David HornerConcept To Market

Julie GillInfego Media

The intent behind the $6m investment Challenge

David Horner Julie Gill

www. concepttomarket.co.nz www. Infego.co.nzPh (09) 921 4000 (09) 375 6034M 021 970 648 021 512 764E davidhorner@ julie@infego.co.nzconcepttomarket.co.nz

John WaughUK Trade and Investment

Grow your global business from the UK

Why the UK?

• The UK is an integral part of the global economy

• The UK is an investment multiplier• The UK is a springboard for global growth

Our USPs

• The best environment for business• World class creativity and innovation• Gateway for international connections

www.uktradeinvest.co.nz 09 303 5010john.waugh@fco.gov.uk

(And available today until 13:00)

John Waugh

Your Market

Richard McleanBusiness Development Specialist

Concept To Market

A quick checklist

• A real need for your solution• Choosing a route to market• Sales channels and partners

Some potential gaps• Target customer

– Single identifiable buyer for your offer, accessible to your sales channel and well funded enough to pay for the whole product.

• Compelling reason to buy– Vitamins vs. Painkillers

• Whole product– Can we field a complete solution to the target

customer’s compelling reason to buy?• Competition

– Has the problem been addressed by someone else?

Find a route to market

• The best way to find a route is to use a map– Build a market map– A visual approach – removes clutter and offers

insights that long documents cannot– Encourages thinking vertically and laterally and

builds a deeper understanding of your customers, supply chain and competitors

– Helps focus time and resources, consolidates market information from your key people

– Helps you understand who is who and who is doing what to whom.

ME +20

SME -2-5

Home User

Retailers (Harvey Norman etc)

Sample Market Map – Accounting software in NZ

Home Office

SME -6-20

Corporate

Hardware and Software Distributors

Software - Vendors Microsoft SAPMYOB

Ingram Micro

Hardware Manufacturers Toshiba

Dove Renaissance

HP

A B

Dell IBM

Xero

Chartered Accountants

System Integrators

Sample market map (complex)

Sales Channels & Partners

• Why develop channels and partners?• Choosing partners• Setting objectives• Measurement• Communication• But first consider the alternatives

– Kick a big incumbent in the shins

Richard McLean

www.concepttomarket.co.nzPh + 64 9 921 4000M + 64 21 939 955E rmclean@concepttomarket.co.nz

Available here until the completion of today’s sessions or call sometime for a chat and coffee

Jason Rogers Partner

James & Wells

Protecting your ideas

What is IP?What is IP?

IP overview

Types of IP protectionTypes of IP protection

Two classes Various forms

Work out what are your competitive advantages

Break them down into following categories Knowledge based Functional aspects Look Brand

Then you know what IP protection/exploitation mechanisms can apply

IP & Competitive PositioningIP & Competitive Positioning

Intellectual asset managementIntellectual asset management

Goal is to manage the ideas, innovations and knowledge of the business to ensure:

Freedom to operate Ability to exclude others Optimisation of returns alignment with business strategy

Creation and captureCreation and capture

In order to capture, you must first be able to identify – know it when you see it

Once identified, must minimise risks of losing it until IP protection issues determined.

IP protection will depend on value extraction path

IP from an investor perspectiveIP from an investor perspective

Ownership Freedom to operate Scope of protection Opportunity

ConclusionConclusion

Resist public disclosures or commercialisation prior to filing for protection

Ensure tidy path to ownership Take steps to protect aspects of

competitive advantage Complete freedom to operate searches

Jason RogersPartner, James and Wells

03 961 2460jasonr@jaws.co.nz

(and available today until 13:00)

Colin De Freyne

Tax Director

Ernst & Young Limited

Structuring Your IPStructuring Your Export Strategy

Main points for consideration for this topic – why they are important

• How should IP be structured?

• NZ tax issues

• Foreign tax issues

• Sale / exit strategy

Ownership structures

• Typical NZ ownership structures

IP

Qualifying company

(abolished?)

IP

Trust

IP

Partnership

(limited partnership?)

IP

NZ Company

Ownership structures

• NZ Tax issues

– Impact on imputation and IC’s available to attach to dividends

– Double taxation?

– Transfer pricing (cross border transactions between associated parties)

– Managing foreign withholding tax credits (non-refundable)

Good / bad examples and scenarios that you should consider

• Losses and foreign tax

• Sale of IP bundle

• Dividends paid from royalties stream

Export Go Growth Optimiser

What you should do next – in preparation for developing your business plan and investment

pitch

• Business structure / model

• Operations and supply chain

• Effective financing structures

• Income tax / withholding tax management

Colin De FreyneColin De Freyne

Tax Director, Ernst and YoungTax Director, Ernst and Young

09 300 8023

colin.defreyne@nz.ey.com

Ramesh PindoriaDirector

Password Ltd

IT Strategy for global growth

IT is Business!

