15
Oct

I was at a big trade show last week called NextGen. This is the show for existing and future technologies in the alternative energy arena – everything from hi tec wood burning stoves to waste to energy plants. It attracts companies from all over Europe and was very busy with over 500 exhibitors and a wide range of lectures from the technical to policy. All good stuff and I thought I would find some interesting UK companies to whom we could deploy our bond funds. Well there were a few but compared with the German and Austrian exhibitors they felt small, inexperienced and amateurish.

Why is this I wonder? Is this the consequence of years of neglect of this sector by policy makers or just an accident of history? In Europe this sector has been thriving for the last 20 years. Well as an ex policy wonk my impression was that 20 years ago the alternative energy market was seen as small, hokey and irrelevant. We had oil and gas and what was the point of bothering with alternatives! Now we are scrambling to catch-up. History may now be repeating it self with the Cameron administration – political expediency substituting for long term energy policy . The energy sector has always been seen as” difficult” for governments. Investment decisions have very long lead times so short term costs incurred in one Parliament lead to long term gains that might not show up for two or three Parliaments. So a standard response has been to kick difficult decisions into the long grass and wait for a crises which can then be blamed on previous Governments. Perhaps energy policy is too important for Governments and should be set by an independent body with representatives from all parties – a variation on the Office for Budget responsibility.

By Richard Turner

26
Sep

We have been pondering the current debate on open technology and the relaxing of the rules regarding intellectual property protection. It throws up some issues that appear to present a Catch 22 type problem. The argument is that current IP protection i.e. patents stifles innovation and encourages monopoly power. The issue was thrown into stark relief by the recent Samsung Apple court battle. Apple was awarded initially $1.2 billion for infringements and Apple is now seeking a further $707 million.  Apple is seeking a permanent ban on 26 Samsung smartphones and tablets. Samsung has responded by seeking a new trial. As a report by Reuters has stated, Samsung said in its filing to the U.S. court; “It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies.”

On one level it is clearly absurd that Apple should be able to act as a road block further developments of existing technology and be able to patent a simple shape. On the other hand as investors we are seeking IP as a form of competitive advantage.  There can be a clear conflict between IP protection and the wider good. As ever the answer lies in a more sensible application of the law. The key question is:  when is it a matter of standing on the shoulders of innovation and when is it theft? We all use and incorporate  previous technology – if we didn’t then we would still be living in caves.  That is not the same as stealing ideas and directly exploiting them without adding innovation.

By Richard Turner

19
Apr

Richard TurnerThe past month has indicate that a feeding frenzy may be about to begin. Facebook (founded 2004) bought Instagram (2009) for $1 billion. Earlier, Zynga (2007) acquired OMGPop(2006) for $200 million . The feeding frenzy is a result of collective paranoia and greed. Facebook and Zynga recognise that just as they came from no where to being giants of the web so other companies can achieve the same. The strategy appears to be as soon as another company raises its head above the parapet and gain some traction acquire it. The fear stems from a strong belief that unless you are on the curve you will lose the edge and the head space of the target audience who value the new and the different ahead of the traditional values of brand, reliability etc. Innovation is all and Facebook and Zynga know that large companies are always behind the curve. There is a view that Facebook is old school , Zynga not yet but both have the same challenge of remaining on the edge.

20
Mar

Richard TurnerThere is much discussion at the moment about the Banks not willing to lend to SME’s. Government has proposed to help SME’s by subsidising loans to the tune of £20 billion. This will reduce the interest rate on loans made by participating banks by 1%. Is this likely to stimulate the SME economy?

The answer I am afraid is not by much. Our worms eye view at Catalyst is that the problem is not the cost of debt but the absence of debt. There is in effect a binary problem. If your project leaps the banks hurdles then you get the finance if it fails then you don’t. The problem is the that the bar has got higher and higher – what was sensible and fundable in 2005 now fails absolutely – not because the outcomes are different but because of a climate of fear .

I am not arguing for a return to the wild and woolly days merely that the cost of debt needs to reflect the risk of the project. Banks used to pride themselves that they understood risk  and could price it.  There even used to be what was called mezzanine debt which ranked below senior debt but above equity.

This finance would have interest rates of 15% with an equity kicker. Risk is not binary – often projects do not fail in an absolute sense: the investors may have to wait for a long time to get their money back; debt may have to be rescheduled. Debt providers need to re-learn how to price risk and be more creative with financial instruments.

8
Mar

Richard TurnerThere has been much discussion on the News and in the Press on how to fuel growth in the UK. Most commentators agree that SME’s will be a major source of future growth . So  it seems reasonable to ask what is holding back SME’s from growing and diversifying?

