Tag Archives for University of Cambridge

Let the good times roll again! Convertible debt for angels

Fred WilsonImage via Wikipedia

Fred Wilson write a great blog and not much needs to be added to it except that he is one person who got in early and will make a ton of money out of spotting the social network space.  Amazing to have the simple vision to use the tools and then be able to relate to entrepreneurs.  All so simple but he does hide away..  Ooops no he does not as one of his companies, Zemanta, has just popped his photo up!

In his post on convertible debt for angels in the first round, he puts the other case that he prefers agreeing a price and investing.  But he understates the great increase in value he brings to the new company when he says “I can negotiate a fair price with an entrepreneur in five minutes and have done that for a seed/angel round many times.”  We can all agree a price but most entrepreneurs do not bite off our hands!

Fred Wilson operates in a very different environment than Cambridge Enterprise, the arm of the University of Cambridge which “exists to help University of Cambridge inventors, innovators and entrepreneurs make their ideas and concepts more commercially successful for the benefit of society, UK economy, the inventors and the University“.   Their recent News and Events Bulletin states that “Sixteen Cambridge Enterprise portfolio companies are included in Business Weekly’s “Killer 50” list of the most disruptive technology companies in the East of England”.  Amazing companies that will change our lives in the years to come.

But in the mission statement of Cambridge Enterprise there is no mention of angel investors.  Are angels the best investors to start disruptive technology companies?  Do they have deep enough pockets?

Perhaps angels in Cambridge need to entice the entrepreneurs in Cambridge to follow the path of Fred Wilson as demonstrated so well by Rahul Vohra and Rapportive.  A very different business plan resource approach is required.  Perhaps Cambridge Enterprise should establish a new division to support the likes of Rahul Vohra – after all the experience, skills and opportunities given to Rahul Vohra served him well until he upped and offed to Silicon Valley.

The only worry to me as a low-grade angel is that the convertible debt stacks the cards too much in the favour of the entrepreneur and the second round investors.  The first round investors need a great big uplift to justify the huge risk we take.  We might not fund a company to revenue but we fund social network companies to their first major step of customer engagement with hundreds of thousands of users.

Will all this help The Entrepreneurs Graphic Novel when it is is published as an app?

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Samantha Sharpe is the NESTA Innovation Policy and Research Fellow

The Judge Business SchoolImage via WikipediaDr Samantha Sharpe is part of the team at the Centre for Business Research, Judge Business School, University of Cambridge studying early stage companies.  She is funded by NESTA and has a project in the same area as the NESTA project using Equity Fingerprint, the business plan resource.

In  her talk at a meeting at Lancster University Management School (when will it be re-named Lancaster Business School?), Samanthan outlined her work on researching the portfolio of investments made by the N W Brown Group, now IQ Capital Partners.  She has been allowed acess to all the confidential information and so is only able to produce summaries of her data.  Most interesting was a graph which related to Equity Fingerprint.  But whilst Equity Fingerprint concentrates on the decisions made by entrepreneurs in raising fund and how it impacts on their ownership of the company, Samantha’s graph showed the total funing of each round from equity, loan and grants – it showed the gearing achieved by the entrepreneurs on the funds raised.  It would be good to incorporate a measure of the change in valuation at each stage.  I also suggested that she showed the number of founders at each round as it appears that most Active Equity Companies have three or more founderswhich is very different from Passive Equity Companies which have fewer than three founders.

Of course the sample reflects the types of team which will approach a relatively small player in theUK funding and not the entrepreneurs who will chose other routes such as a trade investment, angels or VCs.

Would a study across the funding groups show that entrepreneurs who take a specific route – customer funding to VC – be significantly more successful than companies following the IQ Capital Partners route or taking investment from Cambridge Enterprise?  Or should we stop studying and get on with building business?

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30 years of IVF from Cambridge to the world and back to Cambridge via Cornwall

Image via Wikipedia30 years ago and at least nine months, I was working in the Cambridge office of 3i.  Stepoe and Edwards approached us for funding of the first IVF (in-vitro fertilisation) clinic, Bourne Hall.  After much debate about the morality and risks, 3i advanced a loan, no equity, to allow them to continue their work.  I think that the person in charge of the deal was Paul Gilmartin but I have lost touch with him.  So Cambridge was the place where the first IVF child was conceived – another “change the world” idea.

