Start up - High capital requirement - how?
Discussion
Looking for some wisdom from the PH powerfully built MD types on here.
I've got a business proposition that I'm really keen to get off the ground however the capital requirements behind it are going to be high and I have no idea how it would be possible to raise the money.
The business is a decomissioning tool for the oil and gas industry although it will have applications outwith this as well. I don't want to put in to many of the details just in case someone else is reading this involved in the industry and wants to pinch my idea however it is a set of tools to decomission and recover a certain type of structure from the seabed of which there are 50-100 of in the North Sea alone and there is nothing in existence to be able to do this currently, they will also have to be removed at some point within the next 20 years or so. Personally I have been involved with a lot of decomissioning from both a Subsea Engineer and Client side of operations and I know exactly what is required to do this job and how to do it.
I've had a quote for the main piece of kit that needs to be built and that along with the other ancillary equipment is going to come to around £1.75 million pounds and of that I can not afford to put much in at all, maybe say £50K so a drop in the ocean, is there anyway to even proceed with this or is it a complete none starter?
I also have one of the Operators keen on the equipment and hoping to get some sort of commitment off them to use it to decomission their structure with it and this would generate around £500K in revenue, however this would not probably be until 2019. The lead time for the equipment to be made would be 10-12 months from the time of order.
Any help greatly appreciated.
I've got a business proposition that I'm really keen to get off the ground however the capital requirements behind it are going to be high and I have no idea how it would be possible to raise the money.
The business is a decomissioning tool for the oil and gas industry although it will have applications outwith this as well. I don't want to put in to many of the details just in case someone else is reading this involved in the industry and wants to pinch my idea however it is a set of tools to decomission and recover a certain type of structure from the seabed of which there are 50-100 of in the North Sea alone and there is nothing in existence to be able to do this currently, they will also have to be removed at some point within the next 20 years or so. Personally I have been involved with a lot of decomissioning from both a Subsea Engineer and Client side of operations and I know exactly what is required to do this job and how to do it.
I've had a quote for the main piece of kit that needs to be built and that along with the other ancillary equipment is going to come to around £1.75 million pounds and of that I can not afford to put much in at all, maybe say £50K so a drop in the ocean, is there anyway to even proceed with this or is it a complete none starter?
I also have one of the Operators keen on the equipment and hoping to get some sort of commitment off them to use it to decomission their structure with it and this would generate around £500K in revenue, however this would not probably be until 2019. The lead time for the equipment to be made would be 10-12 months from the time of order.
Any help greatly appreciated.
Firstly, you should protect your idea - ideally via a patent which will invariably take up most, if not all of the £50k you can raise yourself. You should only this personally (not your businesses).
Secondly, it is highly unlikely that you'll raise £1.75m without having to give away a fair chunk of your business. Be prepared for this and think about how this might be shaped and what you would be happy with.
Thirdly, get a contract now. Go and pitch to the O&G companies and secure a contract or two. Be honest with them and they'll be honest with you. The ideal scenario for you is to have a patent and a couple of meaty orders in your hand. That changes the concept from a high-risk, theoretical concept to a real, tangible opportunity. This will then greater broaden your opportunity of investment and reduce (possibly eliminate) the need for you to relinquish chunks of your business.
If there's export opportunities, get in touch with UK Export Finance; they have several really good packages.
Good luck.
Secondly, it is highly unlikely that you'll raise £1.75m without having to give away a fair chunk of your business. Be prepared for this and think about how this might be shaped and what you would be happy with.
Thirdly, get a contract now. Go and pitch to the O&G companies and secure a contract or two. Be honest with them and they'll be honest with you. The ideal scenario for you is to have a patent and a couple of meaty orders in your hand. That changes the concept from a high-risk, theoretical concept to a real, tangible opportunity. This will then greater broaden your opportunity of investment and reduce (possibly eliminate) the need for you to relinquish chunks of your business.
If there's export opportunities, get in touch with UK Export Finance; they have several really good packages.
Good luck.
StevieBee said:
Firstly, you should protect your idea - ideally via a patent which will invariably take up most, if not all of the £50k you can raise yourself. You should only this personally (not your businesses).
Good luck.
Definitely this.Good luck.
Once the IP is protected there are many way to skin the cat.