• Aligning IT with Business strategies– Understand business needs– Shared business vision– Need vs. want

• Holistic approach to IT– Business units– Suppliers– Customers

What you should consider

• Collaboration, Mobility, Communicating Globally

• Security• Web Presence

– Company website, Client Portals ,Secure portals

• Compliancy/Regulatory Requirements• System Availability

Challenges

• Second location – centralised or decentralised– Costs, Access, Disaster Recovery

• IT Optimisation• Capacity Planning• Support

– Local and global• Outsourcing, Hosting

– All, part or none

Contact details

Name: Dr Ramesh PindoriaPhone: 021 749 000Email: rameshp@password.net.nz

(And available today until 13:00)

QuotesGeorge Shaheen: “We do not treat Information with the same reverence that we treat human beings or money”Jack Rockart: “The value of IT depends upon how it is used strategically to improve the organization, not on how much it costs”

Holistic Approach to your travel budget

Brendan DruryBrendan Drury

GM FCM Travel Solutions, Stage and Screen, GM FCM Travel Solutions, Stage and Screen, CiEventsCiEvents

Proudly part of Flight Centre

Considerations for today

Travel is one of the top 5 expenses in most businesses

Optimising the Travel budget

Travel and the Internet

What do your employees expect when they travel

Conference Incentives Events

Optimisation of the travel budget

Is the Trip necessary ?

Air / Land Leveraging Preferred Agreements Different Airfare types – flexible/ non flexible Look at overall costs – hotel, taxi, airport car

parking etc Cheap fares - pros/cons

Best Fare of the Day

Promotional Periods Oct/Nov – UK/Europe short life airfares offered

Planning ahead

Management reporting Monitoring travel budget effectivelyChangesLead in time Consolidation of spend

Travel Guideline/ Policy Drives behaviour / Savings Control through authorisation

Credit Facilities

Expense Management tools

Enhanced data through Credit Card

Optimisation of the travel budget

Travel and the Internet

InternetPurchasing Airline, Hotel & Car Rental sites Searching - time is money Travel sites Helpdesk / 24/7

Travel Policy & Staff Expectations

Policy / Guideline As your company expands this will be come more relevant Authorisation pros/cons

Travel Allowance Implement realistic daily allowance Set expectations through Travel Guideline/Policy

Leisure travel tagged onto business trip Managing increasing leave

Customer Care Travel Insurance Danger spots

Airline/Hotel membershipsLounge passes / FFP cards

Visas / Passports Who has what passport ?

Power of Events

Meetings and events DO play a strategic role in driving business within any organisation

Face to face key

A survey, conducted by the MPI foundation concluded that :-

96% of marketing executives use events within their total marketing mix

49% believe the importance of events is increasing

24% believe events provide the best ROI in marketing (18% Web Marketing/15% Sales Promotion/14% PR and 9% Print Advertising)

Role of Events

Incentive continues to grow

The difference between a good event and a great event comes down to a couple of key factors:-

Extending the life of the event

Matching the budget with the recipients

Maintain brand consistency

Show Stopper

Ph + 64 9 638 0200 M + 64 21 919 609 E brendan.drury@fcmtravel.co.nz

www.fcmtravel.co.nz

We are happy to talk today or any other time that suits

Brendan Drury

Have You Got The “A” Team?Have You Got The “A” Team?

Mark Robotham

NZTE Escalator Service

People Invest in People

• “I Invest in people not ideas”…. “if you find good people, if they are wrong about the product they’ll make a switch…” Arthur Rock (VC Associated with formation of Intel, Apple)

• “It’s not the strongest species that survive, nor the most intelligent, but the most responsive to change” - Charles Darwin

• Background - Linkage Team and other factors

• Investor Check List

• Leadership & Governance

• Qualify People In

Why The Team?

“The Story”unique proposition

Operating in the

Zone of Passion

“ActionableLive Plan” WHATWHEN

CustomersTalent

Investors

Scaling Teams

Competencies & Skills

Governance

ProductStrategy / Plan

Investment & Exit Model

How do we make $$

© Growth Management Consulting Ltd 2007www.NowStrategy.com

Org. StructureBoard

Business PLan

Non – Action Plan

ChannelsPlan

Communications

Sales

Multiple Hubs - Company - Product x n - People x n

NOW Strategy

Leadership

People

Compelling

NeedBusiness

Model

HO

W

Brand Vision - Culture - Values

Market Validation

Sustainability

Brand Essence

Business That Grow

Investor People Check List

• Team ≠ One person– Virtual teams vs FTE

• Done it before– Fantasy Factor = (Forecast / Actual) ± 20%– Start up and Enterprise experience– Bases Covered ( Core Craft – Sales - Finance )

• Values – Motivation - Exit• Commitment• Coachable – Workable

Ready for Investment?

ROI

Distribution Channels

Competitive Advantage

Compelling Need

Innovative Product

Robust margins

Sustainable

Identified Customer

Management team

Vision

Volume Support

Resilence

Exit

Coachable

Invest

Walk Away

Can Be Fixed

1 2 3 4 5

Adapted from Tom McKaskill

Qualify People In !