IVF is now a global “business“and a small Cornish company, Research Instruments, is a global supplier of the micromanipulation equipment used in IVF.  Managing Director, Bill Brown, led a management buyout of the business in 2000 when the founders wanted to retire.  Staff numbers have increased from 10 to 36 with more to start soon.  It would be interesting to have the Equity Fingerprint, the business plan resource, of the company.

But back in Cambridge we have Cambridge Temperature Concepts (disclosure: I am an investor) developing their product Duofertility.   This product will be the step before IVF to see if “timing” can help the 1 in 7 couples having difficult with having a child.  Let us hope for the families and the investors that Douofertility also reaches a global market.

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Xensource goes missing with $500million!

View over Trinity College, Gonville and Caius, Trinity Hall and Clare College towards King’s College Chapel, seen from St John’s College chapel. On the left, just in front of Kings College chapel, is the University Senate HouseImage via WikipediaOn 22 October 2007 Centrix announced the $500million acquisition of Xensource for $500million payable in a mixture of cash and Citrix stock. Xen appears to have started in the University of Cambridge Computer Laboratories where one of the founders, Ian Pratt, works. Ian Pratt is named as the founder of Xensource in this bio of Simon Crosby and it states that “Simon was a tenured faculty member at the University of Cambridge, UK, where he led research on network performance and control, and multimedia operating systems”. The press release 15 august 2007 states “for approximately $500 million in a combination of cash and stock, which includes the assumption of approximately $107 million in unvested stock options.”.

Tech Confidential spills some of the beans ” You don’t hear as much about Kleiner Perkins Caufield & Byers and Sevin Rosen as you used to. Kleiner Perkins is busy investing in anything but consumer Internet companies while Sevin Rosen decided against raising another fund last year. But, they are still cashing checks. The pair invested $6 million in a first round investment in January 2005 into XenSource, an open source virtualization startup that agreed to be purchased by Citrix Systems for $500 million.That’s a big hit for the duo. Other beneficiaries include Accel Partners, Ignition Partners and New Enterprise Associates“.

Silicon Beats mentioned the investment round and commented “Silicon Valley’s best-known venture firm, Kleiner Perkins Caufield & Byers, has teamed up with Sevin Rosen Funds to invest $6 million in XenSource, of Palo Alto.

XenSource offers a so-called open source virtualization technology, which we’ll leave for open source fans to comment on. But as XenSource’s folks put it, virtualization “allows enterprises to realize significant savings from server consolidation running multiple operating systems and mission critical applications on a single server.”

Kleiner’s Kevin Compton and Sevin Rosen’s Nick Sturiale will join the board. Founders include the leader of the Xen project, Ian Pratt of the University of Cambridge, Nick Gault, an enterprise software veteran and formerly founder of Network Physics, and Open Source veteran and openMosix leader Moshe Bar. Pratt and his co-founders at the University of Cambridge will continue todevelop the technology and manage the Xen Open Source community project, the company said.”

Now that is a lot of wonga. Where did it all go? How much stayed in Cambridge? Was Cambridge Enterprise involved? It would have ranked as one of their top investments. If not, why not? Why was such a good deal funded outside of the Cambridge Cluster? Did any of the Cambridge Angels or the other groups invest? There is no trace of Xensource on the Cambridge Evening News website. It would make a great Equity Fingerprint and case study but I guess it was registered in Delaware and so all the details are not available. Hopefully the Cambridge Cluster has a couple or ten of new angels to keep turning the wheels. Just think what the Cambridge Cluster could have done with $500million……

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Modest Twist runs with Velocix

The Mathematical Bridge over the river Cam (at Queens’ College)Image via WikipediaAdam Twist bills himself as astute businessman and product innovator” on the Velocix site – sounds as if he should be on The Apprentice. In the 90s, he started Zeus Technology from his University of Cambridge college room and built it to over 200 people before missing out on the top of the dot com market whilst hanging in, I guess, for the big time.

His latest ideas use P2P technology in the same way as Skype to get large video files humming round the net. 3i is an investor so hopefully Continue Reading »