Patenting sounds like a great idea however looking through this https://www.gov.uk/patent-your-invention/before-yo... it seems to take around 5 years!! Seems like a long time to wait before I can start up the business.
I assumed that I would have to basically give away a reasonable chunk of the business to attract the investment but I assume that this would not be via a bank and would be some form of investor, how do I go about finding one?
The UK Export Finance route sounds interesting as well, there would be applications so I'll have a look at that.
I assumed that I would have to basically give away a reasonable chunk of the business to attract the investment but I assume that this would not be via a bank and would be some form of investor, how do I go about finding one?
The UK Export Finance route sounds interesting as well, there would be applications so I'll have a look at that.
cerbfan said:
Patenting sounds like a great idea however looking through this https://www.gov.uk/patent-your-invention/before-yo... it seems to take around 5 years!! Seems like a long time to wait before I can start up the business.
I assumed that I would have to basically give away a reasonable chunk of the business to attract the investment but I assume that this would not be via a bank and would be some form of investor, how do I go about finding one?
The UK Export Finance route sounds interesting as well, there would be applications so I'll have a look at that.
If you don't patent are there any other barriers to entry? I assumed that I would have to basically give away a reasonable chunk of the business to attract the investment but I assume that this would not be via a bank and would be some form of investor, how do I go about finding one?
The UK Export Finance route sounds interesting as well, there would be applications so I'll have a look at that.
Could you licence the right to use your IP to an entity with the cash to make it happen?
I really do think it would be worth spending some of your 50K on taking some in depth advice from and IP specialist.
I think the main barrier to entry is that there is only a limited number of these structures to be removed and the cost to build the equipment is high, therefore once there is one set in existence and it gets its first job out of the way and a successfull track record in place I doubt anyone else would take the chance to copy the idea (I'd hope they would just come to me and offer to buy the business).
I will however go and have a chat to an IP specialist and see what they think about it and see if there is any way to protect the idea relatively quickly. I know there have been a few O&G related patents such as the Vertical Lay System patented by Technip however SS7 just got round this by building one that was angled by a few degrees and did exactly the same job.
I will however go and have a chat to an IP specialist and see what they think about it and see if there is any way to protect the idea relatively quickly. I know there have been a few O&G related patents such as the Vertical Lay System patented by Technip however SS7 just got round this by building one that was angled by a few degrees and did exactly the same job.
the advice above is good:
- protect your IP
- get some proforma contracts in place
- get investment
protecting IP does not take 5 years - go and see a patent attorney, I have used Marks & Clerk in the past - others exist - get their advice - do that first
one the patent application goes in - that is the significant date of protection if the patent is granted...
then get some contracts
then approach for investment:
- the companies who might benefit
- other companies in the industry
- those who have made money in the industry
- 'dragons' a la dragons den
- funds
- do your research and talk to people - once you are protected your risk in talking is low - but if you use another company to advise you on how to do it you will blow through all your money you have very rapidly - it is very doable with enough research online - but it will be about continually networking until you find the right person - as mentioned above though IP and contract makes it interesting - without one of those, not of interest...
- protect your IP
- get some proforma contracts in place
- get investment
protecting IP does not take 5 years - go and see a patent attorney, I have used Marks & Clerk in the past - others exist - get their advice - do that first
one the patent application goes in - that is the significant date of protection if the patent is granted...
then get some contracts
then approach for investment:
- the companies who might benefit
- other companies in the industry
- those who have made money in the industry
- 'dragons' a la dragons den
- funds
- do your research and talk to people - once you are protected your risk in talking is low - but if you use another company to advise you on how to do it you will blow through all your money you have very rapidly - it is very doable with enough research online - but it will be about continually networking until you find the right person - as mentioned above though IP and contract makes it interesting - without one of those, not of interest...
As others have said speak to an IP professional. Most offer the 1St hour free to give you an idea. There are a number of ways of protecting your IP without going directly to the expense of a patent application.
I don't know about your geographical area but check out if there are any local enterprise offices that can give you advice and put you in contact with the necessary people. In Scotland we have Business Gateway and they can be quite good if you get a good business advisor.
Also, check your employment contract, if you are an employee, as some companies have it in their contract any IP becomes there property while your employed with them, even if you come up with it in your own time.
