years Exits (incl failures) 406 Overall multiple 2.2x Approx IRR 22% 9% of exits gave 80% of cash returned In US 10% gave 90% of cash returned
Results of research Preliminary results 6 investors £668,000 invested (SWAIN deals)
The numbers 2.5 investments each £44,550 average investment 3.8 days per month 5-10 days due diligence pre deal
Typical deals Natural Watt – Single investor £50K Kernow Eco-housing £250K first round (£150K SWAIN investors) £350K second round (includes regional fund)
Floodstop – Single investor £50K Green CO2 £250K single investor + aim
Current trends – equal and opposite? Investors
Investors
•18 months on from April 2008 •Poor returns elsewhere •Entry prices relatively low •Maturity of opportunities •EIS relief remains attractive
•Portfolio balance skewed •Longer Due Diligence •Serial investors illiquid
Companies •Banks not lending •SW VCs no cash for new deals •Other VCs portfolio issues
Companies •Poor market conditions for growth
Challenging times in the S-W? Finance Cornwall (Equity / Mezz Funds)
Finance South West (Growth Fund)
South West Ventures (Regional Venture Capital Fund)
Where next?
South West Loans Fund
SWRDA initiative Up to £50k Up to £250k
Invented here... developed elsewhere
2007 TEPA Assets €770,000 Up to €50,000 2008 92,000 individuals €930,000,000 Available throughout the EU
Thank you...
SWAIN Renewable Futures: Power for Growth 11th November 2009 Philip Tellwright Managing Director
Pricing Sales £2,000,000 Profit £200,000 Exit multiple 6x Exit value £1,200,000
Sales £150,000
Loss £40,000 4 years
Invest £75,000
25%
25% = £300,000
4 times return
SWAIN Renewable Futures: Power for Growth 11th November 2009 Philip Tellwright Managing Director
Who are we to do it? Philip Tellwright MA FCCA 3i plc Hazlewoods Director Corporate Finance Inch’s Cider FD Brissco Equipment FD
Background Commenced May 2004 Operating 5 years Support from SWRDA majority of costs Currently Phase 2 (discussing Phase 3)
Geography
Facts & Stats
Facts & stats 2%
Deal analysed by business sector (20042009) 8% 25%
8% 9%
IT Services Medical Devices Media/Communications Health Care Manufacturing Renewable/Clean Technology
11% 23% 14%
Other Technology
Deal profile 76 deals (14 deals per year); 56 businesses (66% first round); £5.5m from SWAIN investors; £23m total finance; Ave. Stake 18.5% Typical post money valuation £850k 12 failures (21%)
Investment Attractiveness Business plan demonstrating significant growth A management team -> ability to create profits (capital growth) An exit strategy A realistic valuation
Equity Returns 5 year Multiplier
/
IRR%
3F’s Angels 10/58% Regional/ University Funds
VCT
£ks
£10k’s
VC 5/38%
Plus
AIM
£100k’s
£mn’s
PE
LSE 10% -> £bn’s
Pricing Sales £2,000,000 Profit £200,000 Exit multiple 6x Exit value £1,200,000
Sales £150,000
Loss £40,000 4 years
Invest £75,000
25%
25% = £300,000
4 times return
Valuation Net assets EBITDA X
PE X Portfolio Theory CapM Modigliani Miller Shareholder value
Duckworth Lewis
Investment amount and involvement Full time exec Part time exec Non-exec No direct involvement
over £100k
0%
10%
20%
30% £50k 40% 50% to £100k
60%
£25k to £50k £10k to £25k 0%
10%
20%
30%
40%
£100K
£150K
£200K Non-exec
Board member
£250K
£50K
Involvement Executive position
Trusted syndicate
Passive
Job!
Amount per deal £000’s
SWAIN investors
Nesta report (1) Profile 53 years old 13 years with large company EIS 57% 10% of wealth is in angel investments 83% made with co-investors
Nesta report (2) Investment £ size per investor £42,000 Pre-money £875,000 15% seed 36% start up
Nesta report (3) Returns Ave hold 3.6 years Exits (incl failures) 406 Overall multiple 2.2x Approx IRR 22% 9% of exits gave 80% of cash returned In US 10% gave 90% of cash returned
Results of research Preliminary results 6 investors £668,000 invested (SWAIN deals)
The numbers 2.5 investments each £44,550 average investment 3.8 days per month 5-10 days due diligence pre deal
Typical deals Natural Watt – Single investor £50K Kernow Eco-housing £250K first round (£150K SWAIN investors) £350K second round (includes regional fund)
Floodstop – Single investor £50K Green CO2 £250K single investor + aim
Current trends – equal and opposite? Investors
Investors
•18 months on from April 2008 •Poor returns elsewhere •Entry prices relatively low •Maturity of opportunities •EIS relief remains attractive
•Portfolio balance skewed •Longer Due Diligence •Serial investors illiquid
Companies •Banks not lending •SW VCs no cash for new deals •Other VCs portfolio issues
Companies •Poor market conditions for growth
Challenging times in the S-W? Finance Cornwall (Equity / Mezz Funds)
Finance South West (Growth Fund)
South West Ventures (Regional Venture Capital Fund)
Where next?
South West Loans Fund
SWRDA initiative Up to £50k Up to £250k
Invented here... developed elsewhere
2007 TEPA Assets €770,000 Up to €50,000 2008 92,000 individuals €930,000,000 Available throughout the EU
Thank you...
SWAIN Renewable Futures: Power for Growth 11th November 2009 Philip Tellwright Managing Director
Pricing Sales £2,000,000 Profit £200,000 Exit multiple 6x Exit value £1,200,000
Sales £150,000
Loss £40,000 4 years
Invest £75,000
25%
25% = £300,000
4 times return
