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11 April, 2015 - 15:30 By Tony Quested

Awards winners and finalists show Martlet’s strength

Martlet investment director, Peter Cowley

When Chinese ICT giant Huawei agreed to buy Cambridge wireless innovator Neul for $25 million last September it provided local angel vehicle Martlet with its first exit to return cash.

It was a landmark deal for Martlet, the angel investment vehicle of the city’s largest industrial company, Marshall of Cambridge. 

Martlet is celebrating its fourth anniversary this month and investment director Peter Cowley – not given to hyperbole – is confident of more significant successes as the portfolio continues to grow and mature. That portfolio has already expanded to take in 28 investee companies and Cowley and the investment management team at Martlet endeavour to keep due diligence tight and exceptionally focused.

Twenty-five of Martlet’s investee companies are already generating revenues and only three remain in a phase where they are still developing Intellectual Property. Almost half of those 25 revenue-generating businesses are enjoying some profitable months, says Cowley.

Since Martlet made its bow in April 2011, it has invested more than £2.6 million and has suffered only two failures – an impressive strike rate for a relatively fledgling angel vehicle. Over that time Cowley reports that there have been a total of 59 investment rounds, of which 31 are second or third rounds. Although Martlet has not participated in every round offered to it, that tally of 31 further rounds has featured no fewer than 21 up rounds, nine flat ones and only one down round.

Cowley said: “It has been a fascinating first four years for Martlet and overall we are exceptionally pleased with the way things have gone. It is heartening that some of the portfolio companies have already become profitable – indeed, several have revenue growth rates of 2X to 3.5X per year.

“We are also pleased to note that since we started our investments, more than 150 jobs have been created within the portfolio companies.”

Cowley estimates that Martlet’s portfolio value has increased by around 27 per cent but adds a rider: “As all investors in unquoted companies know, that is illiquid and based on latest round valuations, but comfortably more is anticipated within the next 12 months.”

Variety in terms of nature of business has certainly spiced the Martlet pot. Its investee companies operate in sectors which are among the biggest wealth and job creators in the UK and Europe. They reflect Cambridge Cluster strong suits such as healthcare and MedTech – Martlet has invested in on-line CBT provider IESO Digital Health (formerly Psychology Online)  –  Mobile telecoms – principally through the exciting CCS – CleanTech;  Security (Undo Software recently won the Business Weekly Award for Disruptive Technology with its debugging solution and Arachnys goes from strength to strength); SaaS software; the growing segment of FinTech – Martlet backs the innovative Cambridge crowd funding platform, SyndicateRoom – Printing; Semiconductors; Sensing technologies (Cambridge CMOS Sensors is already a world leader while Audio Analytic, the young sound technology specialist, is picking up international traction); EdTech (witness Knowledge Transmission); and Software tools.

Cowley says that most of the business models followed by portfolio companies can be labelled B2B, although some are B2B2C.

As if to justify the adage that life begins at 40, a look at the teams Martlet is supporting shows that the average age of the founders is 40.4 years to be exact. The emphasis is very much on team with the average number of founders per investee company standing at 1.96.

The young companies are also adept at identifying management talent, as Cowley reports an average number of 1.7 Non-Executive Directors on the boards of portfolio businesses.

Fresh opportunities abound. Cowley says: “I glance at about a dozen new deals a week and look more closely at about one per week. As a rule of thumb, Martlet is aiming to make a new investment every eight weeks, although that timescale very much depends on the quality of opportunities set before us.”

The overriding message is that Martlet is in the marketplace 24/7. It is actively accepting and closing deals with promising new startup companies, that can prove they have:-
• A great entrepreneurial team
• Thorough understanding of their market
• Proved their concept
• A clear route to high revenue

Martlet normally co-invests with angels and small seed funds and, as its burgeoning portfolio demonstrates, has the capacity to follow in subsequent investment rounds. Cowley says: “We do not decide on investments based on specific market sectors; rather we invest in entrepreneurial people and teams with an idea, an identified market, a recognised monetisation opportunity and excellent growth potential.”

• If you believe your startup has what it takes to fulfil those criteria, visit the Martlet website.

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