Financing potentially high growth Businesses- Essentials John Spindler CEO of Capital Enterprise
Welcome Agenda Sources of fundingGoing for growth- funding gaps Equity Finance Useful Links
Sources of Start-up/ Growth Finance• Personal resources (time and money = sweat equity)• Friends, Family & Fools ( Your Supporters)• Customers and Suppliers• Government Grants & Loans• Corporate Sponsorship• Debt Providers – Banks – Specialist lenders• Equity Providers – Private Investors-AngelsMatching the right mix of sources to the right stage and type of finance is the key to successful fundraising
What do you need money for?Type Amount Purpose ProviderSet-Up- Varies Get the business set-up- Founders ‘bootstrap’, - Sweat Capital, Family &Pre-seed- before Up to £100k and trading. Friends, Personal Loans & Credit Cards.trading Equipment, website, Over 95% of new businesses start-up on less than accommodation, £10,000 marketing, salaries.Research & Varies Proving of the Concept- Bootstrap- Finance whilst working elsewhere or asDevelopment Up to £0.5m. i.e. it works. consultant on commissionsCapital ( If doing Market testing Government Grants/ Tax Incentives e.g. TSBsomething new Intellectual Property Open Innovation Collaborations with industry/ HEIand innovative) Registration. Definitely not banks TimeWorking Capital Varies To fund cashflow cycle Customers & Suppliers (once you have orders) Banks/ Factorers/ Invoice Discounters/ credit cardsScaling up/ 200K- 2m Commercialisation of Private investors alone or in groups/ dedicated seedGrowth “proven” technology. funds, specialist VC’s alone or in syndicates.Series A Roll out of growth plans Government Backed funds.Investment VC’s only if more than £1m- below more likely angels.
Scaling a Business• Commissioned Model IP Business Model• Service Product• B2B vs B2C ?• Grow a Commissioned based business need: portfolio- brand recognition-sales funnel- high margins- unique talent- credit lines.• IP Business model more scalable but need: Upfront Investment- Legal Protection- Large Market- Distribution Chanel- Great Value Proposition- Partners• Business Model Growth Engine: Viral- Sticky- Channel Explosion – (Life Time Value must significantly exceed Cost of Customer Acquisition)
Financing Growth• Sales Spurt Extend Overdraft/ Factoring• Expanding sales channels/funnel Loan• Expanding capacity Loan• Increasing efficiency/ margins. Loans/ Leasing• Upfront/ Pre-Revenue Investment FFF/ Crowdfunding?• Diversification/ “Pivot” business model Equity InvestmentDo you have a predictable business model?
Reasons Why Investors Invest.The main reason why Angels invest in something is because they believe in theentrepreneur. The following are the main factors they consider when making aninvestment:• Trustworthiness of the entrepreneur• Expertise of the entrepreneur• Enthusiasm of the entrepreneur• Track record of the entrepreneur• Independent Investors liked entrepreneur upon meeting• Perceived rewards for the investors- 10X initial investment in 2-3 years• Sales potential of the market- Must be large.• Growth potential of the market• Predictability of the Growth Engine.• Quality of product• Overall competitive protection of the product• Potential exit routes (liquidity)N.B. All Investors oscillate between fear & greed.
I still want Investment…..?• Create a Growth Business Model• Prove that it can work• Write a business plan/ investor pitch• Hire advisors/lawyers- Prepare Term Sheet.• Meet Investors• Prove it can work a bit more• Pitch to investors• Negotiate Terms & Condition• YESSSSSSSSSSS- You now have an investor – your hard work begins
What can we do to help?• New Business Bootcamp (Tech/Lean/Fashion)• Sign up to a bootcamp extra events• Check out the 100 offers/ funding links• Introduce you to an Angel Network• Offer you a mentor• Offer help developing a business plan• Offer a professional business coach.
Looking for FundingInformation:• Capital Enterprise What’s On in London- www.capitalenterprise.org/whats-on• Business Link - www.businesslink.gov.uk• Start- up Britain - http://www.startupbritain.org• British Library- www.bl.uk/bipc• HMRC Small Company Enterprise Centre- Source of advice and help http://www.hmrc.gov.uk/manuals/vcmmanual/VCM10050.htm• HMRC R& D Tax Credits www.ucl.ac.uk/advances/advances-news/hmrc• HMRC Guide & Support- http://capitalenterprise.org/guide-to-rd-tax-credits• British Business Angel Association: www.bbaa.org.uk• British Venture Capital Association: www.bvca.co.uk/• London Funding Conference: http://www.londonfundingconference.com/about-funding• Guide to Early Stage Investment: http://www.paloalto.co.uk/about_us/Early_Stage_Investment_by_Alan_Gleeson.pdf• Design Council- http://www.designcouncil.org.uk/resources-and-events/Designers/Continued- professional-development/GuidesAnd if you have not checked them out please look at the latest schedule of advice and training events at :www.thebusinessbootcamp.org.
