venice smes seeking finance2
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When seeking finance for an IP based SME beauty is in the eye of the beholder. For European Patent OfficeTRANSCRIPT
tranžigerinternational corporate and transaction advisor
life sciences and healthcare
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Problems faced by SMEs when seeking finance
lessons to learn
Iain C Shirlaw, Tranziger, Director Equity Financing
Venice, November 2008
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Tangible and Intangible Book Value
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IV as % of Market Capitalisation, 2005
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IV as % of Market Capitalisation, 1975
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“Beauty is in the Eye of the beholder” Greece, 3rd Century BC
The Inventor of IPThe FinancierThe Manager
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The Inventor
Typically a public sector employee
Expert (Knows a lot about a specialised niche)
Funding is usually a grant Idea is worth billions
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The Financier
Typically an accountant Non Expert (Knows a little
about many things) Funding is based on a
specific target return Idea is worth nothing unless
it has EBITDA
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The Manager
Typically used to work for a large company
Has been a functional specialist
Funding is something to pay his salary
Idea will make millions for somebody!
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The Industry
Has shareholders to satisfy Has a traditional
perspective Investors don’t want risk Need Proof the idea is
worth anything!
And have a lot of cash!!!!
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The Business Model
1. Invest 20x$25m in R&D to get 20 candidates ($25m each)
2. Invest $20m in pre-clinicals – Lose $10m3. Invest $25m in Phase 1 – Lose $12.5m4. Invest $25m in Phase 11 – Lose $16m5. Invest $50m in Phase 111/1V – Lose $25m6. Invest $50m in FDA and market Approval – Lose
$25m 7. Win!!!! Generate $120m per year for 10 years
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Bridging The 7 Stages of SME Growth
40
5
Proofs:Technical Concept
Product Definition
Market acceptability
Client Orders
Business Capability
Company Growth
Corporate Expansion
1 2 3 4 5 6 7
VA
LU
E B
EN
CH
MA
RK
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The Lesson to be learned
Aim for value at each stage Learn and Build your capability Know your buyer - Pharma? Be ready for change!
Iain C Shirlaw, Venice November 2008
Get your timing right!!
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Seven Ages of Man
Infant ChildAdolescent
Young Adult
Adult
Old Age
Senility
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As You Like it Act 2, Sc 7 Shakespeare
"All the world's a stage, and all the men and women merely players;They have their exits and their entrances;and one man in his time plays many parts,His acts being seven ages.
At first the infant, mewling and puking in the nurse's arms;And then the whining school-boy, with his satchel And shining morning face, creeping like snail unwillingly to school.
And then the lover, Sighing like furnace, with a woeful balladMade to his mistress' eyebrow.
Then a soldier, full of strange oaths, and bearded like the pard, jealous in honour, sudden and quick in quarrel, seeking the bubble reputation even in the cannon's mouth.
And then the justice, in fair round belly with good capon lin'd, with eyes severe and beard of formal cut, full of wise saws and modern instances; and so he plays his part.
The sixth age shifts into the lean and slipper'd pantaloon, with spectacles on nose and pouch on side; His youthful hose, well sav'd, a world too wide for his shrunk shank; and his big manly voice, turning again toward childish treble, pipes and whistles in his sound.
Last scene of all, that ends this strange eventful history, is second childishness and mere oblivion;Sans teeth, sans eyes, sans taste, sans everything." )
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Iain Shirlaw
Contact details:
tranžigerinternational corporate and transaction advisor
life sciences and healthcare