Gaule: Briefly descibe your fund: when it was formed, size, funds deployed and
business focus.
Lake: Cody Gate Ventures (CGV) was formed in August 2007. We have £110m ($177m) under management. Our focus in the near term is to grow and exit the portfolio of seven companies we spun out of QinetiQ into CGV with the financing help of Coller Capital.
We do not have a set sector focus, but common themes are intelligent infrastructure, security (including energy security) and sustainability. Our model is different from traditional venture approaches in that we proactively look to create and build new businesses, leveraging our partners’ domain knowledge to solve important market needs. With this approach we tend to be more hands on, have a smaller portfolio and a larger equity ownership than you might see elsewhere.
Gaule: Describe a current or new business to give us a feel for the ventures in your portfolio.
Lake: We have not been adding to our portfolio with new deals, but we do look at creating new businesses out of the portfolio we already have, as many of the companies have strong platform technology which can be applied to many markets. In that context, we have just created a new business out of Intrinsiq (our nanotechnology company) focused on printed electronics using conductive inks to enable the printing of circuits on a variety of flexible substrates at room temperature. We are excited about the potential.
Gaule: I understand you have recently moved a number of your portfolio businesses to a technology cluster. Give us an insight into the approach you have taken.
Lake: We are creating a Cody Gate Innovation Centre in Rochester, New York, and three portfolio companies will be establishing a presence there. This initiative has both a near-term and long-term aim. We have been looking at geographic regions that have a high-quality technology-based talent pool, great educational and research institutions and a well-organised local business community, underserved by traditional venture firms. Rochester fits that profile.
Our interest is in helping our current portfolio companies grow and developing innovation ecosystems that leverage the CGV model for new business creation and create future portfolio opportunities. Intrinsiq Printed Electronics is a good example of a business that will really benefit from the Rochester location with its talent pool, including Kodak and Xerox.
Gaule: What have you seen as the most challenging issues when managing the relationship with investors and ventures?
Lake: The recent recession has been a tough time to establish and grow early-stage technology companies, so it has taken a bit more cash and time to build business momentum.
Working capital has been a challenge as many of the portfolio companies have now started to grow quite quickly, and at least in the near term, investor cash has had to be used to fund working capital – not ideal but necessary. We have also kept cash quite tight at portfolio companies during the recessionary period – which can frustrate management teams who are keen to spend.
A recent benchmark study showed our companies used less cash than competitors over the last three years while remaining number one or two in their category. So overall, we have navigated through the issues quite well and all seven portfolio companies are progressing.
Gaule: What do you do to relax when you are not deal-making?
Lake: I bought the agricultural land behind our house, so we now have 25 acres to maintain. I really enjoy being out in the fields with the family, seeing the wildlife and the land come back to life as we improve it – we have been reclaiming old stream beds which were very overgrown these last few weeks. At home I have a large music collection that I am building and that can be broadcast wirelessly around the house.
Stephen Lake will be stimulating the discussion on the topic
of new collaboration models and gaining government funding
at the H-I Network Corporate Venturing Senior Executive
Forum on June 23, 2011,