Manoj: What made you launch your company? Briefly, tell us about the company history and the management team.

Ben: EV Group (previously Enterprise Ventures) were already looking at the Vidiactive project before I came on board. EV had invested in Next Device, a company I had co-founded and sold to Mentor Graphics. I had kept in touch with EV and talked about a few ideas when Vidiactive came up. Having been primarily involved in the mobile industry, I saw the emerging trends in web TV as being an area of high potential - not unlike the mobile industry a few years ago. I felt that there was the opportunity to bring some innovative thinking into the space, while also being aware of the complexities of the value chain. Ken Tindell, the CTO, was already there as was Iolo Jones, the chairman. Ken and Iolo are both really strong talents in their space. Ken has founded and exited companies and brings great perspectives on opportunities. He never does things just because that's the way the industry has always done it - he continually challenges assumptions and brings the best, freshest thinking to a problem. Iolo has been involved with the TV industry all his career and brings a wealth of contacts and a fast track to navigating the main players we encounter. He's been instrumental in making sure we don't solve the wrong problem really well! Having had a good experience with EV as an investor, and seeing the strength of the team and the potential of the space I made the decision to go all in with Vidiactive.

Manoj: What problem(s) do Vidiactive solve? Why do you think Vidiactive solve the problem better than others?

Ben: We solve 2 problems:

1. Wouldn't it be great if you could browse for and find web video on your browser, but then watch it full screen on your TV in a full TV experience?  We allow you to watch almost any web video on your TV in a full screen viewing experience. Examples here are the obvious catch up services like iPlayer, 4OD, ITV viewer and so on. We also enable the large video sites like YouTube, but crucially we also easily enable more niche sites. So if you are into cycling tv, sailing tv, angling tv, or whatever, you can now watch it in a full screen experience on your TV rather than being hunched over the lap top. As an example, our development team watched the recent England game online - only they watched it in great quality on a 42" plasma screen TV drinking beer and eating pizza, not huddled around a laptop.

2. Wouldn't it be great if you could manage all your the web video on your own portal on your laptop or PC browser and have your preferences reflected on the TV screen automatically? There is a lot of video content available, and its growing fast. We allow people to watch all of this on TV, but we know that managing all of this with a TV remote is impossible. We link personal video management portals with TVs. This allows you to search, forward, mark, create playlists, receive recommendations, and so on using your browser. This is how people already behave - we don't try and change that by getting them to do complex things with a TV. You manage from your browser and your choices appear on TV UI when you switch it on. For example, at work in your lunchtime you might come across 4 pieces of web video that you want to watch. You can mark them with the Vidiactive solution and when you get home and switch on your TV you have a notification that there are 4 new pieces of video for you to watch. You then use a simple remote to select the video and watch in full screen.

Manoj: Who are your key competitors? How do you differentiate from them?

Ben: We don't believe there is anyone else implementing a solution like ours. There is however a lot of activity in the web video space. Most suffer from limitations. Many of them focus on a restricted set of video content creating a poor selection for users. The reasons for this vary, but we have unique web video playing technology which allows us to show just about anything in a proper TV format. So for example with competitive approaches, you might be able to see iPlayer, but not 4OD or YouTube or Hulu. With Vidiactive, you can see it all.  A lot of other solutions are focussed on cramming more and more interactivity and options onto the TV screen. My view is that this is the path of least resistance when you get 2 industries getting together. Internet + TV = desktop type experience on a TV screen. But this type of approach ignores 2 things;

a) The TV is a lean back experience. in the US, 50% of people who record programming on their DVR don't skip the ads. TV is not inherently interactive.
b) TV screens are shared screens. When you share a screen you can't a personal interaction experience

Its by understanding the above 2 points that we have come to what we believe is the most elegant solution.

Manoj: What stage are you in, in terms of execution of your plans? What are your plans for the next 12 to 18 months? What are the key challenges you are facing right now? What help do you need if any?

Ben: We've been going since the beginning of the year and are about to release the beta solution. We are in discussion with some major telecom and TV service suppliers about the solution, in addition to some very well known hardware companies.  We are also planning on co-exhibiting at CES in Las Vegas in January with a major technology company (to be announced!). Plans for the next 12 to 18 months are trial and then production roll-outs of the service. We are also looking at a further round of funding to accelerate the penetration into the market.

