Contents
Chairman’s message
Chairman’s message
Throughout 2011 Midven maintained its focus on
There are good things happening in business and
searching out quality investment opportunities for
we only have to look at some of our portfolio
both The Early Advantage fund and The Exceed
companies to see that substantial profitable
Midlands Advantage Fund in addition to working
growth is achievable if you have the right focus,
with the existing portfolio of companies to help
strategy and commitment.
facilitate, wherever possible, profitable growth. This was reflected in two very profitable Our deal flow has been consistent and has enabled
realisations over the last year from The Advantage
us to be suitably selective in the new investment
Growth Fund and the HSBC Enterprise Fund where
opportunities that we pursue.
we achieved money multiples of seven times on both occasions.
Exits
4-5
Exceed Partnership
6-7
Early Advantage fund
8-9
During the year we made a total of 28 investments, supporting 17 new businesses in the process. We
We should recognise the difficulties that affect
also continued to assist the portfolio in raising
us all but should in my view retain a realistically
significant levels of further finance from other
positive view on the future.
Advantage Growth, Rainbow Seed & HSBC Funds
10-11
In the news
12-13
The team
14-15
institutional and angel investors. It is with this mindset that Midven will continue to This level of investment is against a continuingly
invest and support local businesses to encourage
difficult economic climate where output has been
growth and job creation and to help drive the
flat and only very modest growth forecast
required improvement in the UK economy.
in 2012. Coupled with this are the ongoing considerable levels of financial and political uncertainty surrounding the Eurozone. The level of doom and gloom in the media can feel overwhelming at times and is in my view overdone.
BRIAN BLAKEMORE Chairman, Midven
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Exits
Exits:
World class business provides great return
successfully realising investment talented, energetic management
Stafford-based Ardentia, a supplier of world class business intelligence
teams to achieve their aims and
solutions for the healthcare sector, was sold to US-based IMS Health for an
help build profitable businesses
undisclosed sum in August 2011.
that will be strategically
The exit transaction generated a
includes a Patient Level Costing
attractive acquisition targets.
cash multiple return for Midven’s
system which is key to the current
We ensure portfolio companies’
HSBC Enterprise Fund of just under
approach to healthcare across
growth strategies are aligned
seven times, representing an IRR of
the globe.
with achieving high value
around 36 per cent – which over
returns. Despite the economic
an 11 year investment period is an
The company at its peak achieved
environment we continued
excellent result!
sales levels representing in excess of
significant returns for our
Midven invested in Ardentia in 1999
initial investment and at the time of
investors. In the last three years
to support the management
exit was further expanding its sales
alone we have achieved five
buyout of the healthcare division of
activities into the Middle East.
significant and profitable exits,
a failing group. The company has
including those featured here.
subsequently achieved market leader
The period also saw us receive
exits of Dynamic Change and Occam Systems.
status in the UK, with customers across all aspects of the NHS, including Primary Care Trusts and Strategic Health Authorities. The company’s product range now also
Midven has been a consistent supporter of the Ardentia business throughout the time of their involvement. What we have achieved has very
EXITS FACTFILE
Highly profitable exit from leading UK player Midland Industrial Glass is one of the
a buyout from the retiring owner.
and concentrating on excellent
largest independent specialist glass
At the time of the transaction
customer service, MIG has continued
processors in the UK, and in 2011
the business was on the verge of
to succeed in an unloved sector
delivered a highly profitable exit for
administration and we played a key
whilst many of its competitors have
Midven’s Advantage Growth fund
role in ensuring the transaction
fallen by the wayside.
after completing a private equity-
proceeded, securing over 40 jobs
backed secondary management
in the process.
buyout.
much been a team effort, manag em e
lionaires mil nt
22 4
Alan Taylor Managing Director, Midland Industrial Glass.
20 times the level at the time of the
to deliver exits that provide
payments from the previous
“Having developed, with Midven’s help, into one of the leading players in the UK glass processing market, we are now looking forward to building on our position.........
