2. Overview
• Background and the Wombat story
• Lough Shore:
• Northern Ireland business landscape (at least from the perspective of
indigenous tech companies),
• Where Lough Shore fits in.
• Experience, comments, lessons learned.
• Questions.
w: loughshore.co - Tw: @loughshore
3. A little background…
• From Glenavy, Co. Antrim.
• Studied Queen’s University, Belfast.
• Joined First Derivatives Plc in January 2001, with
a focus on New York from early 2002.
• Joined Wombat as the second FTE in Jan 2004,
based in New York.
• Wombat was acquired by NYSE in 2008.
• Became COO of NYSE Technologies through
to April 2010.
• Founded Lough Shore Investments in
November 2010.
• Won first Oscar in 2012.
w: loughshore.co - Tw: @loughshore
4. Wombat – key facts
• Massive compound organic growth, circa $500k billings in 12 months
before I joined in Q4 2003, business unit circa $40m in 12 months to
Sept 30th 2008.
• Quarterly cash positive Q1 2005 through to exit (Q4 2007). Over 12
months runway on the balance sheet on exit.
• Combative penetrate and up-sell “base-hit” driven business model. Only
a handful of the more than dozen competitors in the sector in 2003
were still around in 2008.
• Maximum deal size (total product value) per customer circa $400k in
2003, $5m in 2008.
w: loughshore.co - Tw: @loughshore
6. Wombat & Belfast
• New York first, Belfast second. The company’s center of heart was
always out and out Wall Street (office in 25 Broad, across the road from
the exchange).
• Engine room was out and out Belfast, 70% of the global team were
sourced through the Belfast office.
• Average age across the company globally on exit – 26 ½!
• Four major Invest NI investments, culminating in its biggest ever ICT
deal in 2009, £10m to secure 550 jobs from NYSE Euronext.
• Virtuous circle continues: CME, Cowen Group, First Derivatives in
Belfast, Lough Shore Capital.
w: loughshore.co - Tw: @loughshore
7. The Dream Team, March 2008
w: loughshore.co - Tw: @loughshore
8. Fundraising - Wombat
• The million dollar secret: the best way to fund a technology business is by selling stuff to
customers with strong margins!
• Merrill Lynch made a circa $3.5m strategic investment in Q4 2005, got returned $55m in
Q1 2008.
• Best deal we ever did, doubled the exit value in my estimation,
• Used the cash to bolster the balance sheet, then buy Harco.
• Auction to sell the company started out as a fundraising round for an MBO. We were
working with twelve suitors through 2007, eight bid in round one.
• The $200m secret; VCs or acquirers will see your projections nine months before a deal
closes; hitting the numbers needs to be in the DNA. You disappoint, you die.
• Invest NI was a great partner – has to be said.
w: loughshore.co - Tw: @loughshore
9. Lough Shore Investments
❝ Our mission is to invest in high potential management teams and
partner with them to build great businesses. Our goal is to bring ten great
companies to exit or IPO by 2025 ❞
!
!
w: loughshore.co - Tw: @loughshore
10. Some great NI businesses
Company
Year Founded
Turnover (2010)
Profit
Market Cap (03/12)
Randox
1982
£59,695,000
£2,908,000
-
First Derivatives
1996
£25,476,000
£3,787,000
81,000,000
Almac
1968
£250,983,431
£10,721,002
-
Chain Reaction Cycles
1984
£109,420,000
£9,527,000
-
Andor Technology
1989
£42,719,000
£4,569,000
167,000,000
w: loughshore.co - Tw: @loughshore
11. Elephant in the room
Our mission is to invest in high potential management teams and
partner with them to build great businesses. Our goal is to bring ten
great companies to exit or IPO by 2025.!
w: loughshore.co - Tw: @loughshore
12. Lough Shore – Big idea
• Create an outward focused seed investor, specializing in taking local
companies to the US market and raising international capital through to
IPO. Platinum player in a small market.
• Develop strong links in local funding community to help these
companies fully leverage all the assets available.
• Partnership approach, strong focus on developing management teams
and working with them to grow the business with a focus on
investablity.
• Really strong focus on skills, ecosystem and go to market, both here
and in the US.
• Partner with government to address the management skills gap.
w: loughshore.co - Tw: @loughshore
13. Partnering with Management
The Essence of Running a Business
Face time with
Building a
Product and
International
customers and Doing Deals
Team and
Engineering
Expansion
partners
Leadership
Always Be Selling / Always Be Closing
The Boring Stuff
Finance and
PR and
Legal
Go To Market
Admin
Marketing
Management
Logistics
Governance
M & A
Process
Need To Be Doing This Really Well
w: loughshore.co - Tw: @loughshore
14. Strategic planning, execution and tracking using the 8QP
8QP Heatmap shows progress at a glance
❝The 8QP has been a
fantastic tool for helping
me step back and take a
real strategic view on the
direction of the
company❞
Jonathan Chesney,
WorldDesk
w: loughshore.co - Tw: @loughshore
15. Advice to founders
• Have an angle.
• Manage the business, if you don’t need the money they’ll be knocking on your door.
Patience and consistency with careful cash management.
• Major on proof of traction. The best stories are based around revenue acceleration. The
founding team has already got the business up and running, but need to augment the
balance sheet and invest to scale sales / delivery (inc. globally).
• Be honest and transparent. There isn’t a serious angel investor or VC out there who hasn’t
got sold a pup (or a litter of pups). Many have been on the receiving end of fraud and
other vicious practices. They are cautious and rightly so!
• Be realistic about growth projections and valuation. Take outside advice. Many eleventh
hour collapses stem from investor unease about either the valuation or the integrity of the
founders.
• Seed investing in particular is about partnership.
w: loughshore.co - Tw: @loughshore
16. Compounding = Patience
Einstein considered Buffet’s life story “The
compound interest “the snowball”.!
most powerful force in
the universe”.
• To make it big in the medium term, entrepreneurs need to understand the power of
compound growth (including how it relates to building a balance sheet).
• It is a concept that’s fundamental to growing a customer base, cash flow, team,
balance sheet, & retaining equity.
• Small changes in level of debt, revenue growth, margin, return on equity, have
massive impacts on how a business scales in the medium term.
w: loughshore.co - Tw: @loughshore
17. Mr Consistency
• Get the small calls right and grind out the
results, consistently. Day after day, week
after week, year after year.
• It’s all about base hits and RBIs (i.e. take
the base hits and the home runs will
come). Or, as they say in Ireland, take your
points and the goals will come!
• The concept of the “flywheel” is key,
aggregating hundreds of small wins to
build sustainable momentum – Jim Collins
w: loughshore.co - Tw: @loughshore
19. The Shore – The Rationale
• Investment was made from the marketing budget.
• Massive alignment of interest (Lough Shore, Shores of Lough Neagh,
CALNI, returning from the US, showcasing NI).
• Terry George, the Entrepreneur:
• Northern Ireland team operating at the highest level in their industry,
• Crystal clear aspiration, objectives and business plan,
• Cheap / brilliant at sweating the assets.
• Massive brand message if we got the win.
w: loughshore.co - Tw: @loughshore
20. And when it all works out!
w: loughshore.co - Tw: @loughshore