Manoj: What made you launch your company? Briefly, tell us about the company history and the management team

John: FaceTec (owned by me) has a patented facial recognition personalisation platform which enables a face in an uploaded image to be recognised & automatically (i) extracted and placed in another image (i.e. replacing the face of the character in the recipient image) & (ii) to add assets e.g. face paint, make-up, glasses etc to the donor image. FaceTec was approached by Moonpig 18 months ago and the two companies were close to signing a licensing deal for the platform, however my co-founder of Whamoosh! (Alan Oliver, who used to own his own greeting cards publishing company, Kamrok) and I decided a year last October that the market opportunity was good enough to launch our own web based online 'print to demand' personalised greeting card company. The business was launched 2 weeks ago.

The UK market is the largest in the world per capita (£1.5billion). Online personalised cards account for less than 1% of the market; Moonpig has c.90% of this market. The market does little consumer marketing, relying mainly on the vast no of distribution channels to drive sales. The market is mature, staid and ripe for innovation (especially in respect of the internet). Moonpig have validated the market opportunity and evangelised the personalising of greeting cards; they recently posted £20m t/o & £6.7m profit. Our own forecasts project this level of profitability.

My background started in the ‘80’s as managing director of CIC Video (a Paramount Pictures & Universal Studios JV) which I grew from £5>65m in 3 years. In the ‘90’s I came back North and joined the founders of Psygnosis a Liverpool based video games company which Sony bought for c£30m in 1993, the year after I joined. I went onto run the Worldwide publishing business with offices in eight countries and after backing the business into Sony PlayStation in the late ‘90’s became publishing exec for Sony PlayStation Europe. Since 2001 I have been involved in two University spin-outs, (i) Celoxica (Oxford University) where the management team raised £33million before it became an AIM listed company and (ii) in 2003 Genemation (The University of Manchester) where I raised £1.5 million. FaceTec acquired the IP and assets of Genemation in early 2008

Manoj: What problem(s) do your company solve? Why do you think your company solve the problem better than others?

John: It’s not so much a problem as an enabling solution. Like Moonpig we are giving customers the opportunity to personalise physical merchandise and deliver a service that supports and enhances that process. We have set out to make the Whamoosh! platform a superior customer experience than our competitors not only in terms of our USP but the way we deliver it and the service allied to it. Our USP is the Face-it! personalisation platform which we have licensed from FaceTec. It takes what Moonpig started to the next level i.e. the user who’s face is uploaded becomes the character in the greeting card. Moonpig are trying to emulate what we can do but frankly it’s very poor and I don’t think customers will be very impressed when they see what they can do with Face-it! cards. There are three patents behind the personalisation platform which in terms of the core algorithms and the platform itself have taken twelve years of University research and commercial development to evolve into what supports the Face-it! range. It means that there’s a very high barrier to entry.

Manoj: Who are your key competitors? How do you differentiate from them?

John: Moonpig; there are three others but they tend to be Moonpig-lite. Our main USP is the Face-it! platform, which we believe takes personalisation to the next level. We create our own designs; Moonpig relies heavily on licensing 3rd party designs. We have put a lot of effort in making user functionality and the user journey more intuitive and rewarding than our competitors e.g. users can access from within the site their images stored on Facebook & Flickr. Users can also store their favourite images on Whamoosh! and we have given the majority of our cards editable verses

Manoj: What stage are you in, in terms of execution of your plans? What are your plans for the next 12 to 18 months? What are the key challenges you are facing right now? What help do you need if any?

John:The web platform and print/fulfilment pipeline is live, so we already match what Moonpig and our other competitors can do as an end to end solution. We are focused on marketing; creating awareness and driving traffic to the site. We’re working with Weber Shandwick on PR and WebComms (a fellow Daresbury Science Park tenant) on SEO optimisation and PPC

As previously stated the focus is now on marketing the offer and driving traffic to the website; this will remain our major activity for the foreseeable future. As cash flow increases we'll expand the art team and launch new greeting card ranges and product lines e.g. mugs, posters and calendars We may bring in investors in two stages, (i) early next year to pump prime the initial marketing push & (ii) in 18>24mths time to raise the investment in marketing & bring the printing/fulfilment pipeline in-house (probably based out of Guernsey) ready for a likely trade sale in 3>4 years. We believe Moonpig will be in play as an acquisition target within the next 18>24mths and that will trigger interest from any acquirer’s competitors in the sector and will then put Whamoosh! in play

