As we cross the threshold into another year, Dermot Hill, Chief Executive, offers some timely insight for business leaders and venture investors into how Intramezzo views 2013.
We believe that the economic conditions are likely to remain much the same, although it is more likely to marginally improve than decline. This is because company balance sheets have become much stronger and reserves have been accumulated to levels that have instilled a confidence to cope with the ‘new normal’. A positive factor involves the continued quest for progress and business growth – it is our belief that management teams have reached a point where the ‘locked down’ approach is being adjusted to ‘cautious expansion’.
The New Normal
The ‘new normal’ is being driven by the daily march to globalisation producing a more fluid and transparent transfer of economic shocks. These shocks can emanate anywhere in the world and impact the UK consumer or business almost instantaneously. The ‘new normal’ also involves a government and a fiscal policy that is fighting hard to bring down the national debt. These two elements are the main contributors to a fickle and changeable outlook.
The Darwinian principal of survival of the fittest will determine who comes through 2013 well. Each business must aim for quantum improvements in the way that it operates to rank amongst the best performers. Early stage, high technology businesses with defensible IP are in a particularly interesting and advantageous position.
International markets will continue to be an increasingly valuable source of growth. As such, many businesses are looking at ways to overhaul or upgrade their sales channels. To address this, there exists a number of “people solutions”. For example, appointing an advisory board that can rapidly enter and win business in overseas territories. Alternatively, an interim manager or non-executive with the appropriate network and experience can help a business quickly penetrate new markets or introduce new products.
A particular trend is the demand for CTOs who can deliver the vision. It is a rare individual who can see into the future of new and innovative technologies in order to build and successfully deliver a road map on time and to budget. The IP on which a company can base £millions of shareholder value needs careful custodianship for value to vest.
We are also seeing demand for CEOs capable of weathering the challenges of running a business in the era of the ‘new normal’.
No Shortage of Funds
Companies looking for investment will have to present a very strong management team to stand a good chance of gaining investor support. For the right ventures with well-formed management teams there is no shortage of funds to draw on.
The current UK tax regime has prompted a growth in angel and related funds – suggesting that there is more money looking for a safe destination. In this case, “safe” refers to the skills and capabilities of the management team.
Where equity investments are more risky, the potential returns when compared against the low bank interest rates creates a very positive condition to attract money into this asset class.
The advent of crowd-funding is bringing new innovation to the investment sector. In addition to this, we have seen an increase in the demand for talent linked to investment. Chairmen and Non-Executives who can personally invest in a venture are seen as a real asset and can accelerate the growth curve in a high potential venture.
The coalition government has recognised that research and innovation is a key strength in the UK and essential to underpinning private sector growth. In fact, it has put innovation at the heart of its strategy – maintaining the £4.6 billion budget for science and research programmes, with £150m being spent each year on supporting university / business interaction.
Furthermore, the government believes the research base is so important to economic growth that, in support of this, an additional £495m has been invested in capital projects since January 2011.
This emphasis on innovation can only be good news for the early-stage and start-up space – the breeding ground for pioneering new technologies, products and services. This is a sector burgeoning with no shortage of excellent ventures looking for talent and investment and, with it, true potential for growth.
Formed in 2002, Intramezzo is a founding sponsor of Pitching for Management, a national organisation which supports new ventures looking for talent.
The company also works extensively with angels and venture capitalists to build successful management teams.
Intramezzo has been attributed with over £100m in exit value during the last 12 months, through CEOs we have appointed at formation who have led the companies through to successful exits.