I don't know about your geographical area but check out if there are any local enterprise offices that can give you advice and put you in contact with the necessary people. In Scotland we have Business Gateway and they can be quite good if you get a good business advisor.
Also, check your employment contract, if you are an employee, as some companies have it in their contract any IP becomes there property while your employed with them, even if you come up with it in your own time.
anonymous said:
[redacted]
Tricky but by no means impossible. If it was, there would hardly be any industrial innovation as the risk to investors would be too high.All the OP would need to get is an 'in-principle' order. In other words, BP or whoever saying, officially, that if the tech works, then they'll confirm the order. This makes the risk far more palatable.
An old school friend started this company, backed by a Norwegian shipping family. He came up with the idea, designed the boats, had them built, operates the company etc, the Norwegians put up the cash for a large % of the business. They were clients at his previous employer.
http://njordoffshore.com/
http://njordoffshore.com/
Yep its not actually wellheads but its another part of subsea infrastructure. If you're not involved in O&G at all you'd be amazed at the tens of thousands of tonnes of equipment that is located on the bottom of the North Sea that will ultimately all need recovering at some point.
I think you maybe right about doing it as a joint venture with an existing player in the area or with an interested operator, unfortunately the one that I am closest to has just been bought out and may change the dynamics of what is possible for them to do. I'm going to have a chat to them when I get back onshore next week though to sound them out.
I think you maybe right about doing it as a joint venture with an existing player in the area or with an interested operator, unfortunately the one that I am closest to has just been bought out and may change the dynamics of what is possible for them to do. I'm going to have a chat to them when I get back onshore next week though to sound them out.
cerbfan said:
Good advice thanks and interesting to know that the patent start date comes into effect on the day of application. I see that Marks and Clerk have an office in Aberdeen as well, I'll give them a call.
Mrs R is a patent attorney and Director of a multi-national IP firm and is based in Aberdeen. Her area of expertise is Oil and Gas technology.If you drop me an email I can put you in touch (fnarr fnarr)
For someone like Schlumberger that amount would be a drop in the ocean. if it's something that needs to be done and there's a commercial viability I would be surprised if they weren't addressing it.
Having seen something of this industry I'd be amazed if 1.75m would get a new company and product offshore.
Having seen something of this industry I'd be amazed if 1.75m would get a new company and product offshore.
Hi OP. Interesting topic.
Couple of thoughts from myself.
Firstly, if you’re looking to go it aloneish, I really do think you’ll need to put up more of your own capital, otherwise you really will have to handover a huge chunk of the business to other investors. It’s a sad reality. Can you not raise anymore (watches/cars/house)? To gain investment and the confidence of those investors, they will usually want to see the level of your own commitment to the project.
Secondly, have you thought of making contact with Decom North Sea or attending any of their events? It may produce some leads or support.
http://decomnorthsea.com
Good luck and keep us posted
Couple of thoughts from myself.
Firstly, if you’re looking to go it aloneish, I really do think you’ll need to put up more of your own capital, otherwise you really will have to handover a huge chunk of the business to other investors. It’s a sad reality. Can you not raise anymore (watches/cars/house)? To gain investment and the confidence of those investors, they will usually want to see the level of your own commitment to the project.
Secondly, have you thought of making contact with Decom North Sea or attending any of their events? It may produce some leads or support.
http://decomnorthsea.com
Good luck and keep us posted
Thanks Renmure, I've sent you an email and would definitely be interested in having a chat to your wife.
dfen5, yes 1.75 Million is peanuts in some areas of Oil and Gas however other parts can be run on much less money. The total cost for decomissioning this aspect of the field will be several million however all these other costs would be paid by the Operator. All I would do is hire the equipment to the Operator along with personnel to go offshore and run the equipment. There will be an onshore trial to carry out however costs for this are generally born by the Operator as well.
dfen5, yes 1.75 Million is peanuts in some areas of Oil and Gas however other parts can be run on much less money. The total cost for decomissioning this aspect of the field will be several million however all these other costs would be paid by the Operator. All I would do is hire the equipment to the Operator along with personnel to go offshore and run the equipment. There will be an onshore trial to carry out however costs for this are generally born by the Operator as well.
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