Date: 06/11/2009
Time: 10:30-17:00
Place: Manchester Business School, Booth Street West, Manchester, GB

Description:
Smart Networks: The Importance of Relationships and Networks in Radical Innovation

Keynote Speakers:

Professor Hakan Hakansson, Department of Innovation and Economic Organisation, Norwegian School of Management
Dr. Lisa O'Malley, Department of Management and Marketing, Kemmy Business School, University of Limerick
Dr. Vicky Story, Nottingham University Business School

IBM has recently introduced the Smarter Planet programme with a focus on the Smarter City; this is a new model for, not only, thinking about, but also, implementing sustainable living. The model allows us to connect the three overarching stakeholder groups of the Smart Consumers, Smart Businesses and Smart Government within the context of where interactions really happen - the City. In a Smarter City the stakeholder groups work together in a more integrated way. Within business-to-business marketing the idea of connected businesses that work together cooperatively and in a smarter way has become a key theme of research. Assessing the value of relationships, netowrks and interactions in the conduct of commercial activities is critical, particularly for radical innovations, which have been found to rely more heavily on these relationships and networks to bring more innovative ideas to market. Thus central to the idea of the smart business in a sustainable environment is its integration within an innovation netowrk.
This seminar will address this topic, with particular reference to the role of relationships and netowrks in the processes, by taking the perspectives of a variety of academic speakers and case studies from industry and the public sector.

Case Studies:
TrusTech (ACTNoW - Dr. Richard Deed) will focus on network developments that underpin the successful linking of partners (the NHS, Industry and patients) in facilitating the placement of clinical trials.

M:KC (Manchester Teams - Dr. Cathy Garner) willk focus on the development of the Innovation Manchester Teams programme to enhance the city-region's capacity for innovation through building a networked community of innovation.

Northern Startup 2.0 (Ecosystem for Tech Startups - Manoj Ranaweera) will focus on how we can ensure the best possible environment for startups to succeed through knowledge share and access to capital and talent.

Programme
10:30 - Reception
11:00 - Keynote speakers: Dr. Lisa O'Malley and Dr. Vicky Story
12:00 - Open discussion
13:00 - Lunch
14:00 - Keynote speaker: Professor Hakan Hakansson
15:00 - Case study presentations
16:00 - Panel discussion
17:00 - Reception - light buffet and further discussion

This event is free to registered participants. Demand for places is expected to be high and places are limited, so registration as soon as possible is essential. Please contact Michelle Kelly at Manchester Business School on michelle.kelly@mbs.ac.uk as soon as possible.

I have been privy to the launch of Envestors in Manchester for sometime, and was amazed to see the following article on the Insider before the official launch. Once I have clearance, I will reveal more information about this.

News brief from Insider

London investment club Envestors is planning to launch in Manchester as part of a move to take advantage of "wider pockets of wealth". The network, which was set up in 2004 to offer high-net-worth individuals the chance to invest between £20,000 and £2m in early-stage businesses, also plans to expand into Jersey. Partner Scott Houghton said: "Our model involves us identifying a shortlist of early stage businesses that show real promise, which then benefit from a no-nonsense approach to help them prepare to get funding." The group won Private Investor Network of the Year at the annual Investor Allstar awards.

Crains Manchester Business reported today that Scott Fletcher's (NS20 Dragon) spin off company, Smart Identity, which operates out of Daresbury Innovation Centre, plans to change its name to Conduco Plc.

Reading between the lines, it looks like Scott is realigning his business portfolio. ANS Group which Scott founded is a key reseller of Cisco products. Conduco will no doubt be working on innovative, and therefore more challenging projects, whilst ANS Group continues to grow with mature product offerings.

Prediction (most likely to be wrong): ANS Group will acquire Conduco withing the next two years.

Original article from Crains Manchester Business

Manchester-based IT company Smart Identity Plc (PLUS: SIDP) wants to change its name to Conduco Plc.

Shareholders will be asked to approve the change at the annual meeting on November 3

The slow process of setting up the North West Venture Capital and Loan Fund has edged another step forward this week.

