UK Oil and Gas IndustryVenture Capital Fund

Nova Technology Fund

1. SUBSTANTIAL IMPACT ON COSTS OR HSE IN THE NORTH SEA

2. BRITISH IDEAS TO BRITISH PRODUCTS

3. CASH RESOURCE TO SMES

4. TECHNICAL & BUSINESS MENTORS

What VCs Want

• INNOVATIVE PRODUCTS / SERVICES

• EXPERIENCED MANAGEMENT TEAM

• PROPRIETARY IPR

• CLEAR ROUTE TO MARKET

• SUSTAINABLE BUSINESS PROPOSITION

• EXISTING REVENUE STREAM

What about my company?

• Some companies are life-style businesses

(Good living & job satisfaction but unlikely to supply the growth & ROR)

•Entrepreneurial businesses have aspirations and good potential for growth. (They have experienced and ambitious teams)

“Normal” Development is about 6 years to a Mature Company

SEED

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6

START-UP

EARLY STAGE

EXPANSION

MATURITY

GROWTH

SIZE

Business Development Focus (High Growth Means Rapid Change)

Technology

Operations

Marketing

Competition

Seed Start-up Early Stage Expansion Growth Maturity

Relative Importance

Source of leads

0%

5%

10%

15%

20%

25%

30%

35%

Source of leads

Personal contactsAAM / AMJNova presentationsLaunch advertisingEnterprise AgenciesDDATrade FederationsITF

Clusters of Innovation

Innovation in the North East

• 40% BELOW UK MEAN (DTI)

• 33% LESS SPEND ON R&D (DTI)

• 32% LESS GRADUATES IN WORKFORCE (DTI)

• HISTORY OF HEAVY INDUSTRY

• OVER RELIANCE ON INWARD INVESTMANT

• POLITICAL FOCUS ON JOBS NOT INNOVATION OR VALUE

Type of Company

0%

5%

10%

15%

20%

25%

30%

Type of company

ServiceManufacturingConsultancyUniversity spin-offSoftware house

Age of Company

0%

10%

20%

30%

40%

50%

60%

Age in years

Less than 12 years3 years 4 years5 years 6 or more

Technology

9%

3%

3%

24%

39%

7%

15% Exploration

Reservoir Eng.

Drilling

HSE

Facilities

Decommissioning

Business processes

Typical Company Profile

• Based in Aberdeen, Edinburgh-Glasgow belt or London area

• Less than 3 years old

• Independent, not a member of a trade federation

• High proportion of university graduates in team

• 15% chance of a university spin-off

• Probable SMART award

Rejections (Commercial)

0%

5%

10%

15%

20%

25%

30%

35%

Management teamIPR issueBusiness propositionCompany structureHigh riskMarket acceptanceSME rejected offer

Guidelines for Success

• Stick to the knitting• Common philosophy,

goals & quality standards

• Avoid information overload

• Build your team• Cash flow• Anticipate problems

• Keep investors & advisors informed

• Watch your costs• Do not anticipate sales• Develop a network• Look for opportunities

but discuss with investors.

VC Investment – Scotland£ millions: Jan 2000-April 2002

0

20

40

60

80

100

120

140

160

180

200

SoftwareBiotechOptoelectronicsOtherEnergyElectronicsCommunications

0

0.25

0.5

0.75

1

0 1 2 3 4 5 6

Time (Years)

Mat

uri

ty I

nd

ex Ready to use

Mature Technology

Technology Maturity

IdeaResearch

Development30

%

70%

Business Needs Ranking (Subsurface)

0

2

4

6

8

10

12

14

16High resolutionimagingLow permeabilityproductionIncreasing recoveryefficiencyUncertainty analysis /understandingReservoir simulation

Well seismic

Brownfield wellmanagement

Business Needs Ranking (Wells)

0

2

4

6

8

10

12

14

16Brownfield reservoirmanagementCost effective wells

Accessing brownfieldpoolsDrilling depletedreservoirsNew field reservoirmanagementSubsea intervention

HPHT

Business Needs Ranking (Facilities)

0

2

4

6

8

10

12

14

16

Subsea developmentReliabilty / uptimeEmissions controlCost reductionDebottleneckingMetering / allocationSand managementHPHTIsolated fields

Nova Technology FundBarry HoodE-mail: barry.hood@novafund.co.ukwww.novafund.co.uk

Nova Technology FundExploration HouseAberdeen Offshore Technology ParkABERDEEN AB23 8GX

Tel: 01224-705741Fax: 01224-705841