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Are VCs still interested? Christoph Ruedig Investment Director, Albion Ventures SEHTA AGM and Annual Conference 20 June 2013 1 King’s Arms Yard, London, EC2R 7AF T +44 20 7601 1850 www.albion-ventures.co.uk Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com)

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Are VCs still interested?Christoph RuedigInvestment Director, Albion Ventures

SEHTA AGM and Annual Conference20 June 2013

1 King’s Arms Yard, London, EC2R 7AFT +44 20 7601 1850

www.albion-ventures.co.uk

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Topics

Yes

2

But:,

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Topics

Intro to Albion Ventures

State of the VC industry

Working with VCs

3

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Introduction to Albion Ventures One of the largest Venture Capital Trust (VCT) managers in UK

7 VCTs AuM £240m 65 companies Portfolio turning over combined £350m, employing 4,000

Experienced team *1996 within Close Brothers ... MBO in ‘09 Managed >150 companies to date 10 investors from finance, strategy, industry & healthcare ... combined ~100 years investing experience

Balanced investment approach Generalist investor with focus on healthcare and renewables Growth capital + mature/asset-backed investments £1m-£10m cheque size

Award winning performance Independent Healthcare Awards Winner 2011 “Investors of the Year” Finalist – HealthInvestor Awards ‘09

4

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Regulatedtechnology

Non-regulatedtechnology

Albion Healthcare Experience

5

IndustryServices

CareServices

Risk & returns

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Topics

Intro to Albion Ventures

State of the VC industry

Working with VCs

6

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The demise of the VC?

“Venture capital has changed forever, and when the shake-out is over it won’t return to the good old days”

“Venture and risk capital have increasingly become less available to deserving start-up and growth companies”

“3i has withdrawn from start-up investing and focusing on later stage deals”

Harvard Business Review:Venture Capital at the Crossroads

Published 1991

7

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EU and UK VC investments continue to be down ...

8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Life sciences Other

Funds Invested - Europe Funds Invested - UK

€bn

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2007 2008 2009 2010 2011 2012

Life sciences Other

€bn

Source: EVCA

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... As does fundraising

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0

10

20

30

40

50

60

70

80

90

2007 2008 2009 2010 2011 2012

VC Other

Funds Raised - Europe Funds Raised - UK

€bn raised

0

5

10

15

20

25

30

35

40

45

50

2007 2008 2009 2010 2011 2012

VC Total

€bn invested

Source: EVCA

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A tale of two continents ...

10Source: Biolauncher

Close to £6bn invested in US medical technology in last 3 years

Just over £1bn invested in EU medical technology over same time

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11

It’s not all bad in Europe

Good companies continue to be financed

New sources of funds replacing LP/GP structure HMRC sponsored ... VCT, EIS, SEIS Government sponsored ... TSB EU sponsored ... FP-7, regional growth funds HNW / Angels

Public markets are strong ... for now

Life Sciences is viewed as a ‘hedge’ against economic downturn

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Topics

Intro to Albion Ventures

State of the VC industry

Working with VCs

12

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What opportunity is being addressed?• Is that still true in the future?• Is the market large enough?• Is the need genuine?

How good is the team?• Strategy?• Operations?

What’s the competitive advantage?• IP?• Relationships?• Reputation?

3. Team

2. Market

1.Competitive Advantage

Get the Basics Right• Market, business model

How VCs assess deals

13

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14

Investment process

CompletionInvestment committee

Detailed due diligence & legal docs

Investment committee

Heads of Termsagreed

Primarily commercial DD

Valuation

Deal Structure

Initial due diligence

Commercial terms of investment

High-level legal terms

First / bounce committee

Ok to incur deal fees

Financial, legal & commercial DD, referencing

Investment contracts

Second / final committee

Ok to invest

Conditions

£££

Average 1 month – 1 year

weeks - months 1-3 months

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Do’s and Don’ts

Do Don’t

Have a sound and reasonable business plan

Be realistic on funding time scale

Consider the use of a professional advisor

Have proper corporate governance in place prior to approaching VCs

Properly research your future backers

Underestimate how disruptive a fundraising process will be to your business

Expect that you’ll be in complete control of your business after the investment

Take the offer that’s best value for money

Trip over your numbers

Be afraid to ask questions

15

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Christoph [email protected]

Albion Ventures1 Kings Arms YardEC2R 7AF020 7601 1850

Thank You

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