We don't do a lot of bragging at Cambridge Enterprise. While we keep up the good news flow, we're pretty modest about our achievements. This is partly because our roots are firmly planted in customer service, and mostly because we recognise that much of our success is due to the work of many remarkable people, not least of which the members of the University who come to us for help commercialising their brilliant ideas.
But you know what? We’re pretty good at what we do. And this week we have a great reason to pat ourselves on the backs. Pitchbook, a company that conducts research into investments and provides commentary and analysis of current events, trends and issues relevant to its field, published a story about the leading venture firms worldwide, highlighting those companies that have seen the greatest returns of value. The snapshot is focussed on paper value (Total Value to Paid-In or TVPI: money returned to investors plus the fund’s unrealized investments, divided by money paid-in to the fund). Cambridge Enterprise’s TVPI is 3.55x. That would put us at 10th place in Pitchbook’s list of big hitters.
What’s even more amazing? If you look at the DPI values (Distributed to Paid-In: money returned or distributions to investors divided by money paid in to the fund – also called a ‘cash-on-cash multiple’), we do even better. We rock a DPI of 2.86x putting us at the top – that’s right, number one.
This is great for a number of reasons: we are a very early stage fund; we cover all technology areas (and so are generalists not specialists); we are limited in the extent we can follow our investment long-term; we work off a limited resource.
So, I bet you’re wondering how we do it.
Obviously, there has to be an investable business at the core, but we don’t stress about multiples, we don’t fight for our position, we don’t block other investors from joining the party, we prefer not to do preference stacks, anti-dilution or pay-to-play – we don’t even worry that much about pre-money valuation. A lot of credit goes to the environment in which we sit – both from an intellectual capital point of view and from the value-add of the Cambridge Cluster. At the heart of our success is our approach to investment. With a mission of social and economic impact, not ROI, our focus is to get companies started and help them succeed. We look for good ideas, good teams and we focus our efforts on supporting the companies. The financial returns are just a natural consequence of doing that.
We probably don’t behave much like a stereotypical venture capitalist. Maybe that’s what makes us shine.Tags: DPI, Pitchbook, TVPI