Problems faced by SMEs when

seeking finance

lessons to learn

Iain C Shirlaw,
Director International Life Science Investors

Venice, November 2008

Tangible and Intangible Book Value
IV as % of Market Capitalisation, 2005
IV as % of Market Capitalisation, 1975
Solutions to Problems faced by
SMEs when seeking finance

lessons to learn

Iain C Shirlaw,
Director International Life Science Investors

Venice, November 2008

 “Beauty is in the Eye of the beholder”
Greece, 3rd Century BC

 The Inventor of IP
 The Financier

 The Manager
The Inventor
 Typically a public sector
employee
 Expert (Knows a lot about a
specialised niche)
 Funding is usually a grant
 Idea is worth billions
The Financier
 Typically an accountant
 Non Expert (Knows a little
about many things)
 Funding is based on a
specific target return
 Idea is worth nothing
unless it has EBITDA
The Manager
 Typically used to work for a
large company
 Has been a functional
specialist
 Funding is something to
pay his salary
 Idea will make millions for
somebody!
 The Industry
 Has shareholders to satisfy
 Has a traditional
perspective
 Investors don’t want risk
 Need Proof the idea is
worth anything!

And have a lot of cash!!!!

 The Business Model
 Invest 20x$25m in R&D to get 20 candidates
($25m each)
 Invest $20m in pre-clinicals – Lose $10m
 Invest $25m in Phase 1 – Lose $12.5m
 Invest $25m in Phase 11 – Lose $16m
 Invest $50m in Phase 111/1V – Lose $25m
 Invest $50m in FDA and market Approval – Lose
$25m
 Win!!!! Generate $120m per year for 10 years
 Bridging The 7 Stages of SME Growth

40
VALUE BENCHMARK

Technical Product Market Client Business Company Corporate

Proofs: Concept Definition acceptability Orders Capability Growth Expansion
1 2 3 4 5 6 7
The Lesson to be learned

 Aim for value at each stage

 Learn and Build your capability
 Know your buyer - Pharma?
 Be ready for change!

Get your timing right!!

Iain C Shirlaw,
Venice
November 2008
 Seven Ages of Man
Senility

Old Age

Adult

Young
Adult

Adolescent
Child
Infant
As You Like it Act 2, Sc 7 Shakespeare
 "All the world's a stage, and all the men and women merely players;
They have their exits and their entrances;and one man in his time
plays many parts,
His acts being seven ages.
 At first the infant, mewling and puking in the nurse's arms;
And then the whining school-boy, with his satchel And shining
morning face, creeping like snail unwillingly to school.
 And then the lover, Sighing like furnace, with a woeful ballad
Made to his mistress' eyebrow.
 Then a soldier, full of strange oaths, and bearded like the pard,
jealous in honour, sudden and quick in quarrel, seeking the bubble
reputation even in the cannon's mouth.
 And then the justice, in fair round belly with good capon lin'd, with
eyes severe and beard of formal cut, full of wise saws and modern
instances; and so he plays his part.
 The sixth age shifts into the lean and slipper'd pantaloon, with
spectacles on nose and pouch on side; His youthful hose, well sav'd, a
world too wide for his shrunk shank; and his big manly voice, turning
again toward childish treble, pipes and whistles in his sound.
 Last scene of all, that ends this strange eventful history, is second
childishness and mere oblivion;
Sans teeth, sans eyes, sans taste, sans everything." )