Ardentia
Midven works closely with
further deferred consideration
Midland Industrial Glass
Midven being an integral part of our team. Gary Luke, Managing Director, Ardentia
Despite increased low cost global As a result of the transaction, Midven
competition, consistent rises in
achieved a seven times cash multiple
raw material costs and a recession,
return on its investment for the fund,
the management team has
representing a 46 per cent IRR. The
returned the business to producing
transaction also provided an exit for
significant profits, and trading with
the semi-retiring production director.
a record order book.
Midven invested in MIG in 2005,
By creating a niche for itself,
supporting the management team in
investing in its production facility
This is a first rate example of a well managed traditional manufacturing business generating strong profits in the face of significant overseas competition by creating a niche and focusing on excellent customer service..........
Exceed Partnership
Igloo
Midven’s Exceed Fund can invest up to £750,000, with further investment beyond this alongside other investors, in high growth SMEs in the West Midlands.
Shropshire firm Igloo is at the cutting edge of helping revolutionise product launches, corporate entertainment, music and sports events.
Since its launch in 2010, the fund has invested in a wide range of sectors including software, healthcare, electronics,
The company is a leading developer of high quality
and manufacturing. 2011 has been a particularly busy year with the Fund making 12 investments, seven of which
360 degree immersive digital projection. Audiences
have been into new companies.
at events are completely surrounded and “immersed” in an audio visual experience – taking in HD, cinema
Silverdale Bathrooms
quality video and studio quality sound.
Staffordshire-based Silverdale Bathrooms manufactures “high end”
The company, which was featured on The Gadget
bathroom and kitchen ceramics which are exported worldwide.
Show during the year, has already worked with
Midven supported Silverdale in the acquisition of another ceramic
clients such as Sky, Toyota, Miele and UK Trade and
manufacturing business – a deal which saved 50 jobs in the process,
Investment (UKTI), and is now receiving enquiries
including those of the highly skilled craftsmen who make fine vitrified
from media and events companies worldwide.
china bathroom pieces. Igloo is a company that is working in a fast moving, highly creative environment. The business has worldwide applications and is attracting attention from across the globe.
Silverdale, in the heart of the Potteries, is one of the few remaining ceramics manufacturers in the UK. As well as securing current jobs, the deal will help to create more posts as customer service and new kitchen sink activity is ramped up.
Your Vets The Your Vets Group, which was established in 1997, operates five primary service veterinary practices in the West Midlands and currently serves around 140,000
Phoenix Health and Safety Phoenix Health and Safety, in Cannock,
ed to date est nv
i
provides innovative, accredited health and safety training and consultancy services. The company has grown rapidly since being set up in 2005, with turnover increasing eight fold in the three years up to Midven’s investment. The Exceed Fund invested during the
Consero Consulting
clients.
Consero Consulting, which has offices in Birmingham,
The Solihull-based company will use Exceed’s investment
London, Manchester and Glasgow, provides total
to accelerate expansion and open additional practices
construction management and compliance solutions
whilst delivering improvements in those already in
and includes many household names from the
operation. The rapidly expanding enterprise, which
supermarket and hotel sectors on its client list.
has grown by 20 per cent in the last three years, is
The company has considerable expertise and a
establishing a series of “super vets” practices, which
strong reputation in luxury hotel refurbishment and
provide affordable preventative veterinary care for the pet
development, higher education establishments and
owner. The upcoming year should see the opening of
data centres.
two new practices.
year to fund expansion and enable the company to provide more courses, recruit staff – and establish new training locations, including overseas. The company employs over 20 staff and is on track to achieve turnover in excess of £3 million in its current financial year.
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Phoenix is a great example of an entrepreneurial business that started life on the kitchen table........
Busy year for deals A number of other deals were completed during the year, including Phasor Solutions, who are developing cost effective, flat phased array antennas with the potential to be adopted in most applications for satellite communications at high speed.
