ICON66 – Volume 6
ATS Against The Odds
"I first met Martin in the summer of 1999 when we sat down to discuss funding for the ULTra system, a sensor controlled, on-demand driverless taxi, nothing less than a revolutionary transport system for the future."
From a funding perspective it seemed a highly unlikely project. Trying to be polite, I advised Martin that there was absolutely no chance of raising any capital from the City, but we discussed what needed to be in place to make the concept a workable proposition. Martin looked at me not so much disappointed but challenged and determined to prove that he did, in fact, hold the answer to some of the world's traffic congestion problems.
Martin left the office that morning with more of a spring in his stride than when he arrived and I have since learnt that there is nothing that Professor Martin Lowson likes more than to succeed against all the odds. (He was yet to tell me that he had previously worked with NASA on the Apollo moon landings and was therefore used to breaking barriers.)
I didn't hear from Martin again for four years when, out of the blue, came the call: "I don't know if you remember, but we met four years ago to discuss funding for my driverless taxis". He then proceeded to inform me of the substantial progress the business had made during the past four years.
THEY HAD:
* Spun
out of Bristol
University
* Raised over £10m
of funds from
the European
Union, DTI
awards and
other grants
* Obtained
seed investment
from NESTA
* Built and
deployed a
test track
in Cardiff
over a one
mile circuit
which was fully
operational
* Tendered
for major civil
and commercial
contracts in
the UK and
overseas
* Developed
the management
team with the
appointment
of Chris Cook,
former Chief
Designer at
Westland Helicopters
and Trevor
Smallwood,
former founder
and CEO of
First Group.
The progress had been nothing short of awesome. I was impressed and we met a few days later.
At this meeting we talked in depth about the business and the potential for funding. Sadly as excited as I was about the progress, I knew that the funding market for this type of business still remained exceptionally tough. Martin asked me what I thought the odds of funding were now from the City. "Better than last time." I replied. "It has probably now improved to 90:10 against, which is optimistic."
Once again Martin seemed reasonably encouraged by this.
I told him straight what the odds were on getting the company successfully funded. I did, however, follow this up by saying that, in spite of my own assessment as to how difficult it might be, ICON would be delighted to work with him.
Over the following weeks and months we shaped the corporate finance strategy together, ensuring that we gave the team the best possible chance of success in the hurly-burly of the funding markets. Crucial to this process was the focus and positioning of the business, emphasis on its prospective customers as well as channels to market, the weight of funds to be raised and an early view across the investing spectrum as to where the likely investors could be secured.
I am pleased to say that the strategy worked. In April 2005 the company closed a 'strategic' funding round of £1m which comprised a mix of funds from private investors, incumbent shareholders and an institutional funder investing private client funds. This provided the company with added fire power and resource in advance of the main round.
The main round was closed six months later in September 2005 when BAA Plc invested £7.5 million in return for a 25% shareholding.
BAA Plc was at the time, actively seeking a solution to its Heathrow transit links and the ATS ULTra system was selected to provide a service link from the car parks to the terminal areas. The journey will now be cut to about four minutes as the ULTra system bypasses the congested roads that the ordinary service buses have to use. And, more importantly, passengers will not be forced to wait up to 20 minutes for a bus, as a driverless taxi will already be waiting.
On successful deployment of the pilot, ATS will have the opportunity to locate its transit system throughout Heathrow - potentially £200m plus worth of business. Will it succeed? If past track record is any indication of future success, ATS is now on the fast track to be a truly great company. It has grown from a small company with one prototype to one with its first sale and is now getting interest from all over the world.
As Martin once said in a meeting with potential investors in the City, "Look, it's not rocket science and I should know, I used to be a rocket scientist!"
