The Hindu Business Line : Dealmaking for UK plc

As Dealmaker, Alpesh Patel brings exciting technologies and high finance together `My strategy for India is — open up the communication channels right across all the cities, either through Nasscom, the IITs, or the IIMs,' says Alpesh Patel

ALPESH PATEL, Dealmaker, Global Entrepreneur Programme

It's an intriguing designation that Alpesh Patel sports, one which he too is rather amused by. Appointed Dealmaker for India under the UK Trade & Investment's global entrepreneur programme (GEP), Patel says that it pretty much sums up what he has to do - strike deals.

The GEP champions new business ideas by bringing together entrepreneurs and those who can best guide them towards success in the UK. The GEP was first launched in the UK and following its success it was introduced in India in 2004. The GEP helps entrepreneurs looking to expand to the UK by connecting them with its Dealmakers who are serial entrepreneurs with technology and global business experience.

Patel, who is of Indian origin but has grown up in the UK, was appointed last year as Dealmaker and is clearly enjoying his new role, though he admits life's quite hectic ever since. He is the fifth such appointed by the GEP and the first for India. As a Dealmaker, Patel will provide guidance to a growing number of Indian life sciences and technology entrepreneurs interested in setting up companies or pursuing opportunities in the UK.

Patel, a serial entrepreneur himself, has started and built five companies since 1997, including Agile Partners Asset Management, one of the best performing hedge funds in 2004. In Chennai recently, Patel spoke to BrandLine on his role and the deals he swung and will also swing in the future. Excerpts:

What's the dealmaker programme about and how does it work?

The dealmaker programme within the global entrepreneur programme of the UK Trade and Investment was started two years ago and was prototyped in the US.

The basic rationale behind this is that the British government thought there was a market failure by British angel investors and British venture capital investors of tapping into very early stage technologies around the world, whether they came out of Korea, Russia or the US.

So, they tried out this concept in the US and had about 22 successes whereby they found early stage intellectual property rights in life sciences, bio-tech, software and then matched that with the funding ... so the dealmaker's role is to act as a facilitator to provide a soft landing for those companies into the UK.

But, that's only if they want to incubate in the UK, isn't it? Entrepreneurs may not be looking at the UK only to develop their technologies... ?

That's right, they may not consider the UK because of several reasons, either because of perceptions or so many gaps in their knowledge.

To give you an example, the promoter of one company in Delhi was concerned about moving his family across, but didn't realise that part of the services that the High Commission offers is to give them advice on ancillary services and not just on where to locate — personal things like what rentals are, office costs, good schools and so on.

Often, as in India, I will only find a scientist who needs somebody to manage the commercial aspects of his business as well as capital. Or, if all three (the business idea/technology/ capital) exist, then they want to set up in the UK to make it their global centre. The reason they want to be located there is that while they will do their research in India because of the lower costs and brain power, they would like their sales and marketing to be in the UK for an international perspective.

But, is that a pre-condition for them? That they should be inclined to want to move to the UK?

That's right, we would want some benefit for UK plc. It could either be the migration of the entrepreneur — not a necessary prerequisite if the businessman is coming regularly — as that improves the UK scientific gene pool. We would like the IPR to be licensed to a British company; it could be their British company as they can own 100 per cent of it. But, that's not relevant; what's important is that there should be a commercial reason to be in the UK and we are facilitating it or accelerating it or assisting them in finding the capital or the right management team. What the government doesn't do is give grants because that would skew the market and you would never know how good the company is.

We found there's a large appetite for these types of deals among VCs who normally look at later-stage deals but have not been coming here because they don't have the time or resources. So, the government with their various posts around the world, where the scientific officers have been in touch with the scientific community... they now have a place to send entrepreneurs with their proposals whereas earlier diplomatic posts would look to assist only the larger companies. How have you been scouting for Indian companies to tap; what channels have you been using?

My strategy for India has been this — open up the channels of communication right across all the cities, either through Nasscom, the IITs, the IIMs. I expect to look at 250 business plans in the next 12 months and select about 10 to start with. So far in the last nine months we've had four successes — either they are companies incorporated in the UK or raised capital in the UK — what we consider wins in this programme is a company which sets up in the UK, or, if we migrate intellectual property or an entrepreneur to the UK.

Which are the companies that you've had success with?

One of the companies is called Eon PreMedia, incorporated in the UK, and we are currently doing a road show for them to raise about a million dollars. The other one is Opelin, which is in the data management / storage space. They have technology which allows them to remotely store data more efficiently — one of their clients is Reliance, for instance. Now, they are also in capital raising mode and I've set up a series of venture capital meetings. Then we have a nano-technology scientist — we are still in the process of finalising with him. The fourth one relates to an individual who set up a large back-end infrastructure to a UK travel company - he sold out, made a lot of money. In his case, the entrepreneur was there and so was the capital. We found him a partner in the UK who co-invested with him in a new venture and we migrated entrepreneurial talent. He's a global player, but will have operations in India, but looking for his front-end and deal flow from the West, which is how many Indian companies are — earn in the West and cover costs in India.

Does your role stop with finalising the deal and go on to the next one?

There is some after-care involved. We haven't got to the stage where we can completely let go. The investors would like some kind of continued hand-holding. They see the dealmaker as some kind of trusted intermediary — because we represent the government, they trust us and there's an honest broker's role there and we do offer our services even after it's been done.

You mentioned that you will be sifting through 250 project reports in the first year. So, how many more are you likely to finalise and how close are they to finalisation? And, in what areas are these?

I started last July and I've had four wins in10 months. For the next 12 months I anticipate another five wins. The pipeline has about 10 promising projects of which 2-3 will be wins, and more will enter the pipeline during the year. The areas are diverse. I take a bottom-up approach, i.e., look at the company first, not the sector, so the sectors can be very varied. One is in financial services algorithms, another is in plant genetics. I would say with my process now finessed over the past year I can convert a scientist with technology looking for money and management into a funded venture in 4-5 months if all goes efficiently. Delays are due to legals and due diligence.

How are the proposals being channelled to you?

The channels I've adopted — there are fat pipes as it were — through the likes of the IITs, Nasccom, who themselves are filters for accepting business proposals. And, I will get the ones relevant to me. For example, at IIT, Mumbai, they will make 15-minute presentations to me and I will have some idea about who I am going to run with. To finalise the four we've done now, I must have looked at some 150 proposals. One came from TiE, from the IIT as well as from our High Commissions. I want the companies to have earnings in 3-5 years of about $10 million; that's a realistic expectation, and with a market cap of $100 million, which is why of about 250, there will be 5-10 worth looking at. But, since this is early stages, I don't anticipate raising more than a million dollars. There are VCs out there who are willing to throw millions of dollars at a later stage but the funding is needed for the early stage.

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