Early Advantage
improving the clinical performance. The funding, provided alongside Minerva
Anvil Semi Conductors was spun-out from Warwick University during 2011 following years of research at the University’s School of Engineering with the aim of developing the next generation of Silicon Carbide semi-conductor devices. The semi-conductors being developed by Anvil are expected to enable significant improvements in operating efficiency, size and cost when used in power converters such as those found in electric cars, photovoltaic cells and wind turbines. The market for such devices is estimated to be $25bn worldwide. The company is the first private company to use the £10 million semi-conductor clean room funded through the Science City Research
Business Angels, will go a long way towards the company completing product
Collaboration.
The Early Advantage fund provides investment for small, high growth businesses at start-up and early stages. The fund’s first investment can be up to £125,000 alongside matching from private investors and a total of £400,000 can be invested over the life of a company. 2011 has seen the fund invest in ten new companies, ranging from spa equipment to semi-conductor materials! Four of these were completed in a very busy December for the team. In addition, the fund has continued to support its portfolio with further funding, making four follow-on investments. This level of activity has seen the leverage of investment from third party investors into the portfolio increase to £8.85m.
Cipher Surgical The first investment of the year was medical technology company Cipher Surgical. The company currently employs three people and is based on the University of Warwick’s Science Park. The company has developed a system which clears the lenses on keyhole surgery cameras without removing the device from the patient, saving time and
inves tm e erage lev nt
development and bringing the product to market.
Crowd Technologies Birmingham-based Crowd Technologies, which launched in 2010, has developed social media risk management software which enables businesses to manage their online communication activities more effectively. The software allows organisations ranging from small start-up businesses to
Midven understand the challenges and hurdles that we need to overcome as an early stage business .... . ...... James Leavesley, CEO Crowd Control
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Anvil
large international firms to effectively and efficiently control their social media outlets and protect their brand, which can mean anything from monitoring Facebook pages for profanities to protecting access to social media pages when employees move on. Since launching, the firm has attracted a host of big name clients including Cadbury, Hello! Magazine and Green & Blacks, and continues to expand rapidly as the increasing importance of online presence and profile is being recognised.
Sparcana Sparcana, based in Stratford-uponAvon, is a health and beauty start-up business which launched its first product to market in 2011. Midven again joined forces with local business angels to provide development capital to fund the product launch and marketing strategy. The business has developed a portable, continuous heat chamber for warming skincare products such as waxes, clays and mud. The product uses patent protected, cutting-edge technology to solve a basic everyday challenge faced by professionals in the health and beauty industry.
The company plans to launch additional products to market regularly and to quickly establish a significant and market leading presence in the health and beauty industry.
Soshi Soshi Games, which represents Midven’s first foray into the world of online gaming, develops online social networking games. The market for selling virtual goods through social gaming, whilst a relatively new one, is already valued at $7bn. The company’s “Music Festivals Game” gaming platform is seeking to tap into this market and create new revenue streams and marketing opportunities for the music industry and other brands whilst helping up and coming music artists get discovered and create a fanbase. The Early Advantage fund investment funded the full public release of the game as well as providing ongoing working capital for the company.
Activ8 Activ8 was established in 2005 to provide analytical solutions to improve recruitment and retention of staff and can boast a customer base including Legal & General, The Bank of England and Warburtons. The company’s product is an
HR specific business intelligence platform which stores and analyses core personnel data and produces over 100 standard HR reports and KPIs to enable improved HR management and predictive performance management of employees.
Other deals Other deals completed in 2011 were Cellfacts Ltd, who specialise in precision analysis systems which detect microbial growth, Birmingham-based Diamonds Software Ltd, Orthogem Ltd, a biomaterials firm who have developed a new generation of synthetic bone graft substitutes, and Staffordshire-based Netmania Ltd, who have developed software which enables telecommunications businesses to manage customer devices remotely.
The presence of someone from Midven with solid commercial experience and an ability to offer pragmatic, but creative solutions has been important in helping the company change and develop........ Andrew Waterfall, Chairman, Cellfacts
Advantage Growth Fund
Rainbow Seed Fund
The portfolio has continued to progress well without the need for significant levels of further funding – a huge positive in the current economic climate.
