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


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.


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.


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.

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.



Richard Turner will be taking part in ALPHA TECH FEST 2012                                                                                                                           

LONDON, 16th March 2012

The Annual Festival for tech ventures looking for funding & growth

The Alpha Tech Fest brings together venture capitalists, angel investors and ground-breaking tech ventures every year to discuss funding options and to build their network in an informal setting.

This year, the fest has the opportunity to host leading VCs; seed, early & mid-stage investors and venture directors who have actively been investing over the last year.


More and more VCs and investors are following a model of progressing discussions with ventures whom they have met and had an opportunity to learn more about. Having a business plan submitted by email hardly has the same impact as a face-to-face interaction.

At Alpha Tech Fest 2012, all participating ventures have their own allotted interaction space, so investors & visitors can look them up for an initial chat. VCs and angels will also be taking the time to have focussed interactions with each participating venture through scheduled investor tours.

These initial meetings could form the basis of follow-up conversations and meetings – attend ATF2012 to draw attention to your ambitious ventures and network with the best in the field.


Once you are registered to participate in ATF2012, the organising team will be in touch to discuss on-day logistics and scheduling for the investor tours – both for tech ventures and investors.

Read more at: http://alphaversion.co.uk/atf-2012.html






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.

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/ 


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


  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



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


Richard TurnerAs business enterprises have grown in size and complexity, it is not uncommon to find them owning and/or controlling one or more subsidiary corporations. These subsidiary corporations may be for-profit subsidiaries, or in some cases even nonprofit subsidiaries. In either case, the relationship between a parent company and a subsidiary may create some unique problems for the parent company.

Why A Subsidiary?

There are many reasons why a business enterprise may establish a subsidiary corporation. These reasons often include, for example:

(1) the parent company desires to engage in a new line of business activity unrelated to its current business;

(2) the existing or projected revenues from the new line of business activity are substantial;

(3) the business enterprise prefers not to expose its assets to the liabilities associated with the new business line; or

(4) the new business activities may carry risks of liability unacceptable to the parent;

(5) the parent is a public corporation and it desires to keep the subsidiary privately held;

(6) the parent wants to posture the subsidiary for going public without affecting the parent’s shareholders; or

(7) that the organization desires to reward certain employees with increasing compensation, etc.

The Parent/Subsidiary Relationship

It is common to use the term “parent/subsidiary” when describing the relationship between a business enterprise and its subsidiary. But, a caveat is in order here. The term “parent/subsidiary” is not equivalent to the term “parent/child”. This is an important point.

While the parent business enterprise may incorporate its subsidiary corporation, name its board of directors and officers, enunciate the subsidiary’s business purpose, adopt bylaw provisions preserving the parent’s control of its subsidiary, etc., it is important that the subsidiary be established and recognized by the parent, as well as third parties, as an independent corporation managed by a board of directors.

Subsidiary Independence: A Stumbling Block?

The matter of subsidiary independence is oftentimes a stumbling block to the parent business enterprise which may view an independent subsidiary as an uncontrolled subsidiary. But recognizing a subsidiary as an “independent” corporation is not the equivalent of regarding the subsidiary as “uncontrolled.” At all times, provided that appropriate bylaw provisions are adopted and maintained, the parent has the legal authority to hold the subsidiary accountable to meet “bottom line” financial objectives, to pursue acceptable policy mandates, to fulfill its goals and to otherwise conduct its affairs in a manner pleasing to the parent.

How Does The Parent Control An Independent Subsidiary?

Upon reaching a decision to organize or acquire a subsidiary corporation, the business enterprise parent controls its subsidiary by being its sole stockholder. By holding, i.e., owning all of the subsidiary’s voting stock, the parent has the power to elect and remove the entire board of directors.