• Harnessing Gravity – Creating the “Zone”– Values– Create Purpose and Vision

• Rapid growth– Competency profiling – Lominger

Establishing Advisory Group - Board

• Why– Best people investment– Greatest tool to focus delivery to plan – Power of Virtual Teams– Power of multiple advisors– Long term 3rd party perspective – True independence – principal issues– Break circular reporting models

• What Other Services – Medium Term Advisors do I need?– HR Part Time Management– Sales – Marketing Coaching Mentoring– Financial Management– Incubation ( full suite of services)

AG Makeup

• Complement Management team skills• Traditional (Finance, Legal, Industry)• Different AG for different stages (Seed, early stage, expansion, mezzanine)

• Consistency pays• Empathy with Financial Environment and Dev Stage

– Industry Strategic– Craft Financial– Growth Experience Team Player– Sales & Marketing Time Available– Affordable Compromise Craft vs Business

• Experience ??? Passion• Maximum size• Marque members at appropriate stage

Teamwork = Conflict

• Conflict is central to team effectiveness because conflict is a natural part of the process that makes team decision making so effective in the first place.

• Successful teams use conflict to arouse discussion and stimulate creative thinking.

• Mediocrity occurs when teams choose to "get along“, rather than challenge their assumptions and perspectives

What Makes A Great Deal ?What Makes A Great Deal ?

Mark Robotham

GM Escalator Service

Great Deals

• Deal of what?• Get Real• Great !• Valuation• Forecasts• De Risking Business

Raising Shareholder Value

• Non Equity• License• Strategic Partnership• Joint Venture

• Equity• Capital

Get Real !

• Business or Hobby• Investment proposition• Valuation -> Equity Injection -> % shareholding• Average deal time 6 months – 24 months

– Management overhead 200hrs+• Trances – Milestones - Accountability• Invest in growth potential• Value of professional services – broker• Journey not a destination

Great Deals

• Return worth effort– Better end result than organic bootstrap

• Lost opportunity cost– Realistic (win – win)

• Every one benefits at exit• Increased shareholder value

– Simple– Fair– Maximised market tension – multiple interest– The deal is the beginning not the end

Valuation

You need $1,000,000 dollars to develop a new export market…

You are prepared to give up 20% of your business for the $1,000,000…

This implies:Post money valuation $5,000,000 &

a pre-money (before the investment) valuation of

$4,000,000!

Expected Returns

Company Stage

ROI 5-year Increase in

Capital

SEED 60%+ 10x +

STARTUP 50% 8x

EARLY STAGE 40% 5x

2nd STAGE 30% 4x

NEAR EXIT 25% 3x

Valuation:A risk adjusted estimate of the businesses ability to make money in the future.

Financials –Current & Forecast

Balance SheetCash flow

P&L

Assets:IP

MiscPeople

Track record

Market

Scalability

Etc...

Model

+

Valuation

AssumptionsVariables Benchmarking+ + Risk

Valuation Methods

• Early Stage Space– Market Value / Multiple – EBITA

• Most widely used - market benchmarked value

– Discounted Cash Flow (DCF)

• Reduce Risk = Increased Value

Believable Forecasts

• Sound Assumptions• Backed by action plans• Validated prospect

customers• …

De Risk the business !

• Revenue is King !!• Governance• Credible case studies• Scaleable business• Dependence on key individuals• Experience of team• Strategic partnerships• Licensing deals

Mark RobothamGM Escalator Service 021 61 8850 mark@escalator.co.nzwww.escalator.co.nz

Tax Considerations for Deals

Vendor

• Generally capital receipt (except taxable for patents [CB26])

• Company – watch:– Related party transactions– Capital gain distributed on

liquidation– Qualifying company

• Consider GST implications on sale

Purchaser

• Depreciable property?

• The copyright in software, the right to use the copyright in software or the right to use software are depreciable

• Patents or right to use patents are depreciable at a SL rate over their legal life.

• Offshore purchaser would need to seek their own specific advice. Some countries may have more favourable treatment than others.

Licensing your IP

• Licensing agreement

Licensor

– Income stream may be a “Royalty” which will be a taxable receipt.

– Definition of “Royalty” is extremely wide.

• Right to use• Supply of knowledge or

information• Supply of assistance

Licensee

– Depreciable intangible property [Schedule 17]

• “Right to use”

Would also need to consider where the ongoing R&D is to take place.

Colin De FreyneColin De Freyne

Tax Director, Ernst and YoungTax Director, Ernst and Young

09 300 8023

colin.defreyne@nz.ey.com

Andrew BakerManaging Director

IQ Ideas Ltd

Been there, done that: the experience of raising investment

funds

My experience

• Background• Proof of Concept• Proof of Market Acceptance• Proof of Commercial Viability• Proof of Scalability• Exit Strategy

Phone: +64 9 627 3571Mobile: +64 21 377 644andrewbaker @ IQideas.com

www.IQideas.com miQube™ - another great Kiwi innovation!

Andrew BakerIQ Ideas