The Rainbow Seed Fund, launched in 2002, has enjoyed a busy year, with £1.4 million of investments taking the total to £6.4 million.
The Fund’s investors agreed to a two year extension in the life of the Fund to help counteract the impact of the
Leveraged funding into the portfolio from third party investors now stands at over £110 million – a strong
recession on company exit timescales. Though the Fund closed to new investment in 2008, it continues to work
endorsement of the quality of research from the Fund’s partners, given the context of a difficult fund raising
closely with management teams to help deliver growth strategies and attractive exits.
environment.
One such transaction was Midland Industrial Glass, which represented the fourth significant and profitable exit
The Fund provides investment to support the commercialisation of the world class research emanating from its
from the Fund in the last three years.
partnered public sector science base.
Portfolio Spotlight • Microvisk commenced pre-clinical trials in Germany and started down
Case study
Portfolio Spotlight
Simworx, based in Kingswinford, has continued to expand on a global scale and
the path of FDA approval for its blood
is gaining theme parks and other visitor
viscosity measurement device.
attractions such as museums. Six additional
• Comply Serve commenced global expansion securing contracts for its
jobs have been created in recent months to meet demand – and new contracts have
project compliance software in the
been won in Indonesia, Columbia, Italy,
Middle East and Australia.
Turkey, Cyprus and Vietnam.
• Allinea was identified by Red Herring as one of the global top 100 fastest
4D technology combines a 3D theatre with the experience enhanced by a fourth
growing and most influential high
dimension of effects incorporated into the
technology companies.
seating. New 5D theatres, developed by
• Gemba Solutions has undergone significant European expansion, with
Simworx, also include seats which can tilt forward, backwards, left and right.
50 per cent turnover growth for this
Midven has been a strong supporter of the company, providing invaluable commercial and strategic guidance. We would not have progressed as quickly without this input ....... Terry Monkton, Managing Director
real time performance management
Simworx first received funding from the
software company.
Advantage Growth fund in January 2008 and has subsequently benefited from additional funding from Midven’s Exceed Fund to support the further expansion.
• Cobalt Light Systems’ patented spectroscopic technology has been developed into a desktop scanner which has been successfully trialled at
Case study Formed in 2004 following a study to improve soldiers’ protective clothing against chemical attack, P2i now employs 160 staff across the UK, Asia and US. The company’s nano coating technology is now used to protect a range of products – from mobile devices (the Motorola Razr and Xoom) to clothes and footwear.
several European airports as
In total, the company’s technology has been used to protect
the airline industry moves
more than eight million electronic devices, and P2i’s sales
towards the removal of bans
have recently doubled to £6 million as other household
on liquids over 100ml on
names such as Timberland were secured as customers.
flights in 2013.
The technology uses a pulsed gas in a vacuum chamber to
• Novacta Biosystems has
attract a thin layer of polymer over the internal and external
P2i is an excellent example of what can be achieved from an initial pathfinder investment to support an interesting research idea........
commenced dosing of its
surfaces of products, lowering its surface energy and
first healthy volunteers in
providing a super thin coating which repels liquids without affecting the product’s
a phase one clinical trial
look or feel.
of a new antibiotic to treat the hospital super bug Clostridium Difficile.
The company, which was originally supported by Rainbow as a research project within the Government Defence Science & Technology Laboratory, has now raised £40 million over several funding rounds, and goes from strength to strength as more and more solid objects are likely to benefit from their technology.
HSBC Enterprise Fund Work continued towards the full realisation of the fund during the year with the disposal of Ardentia.
period since the current Midven management team
short-term returns – something the venture capital and private equity
has been involved with the operation of the fund.
industry is often accused of not being able to do.
As the fund was established in 1993, generating this level of return over such a long period demonstrates
Whilst it is never easy to draw direct comparisons, according to BVCA
This takes the return on investments across the whole fund to 11
that by working closely with companies, venture
data, returns of funds categorised as “venture” averaged a return of
per cent on an annualised basis and 17 per cent per annum in the
capital can deliver long-term growth rather than just
-0.3 per cent over the period 1996 to 2010.
