SMART MONEY VENTURES WITH HARWELL CAPITAL – HERO IMAHE IS YOUR CHOICE

01.06.18

In the era of the tech business boom, making informed decisions and avoiding common pitfalls is key. Daniel O’Brien, Managing Director of Harwell Capital explains how their accelerator capital and strategic support can help businesses change the world

Technology is a hot theme in media, with daily headlines about blockchains, cryptocurrencies and unproven start-ups being backed with millions of dollars through ICOs and crowdfunding sites, and the asset class being even more accessible now than in the dot.com era.

However, with tech start-up failure rates of more than 90% depending on company stage, there remains the need to engage experts in the field, where deal selection and value add on investment company boards are the key to long term reliable investment success.

This is where Harwell Capital comes in. As an independent late stage Venture Capital investor, we aim to mitigate the high risks of investing in the asset class by methodically applying a strict investment criteria and rigorous due diligence process which typically takes between 3 and 6 months.

THIS PROCESS INCLUDES SEEKING:

Established businesses with high growth rates where the technology and route to market are proven

Differentiated innovative world class technology developed in-house, boasting strong patented / patentable IP which provides the barriers-to-entry

Clear markets for the product, which demonstrate it is solving a pain-point and that users both need the product and are compelled to buy it

Scaleable automated business models to achieve business plans, as low volume, manual businesses won’t achieve the same returns

Attractive and realistic valuations - both pre-money and target exit value, which involve deep proprietary analysis on the company and the market

Management teams with vision, drive, and proven track records in multiple market environments, because without this, it doesn’t matter how good the technology is, it won’t be a success.

Deal-flow is vital, and we at Harwell review hundreds of opportunities per annum, typically backing less than 1%. Harwell has excellent sources of deal-flow throughout the UK and further afield, and the quality of deals accessible is a differentiator.

In our opinion, looking at a selection of well marketed but often amateur deals online, and being shown them from peers isn’t going to result in success. For example, we have backed Africa Mobile Networks (AMN) with over $8m because the company is the only one able to economically serve populations of fewer than 10K with telecom services in sub-Saharan Africa, delivering immediate socio-economic impact.

This is a view shared by Facebook – which has since added $12m grant funding and software and hardware engineers - and the European Investment Bank which is providing $10m’s in supportive debt.

The technology and business model is fully proven and operating at scale, with contracts from Tier-1 operators Orange and MTN, both of whom have stated that AMN is their sole solution for this 200-300m population.

Another portfolio company in which Harwell has invested over £5m is Genesis Technical Systems (Genesis), which has a significant patent estate and is able to provide superfast broadband at 400mb/s using existing copper wire infrastructure to homes in even the most rural locations, removing the need to lay fibre.

Genesis is one of only nine globally approved on BT’s (the global gold standard setter) infrastructure in the UK, has demonstrated the technology at a lab trial for Cincinnati Bell and will shortly be rolling out large field trials with CenturyLink and Windstream.

There is a significant tailwind to this sector as the FCC in the US, and now the regulator in the UK, have made access to broadband a human right and the telcos must provide coverage, where for example in the US the telcos do not have a solution for 17% of the population.

Harwell has also invested $3m in Strada Drilling Limited, a company with vast IP for technology that can drill geothermal wells in 20% of the time and cost of its nearest competitors. To date, drilling costs prevent economic access of this resource in most geographies, but Strada’s technology unlocks this, enabling the world with a sustainable energy alternative (where Harwell chose geothermal over wind/ hydro/solar due to economic paybacks and reliability of energy source), demonstrated by the company drilling the deepest, cheapest and fastest hard-rock well to date.

Our typical investment size is £3-5m, however deals being sought can be as large as US$40m. We offer Family Office investors the opportunity to invest in our portfolio companies through co-investment and discretionary portfolios, and offer HNW investors the opportunity to invest in each deal on an execution-only basis, at lower levels than offered by traditional Venture Capital funds.

Both offerings enable investors to build portfolios of world-class technology companies.

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