To maintain control of a subsidiary and at the same time allow the subsidiary to operate as an independent entity under the direction of its board of directors, a parent business enterprise should:

(1) be the sole shareholder;

(2) include voting control provisions in the subsidiary’s articles of incorporation along with provisions that prohibit amendment of the articles without the approval of the sole shareholder;

(3) prepare comprehensive bylaws defining the designation and authority of officers, their term of office, their removal (for cause, or for any or no reason);

(4) include in the bylaws the procedure whereby the parent elects and removes directors; and

(5) prohibit bylaw amendments without the sole shareholder’s approval, etc.
The board of directors of the subsidiary are responsible to manage the business and affairs of the subsidiary. The board selects officers and the officers are responsible to execute the policies of the board. The officers of the subsidiary do not “report” to the officers or board of the parent nor are they responsible to the officers or board of the parent corporation. This does not mean, however, that there is no communication between the subsidiary’s CEO and the parent. After all, the parent owns the subsidiary and by virtue of its ownership or control is entitled to examine the subsidiary’s financial reports and business plan, and to otherwise hold the subsidiary and its management accountable for the performance expectations of the parent.

What Legal Risks Are Likely In The Parent/Subsidiary Relationship?

A parent corporation may hold its subsidiary accountable for the expectations of its board of directors. And, this is the purpose of the parent’s control of its subsidiary: to hold it accountable for performance. As long as the parent permits the subsidiary to act independently under the direction of its board, there is little risk to the parent of being found liable for the negligence or wrong-doing of the subsidiary. After all, the parent in a parent/subsidiary relationship is merely a stockholder, and the law is clear that a stockholder is not liable for the actions, debts, or obligations of the corporation.However, if the parent exercises excessive control over the subsidiary by, e.g., commingling funds, interchanging employees, having its board serve as the board of the subsidiary, sharing office facilities, using a common letterhead, and otherwise blurring the distinctions between the parent and the subsidiary as separate independent corporations, then each corporation is at risk for the unfunded liabilities of the other under the legal doctrine of “alter ego.”

Under this doctrine, a litigant may “pierce the corporate veil” of the subsidiary corporation and reach the assets of the parent corporation under the theory that the two corporations, for legal liability purposes, are not two independent corporations, but are but one corporation in fact. In this way, the litigant may seek payment of an unfunded liability of one corporation from another corporation. It must be noted, however, that a litigant pursuing an alter ego theory of liability has an uphill fight. Courts are not likely to permit a litigant to “pierce the corporate veil” of a corporation and reach the assets of its parent shareholder, unless it is abundantly clear that the two corporations were indistinguishable as separate corporate entities and are operating as one corporation.

How Should The Parent/Subsidiary Relationship Be Managed?

The parent corporation, by virtue of its voting control of the subsidiary, has the power to hold the subsidiary accountable for its performance. Since the parent retains voting control, it has the authority to select the subsidiary’s directors. This is a most important aspect of the parent’s control of its subsidiary. By selecting qualified, and to some extent indoctrinated, directors, the parent puts into place the subsidiary’s board of directors. This board manages the business and affairs of the subsidiary, makes policy, selects its officers, provides oversight of the subsidiary’s activities, and functions as the subsidiary’s governing body.
The parent’s selection of the subsidiary’s directors is a critical exercise of authority. A wrong-headed decision here risks mismanagement of the subsidiary.

Thus, not only should the subsidiary’s directors be selected with care, they should be “schooled” in a formal board training program which teaches individuals what they should know about being a director of a corporation. Not everyone is suited for being a director of a corporation. Today, a business corporation can often present challenges which tax the ability of the most gifted board members. While it would be a stretch to impute liability to a parent corporation for its “negligent” selection of subsidiary directors, nevertheless prudent selections should be made, and individuals selected as directors should undertake a board training experience to prepare them to meet the challenges of the corporation they serve. A procedure for schooling directors is a matter best defined by appropriate provisions in the subsidiary’s bylaws.




Richard will be giving a paper on ‘Routes to Funding’ next Friday. Alpha Version’s annual event for tech ventures in the software, digital media, consumer applications and Web 2.0 space.

The event offers the opportunity to meet some of the most active investors in UK, hear their thoughts on the investments they are looking for and discuss your plans with them over lunch. Other participants include:

Oscar Jazdowski: Head of origination, Silicon Valley Bank UK

Kevin Douglas, Partner, Antrak Capital

Dan Somers: Partner, Boundary Capital

Tickets are available from the Alphatech website.

Date: Friday 14th October

12 Henrietta Street
Covent Garden
WC2E 8LH London

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