an accidental (serial) entrepreneur - paul atherton · entrepreneurs •can you teach people to be...

© Paul Atherton 2011

An Accidental (Serial)

Entrepreneur

Paul Atherton

Nexeon

• Silicon anodes

– for rechargeable Li-ion Batteries

• Doubles the capacity of todays batteries

– Can store 10x the energy of Carbon (graphite)

– Video Pres_for_MiiGB_v3d_wide.ppsx


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Pre-History

• 1974 – PhD student Imperial College – Astronomy group

• 40 people crammed into 10,Princes Gardens

• Building optical and IR instrumentation

– FP and FT interferometers

• Stabilisation system for control of large aperture Fabry-Perot Interferometers

• 1978 – technical problems solved –

• The White Horse and the Road Show - volcanoes

Observing at the White Horse Inn – Bodle Street Green 1975

Early Days

• Academic success

• demand from other research groups

• 1977-1979 Saturday mornings

• Forming a company - £350

• SERC (now EPSRC and PPARC ) and IP

• NRDC – recirculating loan

• First products 1979 – 81

Growing up and Moving out

• 1979-1985 – IC as incubator

– 1 square meter, overtime, facilities

• Space Shuttle package

• Taking it seriously - Taking a risk

• Leaving academia

– US tenure….

• 1985-87 – 1400 sq ft in Sunbury

– The print works……

Early Lessons

• Pricing

• Exporting – Brazil, India, China

• Building an organisation – who does what

• Learning to make things properly

• Understanding the numbers – accountants

– Yoghurt pots and deferred taxation

Getting Educated in Business

• 1987 – 89 London Business School MBA

• 3 years – part time

– Small businessman

• Finance and accounts demystified

• BUT – nothing on VAT, employment law

or how to get a loan from your Bank

Manager.

Transforming Futures

• Economics, marketing, social sciences

– A revelation

• How organisations worked, what motivates and

drives people.

• Negotiating skills, Interpersonal skills

– Hugely valuable skill sets.

• Small Business Management

– 10 ways to lose money – Michael Hay


Kissing Frogs :

the search for growth

• 1985 – need for new products

– Customers – Universities, space agencies

• Technology audit –nanometer precision positioning capability – but who needs it ?

• No market research available

• Building prototypes

• Test equipment for Data storage and Semiconductor industry.

Culture

• Hi-tech – complex – long learning period

• Trust and long term relationships

• 1988 – Double Queens Awards

– Champagne and cream cakes

– Importance of celebration

– Developing a culture

• – work hard - play hard……….

Telecoms

• 1982 – miniature tuneable optical filter to Post Office Labs

• 1987 – fiber coupled devices – research application

• 1987 David Payne invents Optical Fiber Amplifiers

• 1992 – fiber sensing, optical amplifiers etc etc – every one different specs

• 1995 – Telecoms companies buying 10 off

• 1997/8 – discussing large volumes

– Network monitoring – the Killer Application

From a Frog to a Prince

• July 1998 – signed a 45 million dollar

supply contract with Lucent

• 2nd round financing £ 2M on valuation of

£50M

• new facility – 45000 sq ft, clean rooms,

• Headcount rises from 60 to 180

Reality

• Ramping up

• Delays Jan 99 – July 99

– What are the specs

– What do they really mean

• Distress July 99…..

– Lucent’s own problems

• Covenants, and bank overdrafts

– The credit committee

– Investment Banks

The End Game

• Refinancing – appointed Investment Bank

• The offer we refused

– Board meetings and Decision trees

• The search for a strategic partner

• The Auction

• The offer we could not refuse

The Deal – March-June 2000

• SDL

– 80 million dollars in cash and stock plus three year earn-out worth $150M

• The Nasdaq

• Tradeable stock - S3 registration

• Resignation – 1 year notice May 10th

• June 2000 – buying out the earn-out

– Transaction value > $200 M

• July 2000 JDS Uniphase acquires SDL and enters S&P500


A Serial Entrepreneur

• Active Investor - focus on University spin-outs

– Infinitesima – high speed AFM for semicon inspection

– C2V-microGC for environmental monitoring

– Nexeon – next generation Li-ion batteries

– Midaz – high power UV lasers

• Seed Capital Funds

– SPV (London Business School) • Previously SULIS UCF

• Imperial Innovations (Non Exec Director since 2005)

– Raised >£140M from AIM float in January 2011

– Investing in spin outs from Imperial, Cambridge, UCL and Oxford

My Investment Model

• Hi-tech start up companies

• University spin outs – World class institutions and academics

• Executive Chairman

• Significant Investment – Time 2-4 days per month

– Funding

• Invest Pre Business Plan !!!! • Industry contacts and Market knowledge

– Form team, mentor and guide the company

C2V • Management buy out from Alcatel-Kymata 2001

– Collapse of telecoms – refocussed on Micro systems

capability

– Micro gas chromatography for gas sensing

• Natural gas – analysing energy content

• Sold to Thermo Fisher in November 2009

• .