Michael Taylor, editor, Insider

One of the biggest problems of running StartUp 2.0 events is that 75% of the attendees register on the last 3 to 5 days before the event, which cause immense difficulties in arranging catering, etc. As suggested by our growing community, I am introducing discounts for early registrations.

As you can see from the following table, rates for Members have been reduced by 33% to £10.00 if registered before the last week of the event. Non Members (both startups and others) pay higher rates if paid during the last week. All pay heavy rates if paid at door. I want to avoid collecting cash on the night.

VAT will be added at prevailing rate.

I have also streamlined the invoices, and each event will have respective invoice thumbnails embedded in the registration area. Please note you need to have a free account on edocr.com to download the invoices. If you do not have an account, please create one now.

Do let us know your thoughts on revised pricing structure.

I have been getting several requests to point friends to a business plan template to help them growing their business. I thought it would be a great opportunity to dig out a business plan which I wrote in 2007.

What's a business plan ?

A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals (source Wikipedia).

Business plan is essential tool for any entrepreneur looking to start a business. The document should be aimed at helping you plan your journey from start to finish. My top tip when developing a business plan is to keep it simple to give anyone a quick overview of your business ambitions. You are encouraged to use this document as a guide, I would strongly discourage you to copy it blindly. Remember the business plan is primarily for you.

Content of the Business Plan

Content of the business plan and page numbers:
Executive Summary................................................. 4
Mission Statement................................................. 5
Background and Strategic Vision................................................. 5

Strategy for Growth................................................. 8
Technology................................................. 9
Trademark and IP................................................. 9
Software................................................. 10
Benchmark................................................. 10
Market................................................. 12
Growth of Social Networks................................................. 12

Social Networking Phenomenon................................................. 12

For Corporate Clients................................................. 13

3rd party Social Networks................................................. 14

Market Share................................................. 14
Sales Strategy................................................. 16
Marketing................................................. 17
Global expansion................................................. 17
Exit Strategy................................................. 18
Organisation Structure................................................. 18
Current Structure................................................. 18
Structure in 6 months................................................. 19
Structure in 1 year................................................. 19
Structure in 2 years................................................. 19

<Company Name>’s Journey................................................. 20

Management Team................................................. 20

Finance................................................. 21
Evaluation................................................. 21
Advertising................................................. 22
User Generated Content / Users................................................. 22
Setup/Monthly cost................................................. 22

Appendix ................................................. 22

Business Plan Template

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Manoj did an excellent job of arranging sunshine for the NWstartup 2.0 first annual barbecue at the Atlas bar, Deansgate.

The food was magnificent – big fat juicy burgers, sausages, succulent chicken drum sticks, salads and lots of barbecue sauces. Manoj had laid on a bar tab which was a nice surprise as we had previously been told we would need to buy our own drinks.

As ever there were interesting people to talk to about new developments in tech, who’s doing what and where the best new opportunities are going to be. There was some discussion about the new regional venture fund and comments from Mr Mandelson, earlier this week, wishing the treasury to act to approve the £140m North West Regional Venture Fund as soon as possible.

I discussed the use of tech in increased productivity with Katrina from Tiyga as personal productivity is going to be the focus of a lot of activity to manage the recovery from recession. John McKerrell told me about his ‘people in time project’ enabling location based tracking so that friends can share exactly where they were at any given time (could be useful if anyone commits a murder!) and Sean Randles told me about the whole suite of editing facilities in addition to distribution of one minute videos available through web VM.

Gill Hunt
Escata

For every business I meet that is happily claiming this attractive Government tax incentive, I equally find businesses - particularly new start-up businesses - that are still in the dark.

What follows is a brief introduction to the R&D Tax Credit regime aimed particularly at fast growth technology businesses.

Purpose

The R&D Tax Credit regime was introduced by the Government in 2000 to encourage investment in innovation in the fields of science and technology in order to build the future growth of the UK economy on a sustainable and globally competitive basis.

What is qualifying R&D?

R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology (DTI Guidelines 2004).

Examples of technological advances are gaining new knowledge in a field of science or technology, developing new material, device, product, process or service or, by making an appreciable improvement to existing technology or the level of knowledge in the industry.

It is this latter part of the definition upon which most technology companies base their successful claims since, aside from perhaps Google and Microsoft, how many UK technology companies have the depth of resource (people and cash) to build entire brand spanking new platforms, languages and products? Most technology companies in my experience have built upon existing technology to strike out in new innovative directions - this is normally qualifying R&D.