• Any area• SME only• Proof of market • £25k @60%• Proof of concept • £100k @60%• Prototype development • £250k @35-45%
Looking for funding?Grants & Awards General• J4B- Portal for grant finding http://www.j4b.co.uk• Technology Strategy Board ( R&D Funding) - http://www.innovateuk.org - http://www.innovateuk.org/content/competition/grant-for-rd-single-business.ashx• London European Enterprise Network- http://www.een-london.co.uk• E Funding for SME R&D - http://www.eurostars-eureka.eu/what.do• EU Funding for R&D collaborations: http://ec.europa.eu/research/participants/portal/page/calls• Knowledge Transfer Partnerships funding support- http://www.ktponline.org.uk/ktp-what-will-it-cost- my-businessTranslation/ Follow on research funds.• www.rdfunding.org.uk/bulletin/queries/Search.asp?TheCloseMonth=July&TheYear=2011.• http://www.rcuk.ac.uk/kei/ktportal/Pages/Followon.aspx• https://ktn.innovateuk.org/web/145175/overview• http://www.ahrc.ac.uk/FundingOpportunities/Pages/BrowseOpportunitiesOld.aspx• http://www.ahrc.ac.uk/Pages/default.aspx• http://www.theculturecapitalexchange.co.uk/
Looking for Funding?Grants & Awards - Creative• Arts Council- http://www.artscouncil.org.uk/funding/grants-arts• London Councils- http://www.londoncouncils.gov.uk/services/grants/• Fundraising Resources & News - http://www.fundraising.co.uk/news• Foyles Foundation- http://www.foylefoundation.org.uk/main-grants-scheme-arts• Welcome Trust- http://www.wellcome.ac.uk/Funding/Public-engagement/Funding-schemes/Arts-Awards/index.htm• British Fashion Council- http://www.britishfashioncouncil.com• Centre for Fashion Enterprise- http://www.fashion-enterprise.com/the-agency• Shell Livewire -£1000 award for new entrepreneurs 16-30 - http://www.shell-livewire.org/news/awards2011• UK Film Council- http://www.ukfilmcouncil.org.uk/whatwefund• NESTA- http://www.nesta.org.uk/areas_of_work/creative_economy/digital_rnd• British Council- http://www.britishcouncil.org/arts-performing-arts-funding.htmCorporate Sponsorship• http://artsandbusiness.org.uk/Media%20library/Files/Individual%20giving/09jul_taxguide.pdf• http://www.companygiving.org.uk• http://www.uksponsorship.com/arts1.htm• http://resources.mediatrust.org/marketing-support/tactics/sponsorship/?gclid=CPjHwre-t6kCFcod4Qodo3-o-A
Looking for funding?Equity Finance• NESTA - www.nesta.org.uk/investments• British Business Angel Association- www.bbaa.org.uk• Capital 4 Enterprise- http://www.capitalforenterprise.gov.uk/portfolio• London Business Angels: http://www.lbangels.co.uk• London Seed Capital - http://www.londonseedcapital.com/• Oxford Early Investments- http://www.oxei.co.uk/about.php• Envestors- www.envestors.co.uk• Fashion Angels- http://www.fashion-angel.co.uk• Theatre Angels- http://www.solt.co.uk/angels.html• Paste & Wait Investment (USA only) www.kickstarter.com• Paste & Wait Investment. www.indiegogo.com• Paste & Wait: www.peoplefund.it• Paste & Wait: http://www.pleasefund.us/help/about-us• Paste & Wait: http://www.wefund.com• Crowd funding: http://www.pozible.com• Crowd Funding : http://www.crowdfunder.co.uk• Crowdfunding: http://www.crowdcube.comEarly Stage VC• Amadeus- http://www.amadeuscapital.com/about-seed.php• Balderton- http://www.balderton.com• CAIN- http://www.cainuk.com• DfJ Esprit - http://www.dfjesprit.com• Doughty Hanson- http://www.doughtyhanson.com/technology-ventures.aspx• Early Bird Ventures- http://www.earlybird.com• Index Ventures- http://www.indexventures.com• Octopus- www.octopusventures.com• Anthemis ( Finance & Technology): http://www.anthemis.com• London Technology Fund: www.londontechnologyfund.com
Looking for funding?Debt Funding Initiatives• Enterprise Finance Guarantee ( Government underwriting UK banks business loans- http://www.rbs.co.uk/business/borrowing/g1/firms.ashx• CDFA ( Soft Loans from Community Banks- http://www.cdfa.org.uk• Manufacturing Funding- http://www.rbs.co.uk/business/borrowing/g1/manufacturingfund.ashx• Examples of New types of funding:• http://www.marketinvoice.com• http://www.fundingcircle.com• http://www.thincats.com• http://www.firstfunding.orgIncubators ( Discounted accommodation & support)• Camden Collective ( Creative) - http://camdencollective.co.uk• Hatton Garden Jewellery Centre- http://www.centa.co.uk/hattonjc.html• Fashion - http://www.fashion.arts.ac.uk/business• CEME ( Science & Engineering) - http://www.ceme.co.uk• Innovation Warehouse- http://www.theiw.org• Design/Media- Ravensbourne- http://www.rave.ac.uk/pdf/ravensbourne_wearethefuture.pdf• Dreamstake- http://www.dreamstake.net
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