Midaz Lasers

• High power compact UV lasers

for marking applications

• Tunable UV Alexandrite lasers

for space applications

• Laser Power amplifiers

• Sold to Coherent July 2012


Infinitesima

– High speed AFM for

defect inspection – 13nm

node and EUV

– Replaces SEM 3D, non

vacuum

– All major semicon Mfrs

evaluating


Nexeon High capacity Silicon Anodes for Li-ion Batteries

• 2004 Mino Green

• 2005 Rob Neat

– The holy grail

• May 2005

– Nexeon founded


Nexeon Key Milestones

• Funding – Seed round £0.5m April 2006

– Series A £4.25m July 2007

– Series B £10m February 2009

– Series C £40m July 2011

– Total £55m ($85m)

– £430k (~$700k) grant from UK TSB for

advanced automotive prototype battery

demonstration

• Proof of concept • Technology demonstration • Pilot plant • Acquisition of prototype

cell making equipment • Relocation • Organisation • 250Te/yr Scale-up

Nexeon Key Milestones

Nexeon

– Scaling up material

manufacture

– Joint Development

Agreements with several

large Automotive and

Consumer Electronics

companies.

– Strategic Partners for

Manufacturing


Nexeon Recognition

Clean Energy Award

Powered Transport Award

8 Feb 2010

Clean Energy Award

Powered Transport Award

3 Feb 2012

2010 2011 2012

‘Ones to watch and most promising

companies in Cleantech’

29 Oct 2010

Excellence in technology

29 Nov 2010 Green Technology

category winners

13 Jun 2011

‘Best Design Team’ finalist

14 Oct 2011

Top cleantech company

to watch

11 Nov 2011

Best Technological

Breakthrough

12 Mar 2012

Cleantech 100 listing

13 Oct 2010

Top 20 fastest growing

Clean & Cool companies in

the UK

Clean & Cool Mission

3 Feb 2010

Some Lessons


Life as an Entrepreneur

• Stimulating, absorbing, challenging, rewarding

• Taking risks

• Leadership and Vision

• Being tough

• Staring over the precipice – every day

• Arrogance

• Finding time to smell the roses

Entrepreneurs

• Can you teach people to be Entrepreneurs?

– Maybe some skills

– But integrity, trustworthiness, a can-do attitude, coping with uncertainty, persuasiveness, ability to delegate…..are difficult things to teach.

• What kind of people are they ?

– Not about taking risks

• Mountaineers

Emotional Intelligence

• Why is it that the CEO is not the ‘smartest’

guy in the firm ?

• Different kinds of intelligence

• IQ score accounts for only 11% of variance

in achievement.

• Being successful in life is about a lot more

than academic skills

Innovation

• All innovation is disruptive – New rules – new games

– Change the rules – change the game in unexpected ways

• Not necessarily for the better…(coffee, 3G)

• But - Markets that do not exist cannot be analysed – New markets – no maps

• Markets and applications are often unknown and unknowable - particularly by analysts

Economic History

• Technology takes a long time to commercialise

– printing press, steam, car, computer, laser

• Needs other subsidiary inventions

– Inks, metallurgy, scripts, paper, presses

– Tyres, roads, fuels, electronics

• Generates new demands

– Railways and telegraphy

• Incremental and slow process – But getting faster

• Technology changes the rules

– Displaces incumbents, breaks monopolies

Success often comes from

unexpected directions • Very often the application of a technology is a

long way from the original idea

• Phonograph – Edison 1877

• Intel – DRAM memory.

– From a Japanese calculator chip to the IBM PC.

• He-Ne laser – bar code scanners

• Commercialisation is essentially an adaptive process

• ‘you have to kiss a lot of frogs to find a prince’

• Technology is a basket of options on the future

The ‘Best’ does NOT always win

• Qwerty keyboard

– 1873 – anti-engineering – jamming keys

– 1882 – Ms Longley, Frank McGurrin

• VHS vs Betamax

– Tape length vs Quality

• Usage for taping movies rather than camcorder

• other factors for success–

– Lifestyles, branding, fashion, environment, distribution,

social value, prestige,

First Mover Advantages

• Rarely Exist for start-ups

• Pioneers

– End up face down in the dirt with arrows in their back

• Distribution channels are the hardest part of

building a business

• Second Movers appear once you have established

a significant market

– Fast second....


Ideas are cheap……

• Inert

• Numerous

• Cheap

• Go mostly unexploited

• An Idea is NOT an Opportunity

• The problem of the ‘Inventor’ :

– Implementation is the difficult part

– Genius is 1% inspiration 99% perspiration

• Execution : – Team, Resources, Talent and skill, Experience


The Problem with the Business Plan

• The world keeps changing

– tsunamis, terrorism, climate change, energy

shortages, governments

• The need for complementary assets

– The things you did not know you needed

• Unexpected problems

• And Unexpected opportunities

– If you have the wit to recognise them............


What you call the technology does not

matter – the issues are always the same

• People – experienced management team

• Good Product and strong IP

• Good Customers – who where etc

• Market size and growth

• Scale up issues

• You still have to kiss a lot of frogs….

– And drown some puppies…..


Management!!!

• Experience leads to fewer mistakes – Most start ups fail because of avoidable

mistakes.

– Fail cheaply – if you can - knowing when to stop.

• Good managers can tell which frogs are worth kissing…..and which puppies need to be drowned

Don’t Forget That….

• The world is changing rapidly

• Being best is insufficient

– and being first might be a disadvantage!

• Hiring good people is hard

• Making things is really really hard!

• Selling is hard

• Kissing frogs can be quite unpleasant

• You may not recognise a Prince even when you find one

• You don't appreciate how much you don't understand

• The longest journey begins with just a small step…….


Thank You


an accidental (serial) entrepreneur - paul atherton · entrepreneurs •can you teach people to be...

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