Our experience at Catalyst suggests that while many factors affect SME growth and company foundation the major source of constraint is finance. This is both cash flow finance and investment finance.  Until this constraint is tackled then removing regulation, providing tax incentives, and creating enterprise zones is merely papering over the cracks.

We at Catalyst have launched two “credit crunch” products: the first through our partner company – Catalyst IFG helps ease companies cash flow constraints. The second our Bond aims to provide investment funding on reasonable terms.

6
Mar
Richard TurnerAt Catalyst we receive many proposals a week from entrepreneurial companies in various stages of growth. Sometimes it’s obvious that the company is on the fast track to raising finance but in most cases there are obvious – and often simple – ways to improve a proposition. Here are my top 10 tips for fundraising;

1. Understand where you are in your company development i.e. are you at the seed stage (pre-revenue),  Start-up (initial revenues), early stage (below £1m annual revenues), growth stage (£1m plus annual revenues).

2. Have a scaleable business model with demonstrable economies of scale and scope

3. Have ambition to achieve revenues of £10+ in five years

4. Get the right management team. You need to have a management team with the right experience and track record.

5. Research your market make sure you understand how it works from the bottom up – who are your competitors, how big is the market, what is its growth rate and key drivers.

6. Write a realistic business plan using bottom up estimates of growth and a detailed analysis of to whom you are going to sell and why they are going to buy.

7. Have a detailed understanding of the routes to market and tactically how you are going to sell through them’.

8. Get all members of the management team on side and signed up to the plan.

9. Match your fund raising focus to sources suitable for your stage: Seed stage – friends and family; Start-up – Angels and early stage funds; early stage – venture capital; Growth stage – Venture Capital, VCT’s , Bond Finance etc

10. Build a board of industry heavy weights who have invested in your company.

If you would like to discuss a proposal or indeed get more information on any of the points raised above please get in touch for a chat. We are always happy to hear from successful companies who have an interest in raising finance for growth.

 

22
Feb

Jeremy LawrenceCatalyst IFG started offering single invoice factoring 2010. This kind of finance benefits all kinds of business but especially those with lumpy or unpredictable cash flow. It’s a really useful tool for supporting cash flow – exceptionally quick to arrange and unlike normal factoring or discounting requires no long term commitment.

When we started promoting this funding option it was an almost instant success. The finance community – including banks and other factoring companies – were very supportive. This is something completely different to what they offer and is no threat to their business. Basically we fill a need which has historically been ignored.

In its first year Catalyst IFG factored close on £1m of invoices and provided almost £750k of vital working capital finance. Since the start of 2012, the rate of growth has accelerated sharply.

Awareness of this option is growing and business owners and managers are increasingly scared of the traditional funding options. Apart from the fear that requests for credit will be turned down anyway (computer-says-no syndrome!) the amount of time and bureaucracy needed to reach that conclusion is a real problem. And there are too many horror stories of facilities being withdrawn for no obvious reason and with little or no notice.

At Catalyst we do all our own underwriting so a decision can always be made on the spot. As a result we can complete deals incredibly quickly. I have done two deals already this year which have gone from first phone call to money-in-the-bank in less than 24 hours. It is unusual for a transaction to take more than a week to complete.

Single invoice factoring has been a lifesaver for many of Catalyst IFG’s clients.

One of our clients is a £2m business in the construction sector with a good trading history but no bank facilities. We took this client on last August and since then the business has almost doubled in size. The owner has been able to accept contracts which he would previously have turned down for lack of working capital. When I visited the owner in January he was extremely grateful for our support – “to be honest, Jeremy” he said to me “if it hadn’t been for you, our business would have been toast last year!”

Instead they are looking at a record year in 2012 and improved profitability.

Catalyst IFG has clients in a wide variety of sectors – construction, recruitment, transport, public service, IT to name but a few.

I feel really proud that we have been able to help so many businesses to survive and prosper. At the moment there are very few options out there and the traditional funding sources are routinely letting people down. In many cases, businesses feel abandoned so it is a real privilege to be able to help turn things around.

To discuss how Catalyst IFG might be able to meet your working capital needs please contact me: Jeremy Lawrence on 0845 528 0788.

7
Feb

 

The objective of pipeline analysis is to permit effective sales monitoring and project cash flow and profitability of the business. Once the sales team develop a feel for the analysis then it is possible to establish future sales and hence cash slow with a considerable degree of certainty. A pipeline analysis is a working document which should be revised weekly. Devising a pipeline analysis has three elements:

  • Defining key stages. Key stages are very market dependent and definitions need to carefully judged. Once defined they must be strictly adhered to.
  • Assessing timing. As with key stages this depends upon an in depth knowledge of the target market and individual customers.
  • Preparing a projection. This is a mechanical exercise that can easily be prepared on a spread sheet.

 

Key Stages

A target client moves from 1-10 in the sales process.

