A SUMMARY OF 2017 INVESTMENT ACTIVITY
In 2017, TRICAPITAL members contributed £1.33m. This was made up of £194k to new businesses, and £1.14m in follow-on funding. This, taken together with contributions from SIB and other investment partners, provided some £8.5m for our investee companies – a substantial sum, and well above the £4m total achieved in 2016.
Over the years since 2004, TRICAPITAL members have contributed some £12.7m out of total investment deals of £79m in support of the businesses in which our members have an interest.
2017 FINANCIAL RESULTS
When we drew up our original budget for 2017, we anticipated making a small operating deficit and although income exceeded expectation, that has come to pass. The balance sheet remains robust, with reserves providing an ample buffer against any foreseeable short-term downturn.
Our thanks go to Andy Purves, Susan Arnold, and other staff at Douglas Home & Co for the administrative support throughout the year.
Thanks also to Kathy Kinder for her considerable input, working away in the background very hard, sometimes on her own and at other times with other syndicates, to fulfil her role as Investment Manager during 2017 to make these investments all happen.
TRICAPITAL INITIATIVES UNDERWAY OR COMPLETED
There were a number of new initiatives underway or completed in 2017. These included the formation of a New Investment Panel, the ongoing work on the introduction of the ProSeeder deal platform, the publication of the first Portfolio Review document, and our response to the questions raised by HM Treasury paper on Patient Capital.
My thanks go to Douglas Needham who, as always, has been an excellent Vice-Chairman. Douglas’ leadership of the New Investment Panel has been pivotal in the panel becoming a worthwhile innovation.
The introduction of the ProSeeder deal management and investment software is continuing, albeit not as quickly as anticipated. The implementation of the ProSeeder platform will ease our administration functions, should provide members with more transparency and access to information, and will be an important step in fulfilling our GDPR commitments. All TRICAPITAL members need to be signed up on the platform by the end of May this year, which is when TRICAPITAL must be GDPR compliant. My thanks go to Paul Yuskaitis, who is leading the implementation of this important project, which will bring savings to TRICAPITAL in a number of areas.
The Portfolio Review document, after much hard work and effort, was published for the first time in December 2017, in response to members’ request for more information, and a clearer overview of TRICAPITAL’s investments. It was a long process putting the document together, and thanks go to Julian Livingston, Andy and Kathy for all their help.
My thanks also go to Julian for all his help and guidance in pulling together TRICAPITAL’ s substantial response to the questions raised in HM Treasury’s paper on Patient Capital, which was submitted in November 2017.
MONITORING & EXITS
Thank you to Ian Burton for his leadership of the monitoring group, through which we aim to continue to bring transparency and more information to the members, with respect to the performances of the invested companies.
Unfortunately, that elusive “all-star” exit continued to elude us, as there were no significant positive exit events in 2017. However, there was, following Sphynx Medical’s exit in 2015, a modest additional sum paid to investors in Sphynx Medical, and welcome as this was, it is regrettable that no additional positive exits were achieved during the year. Regrettably, one company, Tentel, failed.
Julia Wailes-Fairbairn decided to step down from her marketing role, on account of other work commitments in 2017. To fill the gap, I am delighted to welcome Jules Horne from Texthouse into this role. Jules has a background in journalism with the BBC and Swiss Radio International, and translation with the German Foreign Office. Her company, Texthouse, was launched in 1999, and provides marketing copy, SEO website content and other marketing activities. Welcome, Jules.
We had well over 40 members in 2017. However, we expect this number to drop to just over 40 in 2018, as a small number of members have decided not to renew their membership, for a variety of reasons.
It is with pleasure that we welcome Moray Martin to the Board as of 1st Jan 2018. Moray comes from a reinsurance background having spent 17 years in the far east in a variety of leadership roles with AXA, Allianz and Lloyds of London. Moray has much to contribute, and is already adding value and having an impact in a number of areas. Welcome Moray.
We expect 2018 to be another busy year in terms of investment – and while the emphasis will continue to be on follow-on funding we shall be looking for attractive new deals to maintain the option for members to support those as well as their existing investments.
We are currently aware that there will be at least 7 (and possibly 8) follow on investment requirements in the first six months!
The Board held a strategy meeting in January of this year and agreed the priorities for 2018. These being: new member recruitment, the completion of the ProSeeder roll out, meeting the GDPR compliance requirements, and the appointment of a marketing resource.
Looking further ahead, the Board recognise another very important priority is to find a way to proactively encourage investee companies to build acquirer value and move towards exit, thereby returning shareholder value. It is accepted that there is a strong desire within the membership that we be more proactive in this area and to that end, the board is exploring the formation of an exit group within TRICAPITAL that can impact and add value i.e.
• what actions can we take, or do we take, when failing companies come back to us for money i.e. executive salary revisions, options scheme revisions etc
• How to hold companies to account when they fail to deliver shareholder value.
Finally, thank you, to you the members for all your support in 2017 and to our co-investment partners (Scottish Enterprise, Archangel, LSIP etc) for all their support. Our thanks also to LINC Scotland for their ongoing and invaluable financial support.
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