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FUND FACTFILE
In the news
Midven makes headlines Andrew’s a man in demand Midven director Andrew Muir is a man in demand. During 2011 he addressed an international workshop in Thailand, sharing Midven’s experience in financing the growth of innovative, technology-based companies. The event, organised by UK Trade and Investment, was also attended by the British Ambassador to Thailand. Back in the UK, Andrew was invited to a special debate at Number 10 Downing Street, hosted by Prime Minister David Cameron. The event focused on sources of finance for small businesses – and the importance of venture capital funds such as Midven’s Early Advantage fund, which co-invests with business angels.
Andrew Muir - a man in demand
The Prime Minster has asked Lord Young – who invited Andrew to the event along with local and national business angel networks– to help improve conditions for small businesses
Pitch perfect
in the UK.
An innovative new Dragons’ Den-style event – called Pitching for Management – was
On track for success Midven chairman Brian Blakemore is well used
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hosted in Birmingham and sponsored by Midven.
to football grounds – particularly through his
With six entrepreneurial businesses pitching
chairmanship of Lye Town. But he and the
for expertise from the business community,
Midven team were in a different sort of stadium
the event enabled fast-growing businesses
for a team night out, when they presented one
to pitch for experienced, high calibre
of the race prizes at Hall Green Greyhound
business leaders in exchange for salary,
Stadium.
sweat equity or commission.
Investment team
Board of Directors Brian Blakemore
Surjit Kooner
Duncan Kerr
Investment Director for the Exceed Fund
Investment Director for the Early Advantage fund
appointed Chief Executive in 2006. He is
Mark White
Ian Fairclough
a chartered accountant, having trained
Investment Director on the
with Deloitte & Touche in Birmingham
Rainbow Seed Fund
Investment Manager for the Exceed Fund
Non-executive Chairman Brian joined Midven as a Non-Executive Chairman during 2009. He has had a career spanning 40 years in the banking
Tony Stott
and investment industries,
Chief Executive Tony joined Midven in 1998 and was
Brian combined reaching a milestone birthday in the year with continuing to guide Midven’s growth strategy. brian.blakemore@midven.co.uk
Roger Wood
and has previously worked in two business angel and venture capital
Investment Director of the Advantage
backed entrepreneurial businesses.
Growth Fund Roger joined Midven in June 2004. He is
During the year Tony oversaw the significant level of
Giovanni Finocchio
John Slaughter
a director of the company and Investment
investment from the Exceed Fund whilst still finding time
Investment Manager on the Early
Analyst
Director of the Advantage Growth Fund.
to deliver the Ardentia exit.
Advantage fund
He has spent over 15 years advising and
tony.stott@midven.co.uk
investing in SMEs. Roger brought the year to a successful close by completing the Advantage Growth Fund exit from Midland
Andrew Muir
Industrial Glass having earlier negotiated the Fund’s two year extension. roger.wood@midven.co.uk
Steven Greenall
Sebastian Savin
Investment Director of the Rainbow
Investment Manager for the
Analyst
Seed Fund
Exceed Fund
Andrew joined Midven in 2004. He is a Director of the company and Investment
Julie Newman
Director of the Rainbow Seed Fund, focusing on the life sciences. He had
Executive Director
an initial scientific career, followed by
Julie joined Midven as an Executive
start-up experience in a medical devices
Director during 2009. She was a founder
business before moving into the world of
of Strathdon Investments and has
investment with NESTA.
spent her 21 year venture capital career specialising in early stage, technology investing.
As well as jetting the globe and visiting Number 10, Andy has overseen the significant increase in Early Advantage investment
Julie Hawker In-house Accountant
and just recently secured further funding for the Rainbow
Julie has combined portfolio management duties with
Seed Fund
chairing the Early Advantage investment committee.
andrew.muir@midven.co.uk
julie.newman@midven.co.uk
Support team
Larraine Heath Administration Manager
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Toby Harper In-house Corporate Lawyer
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