The Technology Partnership: A Carbon Trust Incubator

We speak to Lucy Butler of TTP about the Carbon Trust - TTP Incubator. Since TTP became a Carbon Trust 'Incubator Partner' in 2006, they have successfully supported many early-stage companies; we explore the process these companies moved through, who TTP are working with now and how companies considering becoming involved may do so.

The Carbon Trust Incubator was formed in April 2004. In the past five years it has worked with over 70 companies securing over £70 million in private finance to help grow these. The objective of the incubator is to help prepare promising early stage businesses who have developed innovative carbon saving technologies and who demonstrate real commercial potential and the appetite for high growth. Incubator services are provided through the Carbon Trust's four 'Incubator Partners'; TTP Plc, Angle Technology, Imperial Innovations and Isis Innovations.

Companies may be referred to partners by the Carbon Trust or apply directly, with each incubator offering the following assistance:

- Strategic and Business Development Consultancy
- Corporate Finance Advice
- Management Team Recruitment and Mentoring
- Market Research and Engagement
- Guidance on Intellectual Property

The selection processes for companies to be included in the programme are described as competitive and rigorous with both entrance and exit criteria. To screen the companies entering the incubator and manage the number of organisations receiving support the criteria look in detail at the commercial management team as well as the technical management team. Companies are then expected display continual progress, meeting agreed targets set with the incubator partner in order to meet the exit criteria. The average time spent in the incubator is between 12 and 18 months.

All of the incubators are funded by the Carbon Trust, who provides up to £70,000 of advisory support to each accepted company. These funds are given directly to the incubator partners who are then responsible for providing companies with the services they require. The incubators are situated in Guildford, London, Oxford and Cambridge but all work with companies throughout the UK on a virtual basis. Further assistance is given to companies via two professional service providers, Grant Thornton and Mills and Reeve, whom provide each incubatee with 4 to 8 hours of legal and business advice.

The Technology Partnership (TTP) is able to draw on expertise in both scientific, engineering and market research expertise from TTP plc as well as the commercial and financial skills of TTP Ventures. The partnership was founded in 1987 and creates new businesses based on advances in technology from a number of sectors, making it a great candidate to become a carbon trust incubator partner in 2006. TTP plc state that they have grown to become one of Europe's leading independent technology and licensing companies, whilst TTP Ventures, who manage a £34m fund, describe themselves as experienced investors in clean technology businesses.

We speak to Lucy Butler, a consultant working in the Carbon Trust - TTP Incubator, about the incubator programme.

Why was TTP selected as a Carbon Trust Incubator?

TTP has a record of spinning out technology companies, so is ideally placed to provide this type of support. We have considerable experience of technology business incubation, insight into many different models of value creation, and broad networks of contacts. We have 300 consultants whose technological and commercial knowhow covers a wide range of disciplines. Finally, TTP Ventures can offer first-hand expertise in investment advice.

Do all Incubators work in essentially the same way or do different incubators have different strengths? If so, what is TTP's strength?

All of the incubators provide essentially the same services, including market analysis, IP assistance, investment advice and technology support.

TTP's core strength is the breadth of expertise which it can offer in house. Our business is the commercialisation of technology, so we are well positioned to provide advice from both technological and commercial perspectives. We have contacts in many relevant companies and understanding of a diverse range of markets. We have experts in IP strategy, and active investors in TTP Ventures who can provide real world investment advice.

How many companies are you working with currently?

Since the incubator started three years ago, 21 companies have been accepted. Of these, 15 are in active incubation at the time of writing. We are still actively recruiting new incubatees, so hope this will increase over time!

Are you involved in the selection process for new companies? What is the single most important thing a new company should consider when making an application?

TTP pre-screens all potential applicants before presenting them to the Carbon Trust. We only put in applications for companies that we feel have a reasonable chance of success in front of the Carbon Trust panel.

The pre-screening process usually involves initial contact, a telephone call or two, and one or more meetings. We would then work closely with the company to prepare the application. We might also have discussions with the company's partners, potential customers or other referees, since an independent endorsement is a real credibility boost.

We judge on a range of criteria, of which the most important are the strength of the carbon case and whether the company can scale to be a serious business. The single most important piece of advice would be to do your homework - we want to see tangible evidence of commercial potential and scalability, quantitative carbon saving estimates, proven technology and a committed and rational management team. In addition, it is important to show awareness of your strengths and weakness, and to have put plans in place to address any areas of weakness in future.