Probability
1. General Interest This is an expression of interest resulting from press/ pr, contacts etc. This has a probability of 0% but is defined as a suspect to be followed up by the sales team. The suspects’ details should be captured in a suspect list and included in any on going marketing communications campaigns 0%
2. Establish Need After a meeting or a telephone conversation in which the customer requirements are identified. It is essential at this stage to identify the person in the organisation who has the authority to make the decision to place an order 10%
3. Money Allocated Client has identified funding within his budget or obtained budget approval 20%
4. Request for Quote Target asks for a quote 30%
5. Competitive Bid Judge according to knowledge of competitors but normally give probability according to number of serious tenders according to number of serious tenders
6. Non Competitive Bid 50%
7. Entered negotiation 60%
8. Offer accepted 70%
9. Contract Accepted 90%
10. Contract signed 100%

Assessing Timing

The average sales cycle for service products is on average 6 months from initial contact. This might be as long as 12 months for larger more expensive projects. Once a target enters the sales cycle each stage must be carefully monitored and timings to completion estimated.

Preparing a Projection

A typical spreadsheet is set out below. As noted above these are working documents and should the bible to the sales team and the basis of all reports to the board.

Sales and Pipeline Analysis

Notes Target Client Value Stage/ 

Probability

Jan Feb Mar Apr
1 Big Co 150,000 10/100% 150,000
2 American Co 100,000 3/30% 33,000
3 Small Co 25,000 7/70% 17,500
4 Medium Co 50,000 2/10% 5,000
5 Total 150,000 17,500 33,800

Notes

  1. Big Co might require significant additional services later in the year. JT is meeting with AH to discuss next month after installation.
  2. JT has good relationship with MD.
  3. etc

Download this article or have a look at our resources section for other articles and White Papers

Richard J Turner

Catalyst Venture Partners

 

19
Jan

New roles from Catalyst Talent

Posted by RB   Categories: Blog   135 Comments »

Catalyst Talent is a search company that specialises in matching entrepreneurial leaders to exciting business opportunities. Catalyst Talent is a spin out from Catalyst Venture Partners and has been created to provide the type of individuals needed to lead fast growth companies. The latest roles available are listed below. Please contact Ian McAnearney on 0207 1831069 to find out more about the roles or visit Catalyst Talent to download the job descriptions.

EVP Operations – London based

The EVP – Operations will be a key member of the executive team, and will participate in the Management Board, as well as the Leadership Team. The EVP – Operations will have responsibility for profit and loss for the regions and will be responsible for c 4 direct senior Regional Director reports. The key focus of the role will be on developing the commercial/corporate leadership capability within the regions, improving profitability of the Region and Global P & L, the introduction of a stronger more cohesive global delivery model, improved organisation of resources through the introduction of global competency centres and networks, capitalisation of the knowledge and capability to give us the leading edge in the market in terms of profit performance, quality, delivery and customer satisfaction. Read more >

EVP Operations in Renewables – Bristol

The EVP – Operations must be a proven leader who can set a direction, for and with a senior team.   Acting as a strong number 2 within the business, the candidate must demonstrate a strong personality and gravitas, and will naturally gain the buy in and support of the Regional “Heads” and will comfortably educate and direct the team.  Strong operations and commercial focus, balanced with the ability to ensure consistency in processes and standards across the organisation.  Working in a complex environment, the candidate will be set high standards of performance and targets for the team, and primarily focus on delivery of results and growth within the division. Read more >

Head of Client Service Centre

The primary role of the Head of Client Service Centre is to ensure the retention and growth of the existing business; developing a rapport with clients that will continually improve the relationship and present products and services to meet clients’ existing and future needs. It requires working with the sales team and other managers to increase sales opportunities and thereby maximise revenue for the organisation. Read more >


19
Jan

Richard TurnerWe have returned from the Christmas and New Year break enthused and inspired. While we were away we learnt our first big Bond deal (£23.5m)  got the green light from our investment committee, OCM concluded its deal with Samsung, Green Motion is in talks with a major car manufacturer, and OIL have  made great progress with developing a very exciting TV and Web concept. I think we all feel that the New Year is going to be an exciting one and we have a very interesting pipeline of opportunities.

The bond funding is proving to be an attractive proposition and is a good solution to complement the shortfall in an existing deal.  For example one of our proposed deals is structured in the following way; we made an offer of £20m to top slice a  £100m deal to construct a bio refinery. £80m was coming from equity. Equity investment for a project such as this typically carries a price tag of 20%+ IRR. Our funding has an IRR of about 12%. So an ideal substitute for later stage equity.

We are extremely pleased to be able to offer a product that can provide the difference between a project with such potential for growth getting the green light rather than failing through a lack of funding.  We are looking forward to completing this deal and to kicking off others like it.

Onwards and upwards!

Richard Turner

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