I like to use the analogy that you are at "Point A" and you wish to get to "Point B". You know where you want to get to but you have absolutely no idea how you will get there because, to the best of your knowledge, no-one else in your industry has the foggiest idea either. It will therefore be ground-breaking if you can get there. This indicates the bare bones of a successful R&D tax credit claim.

A key benchmark used in evaluating claims is whether a "competent professional" in your industry would be able to access publicly available knowledge to readily deduce the solution? If yes, then you cannot be advancing overall technology knowledge so this would not qualify - and it begs the question why you are spending the money researching this point?! Note that it matters not that a rival firm may be working on something similar as long as the knowledge is not publicly available.

It is also worth noting that success is not a prerequisite of a successful claim. The point is that you are "seeking" advancement and success should not be guaranteed.

Each claim should be considered on its own merits in addition to the points raised above.

Who qualifies?

There is a common misconception that you have to have employees wondering around in white coats and checking test tubes to be a qualifying R&D company but this could not be further from the truth. I have submitted successful R&D tax credit claims for a vast array of companies and industries from bed makers to conveyor belt and audio recording equipment manufacturers right through to technology companies - the latter have made up the majority of my claims.

It was originally introduced for Small to Medium Sized businesses (SMEs) which were defined as those having less than 250 employees and either turnover of less than €43m and a balance sheet total of less than €50m (these criteria have more recently been increased to less than 500 employees and either a turnover of less than €86m and a balance sheet total of less than €100m).

In summary, most independent fast growth companies in the North West should fall within this SME criteria.

A separate (and less attractive) R&D tax regime was introduced for those 'large' companies that exceed the SME criteria in 2002 although we will not cover this here.

What is the benefit?

If you are a profitable company then you will receive an enhanced allowance against your income to reduce it for tax purposes. The enhancement is 75p for every £1 spent on qualifying R&D (50p up to August 2008). The qualifying expenditure is primarily salary costs (including employer national insurance and pension contributions) plus computer software and energy costs (e.g. electricity etc) used directly in the R&D activities.

So say you have 1 person working on the R&D project earning say £30,000 per year and she spent 80% of her time directly engaged in the qualifying R&D project (e.g. once training time etc had been eliminated) then the claim would be based on £24,000 (ignoring National Insurance and pensions, if any) generating an additional deduction of £18,000 to offset against taxable profits (£24,000 * 75%). The minimum claim amount is £10,000 per year.

So rather than offsetting just the £30,000 as an allowable expense against tax you would actually offset £48,000 pocketing your company a £3,780 tax saving in the process (£18,000*21% small companies corporation tax rate).

If the company is loss making for tax purposes, perhaps because the company is still in investment mode, then it will be eligible for a cash tax repayment - this is unique to the SME R&D tax credit scheme as large companies are not eligible for repayments.

So, using the above example, the company has the choice of adding the additional £18,000 to its tax losses to carry forward to offset against future trading profits or obtaining the timing benefit of surrendering the tax loss and receiving the cash now albeit at a reduced rate of 14% (since August 2008). The repayment is capped by the PAYE and National Insurance suffered by the company in the period.

Making a claim

Your claim for R&D tax credits should be included within the company's CT600 corporation tax return. You can amend the past two years' filed returns to submit or revise a claim.

HM Revenue & Customs aim to process 95% of repayable R&D tax credits within 30 days of receiving the claims.

This remains a highly attractive tax incentive scheme, particularly for technology companies that are already having to bootstrap their way through due to lack of cash.

Happy to discuss further if you wish to contact me.

Steve Livingston
Partner

Horwath Clark Whitehill LLP
Chartered Accountants
Arkwright House
Parsonage Gardens
Manchester
M3 2HP

Tel: +44(0)161 214 7500
Direct: +44(0)161 214 7517
Mobile: +44(0)791 717 3753

Follow me on Twitter: www.twitter.com/stevelivingston

Or you can find my blog at BusinessN2K

Note that the above information is correct at the time of writing and reflects the personal views and experiences of the author only and does not necessarily reflect the views of the firm. No reliance should be placed on the information provided without first seeking professional advice specific to your particular circumstances.