Are you able to describe the general pathway incubatee companies follow once accepted onto the programme?

The exact nature of the incubation process will vary according to each incubatee's needs. The work plan for incubation will be discussed prior to application, and stated in the application form to the Carbon Trust.

Typically, once the incubatee is accepted we would have a project kick-off meeting to elaborate on the work plan, detailing deadlines and formalising responsibilities of TTP and the incubatee. We would then begin the work plan. This might start with aspects such as technology evaluation, IP analysis and market research, then move on to business plan development and investment strategy. Each phase is usually an iterative process involving ongoing discussions with the incubatee, through telephone, email or face to face. The frequency of face-to-face meetings depends to some extent on geography!

TTP Group consists of both TTP plc and TTP Ventures, how closely do the two work together? What differentiates one from the other?

The incubator team is drawn from both TTP plc and TTP Ventures. TTP plc is a technology consultancy, with expertise in spinning out companies and bringing new technologies to market, while TTP Ventures provides venture capital to technology companies. TTP's role in incubation is to provide scientific and market expertise, while TTP Ventures provides advice on fundraising and business models.

Carbon Trust Incubator Partners work virtually but as TTP has its own science park have any of the companies involved chosen to locate here? What advantages does this have?

At present, none of our incubatees are located at the science park. However, there is no reason that this should not change in future. There are clear advantages to be had from locating in Melbourn Science Park. These include excellent access to incubator personnel and to other tenants of the science park (both formally and informally), proximity to the Cambridge Cluster (bringing networking opportunities, recruitment benefits and exposure) without the central Cambridge price tag, and good transport links.

Once a new company has been accepted into your incubation service, what involvement does the Carbon Trust have? (Are you required to report back to them or is it left in your hands)

The Carbon Trust is involved throughout the incubation process. It receives regular monthly progress updates, and reports on our findings and conclusions after each phase of the work plan. It also approves any changes or extensions to the work plan. For example, as the company develops the work plan might need to evolve, and we would go back to the Carbon Trust to discuss this. Additionally, in some cases only a portion of the possible available budget is approved initially, with any further work depending on how the business develops.

What percentage of companies have completed the programme and gone on to become commercially viable companies?

The incubator has been running for less than 3 years, with only three of our companies having graduated so far, so it is still early days. However, all of our graduates are still active in business, and two have raised finance since joining the incubator, so the early signs are very promising!

What has been your biggest success story to date?

The incubatee company which has raised the most money is Nujira, who raised £10m towards the end of last year. Nujira has developed energy efficient power amplifier technology for next generation wireless networks and devices. A more recent success story is GenDrive Ltd, which has just raised significant angel funding. GenDrive has developed a technology that connects renewable energy devices to the grid. Raising finance is challenging in the current economic climate, and TTP has provided valuable support to the fundraising process.

What level of business is targeted the incubator targeted at? Why?

The incubator is targeted at companies who have a viable business but are still early-stage and hence in need of support. Typically, this would be a company who might have raised some funding from angels, grants or friends and family, but still needs significant future investment. However, we will also support more advanced companies who have raised more substantial amounts.

Our aim is to support and accelerate the development of exciting businesses, and help them bring carbon-saving technologies to market more quickly. Therefore, we will consider any company which can still demonstrate a need for incubation, as long as they have an exciting carbon saving technology, good commercial proposition and strong management team.

What should be the next step taken if a company is considering applying to the incubation service?

They can approach one of the incubator partners such as TTP directly - for example they could email me on lucy.butler@ttp.com. The company should initially provide some basic information to demonstrate that they meet the criteria for incubation. This should include concise answers to the following questions:

- Are you registered in the UK?
- What is your innovation/technology and how does it compare to existing alternatives?
- How can you save CO2 (or other greenhouse contributor)? How much can you save?
- What is your IP position?
- How advanced is your technology? (Is your concept proven? How close to market?)
- Do you have evidence of market interest?
- What is your expected business model / route to market?
- Tell us about your team
- Tell us about your financial situation (any previous investment, fundraising plans)
- Any other supporting information (e.g. partner agreements, awards etc)

www.ttpgroup.com/carbontrust