Link Alt Finance 19 11 09

LINK Conference Partnership Finance Chris Cook , Dunblane 19th November 2009

Partnership-based agreements for sharing risk and revenues 20/11/09

Guarantee Society and Capital Partnership 20/11/09

Lets look first at the Guarantee Society 20/11/09

In 18 European countries Guarantee Societies guarantee bank loans to members Banks 20/11/09 Guarantee Society Guarantee Loan Guarantee Members

...but banks are starved of capital and have cut lending 20/11/09

NET uses the Guarantee Society in new ways to support any enterprise 20/11/09

Firstly, to support procurement..... Enterprises 20/11/09 Guarantee Society Guarantee Contract Guarantee Council

Secondly, to provide a mutual guarantee for credit between enterprises Buyers 20/11/09 Credit Value Sellers

Conventionally, sellers may give buyers interest-free credit –or time to pay Buyer 20/11/09 Credit Value Seller

Banks act as credit intermediaries, to provide trust through implicit guarantee 20/11/09 Bank Seller Buyer

Guarantee Society guarantees credit from member sellers to member buyers… Buyer 20/11/09 Pool Guarantee Guarantee Seller

...with a common bond : geographical, functional, or both Buyer 20/11/09 Pool Guarantee Guarantee Seller

Both seller and buyer pay into a Pool for the use of the Society’s Guarantee Buyer 20/11/09 Pool Guarantee Guarantee Fee Fee Seller

Buyer settles credit in money, or money’s worth of Value acceptable to seller Buyer 20/11/09 Pool Guarantee Guarantee Fee Fee Value Seller

If a buyer defaults, Pool pays seller, and collects from buyer Buyer 20/11/09 Pool Collects Pays Seller

A service provider sets guarantee limits, handles defaults & manages the system Buyer 20/11/09 Pool Service Provider Services Fee Fee Guarantee Guarantee Fee Seller

The Guarantee Society Buyer 20/11/09 Pool Service Provider Services Fee Fee Guarantee Guarantee Fee Value Credit Seller

Banks act as service providers not as middlemen 20/11/09

Capital Partnership – direct investment in production or revenues 20/11/09

Conventional investment is Equity in Limited Companies 20/11/09

....a 19 th Century legal dinosaur 20/11/09

...or Debt - loans secured by legal claims eg mortgages 20/11/09

...giving two conflicting claims over the same productive asset 20/11/09

But there’s a new furry animal out there.... 20/11/09

...the 21 st Century UK Limited Liability Partnership (LLP) 20/11/09

An LLP is a corporate body with limited liability.... 20/11/09

...and...errrr...that’s it!... 20/11/09

As far as the Tax Man is concerned it is a Partnership 20/11/09

Capital Partnership Capital Partnership Investors Customers Custodian % % £ 20/11/09 Managers

Equity Shares - % age shares in revenues or production... 20/11/09

...or Units - redeemable in production 20/11/09

Example: “The Art of Flirting” – a film incorporated as an LLP 20/11/09

The actors received nth’s of the gross revenues... 20/11/09

...I got 5%...and the producer the rest... 20/11/09

...except that we needed lights, cameras, pizza, coffee 20/11/09

Two Capital Partners invested £10k for 20% of revenues 20/11/09

...if there are any 20/11/09

Art of Flirting Partnership Art of Flirting Partnership Financial Capital (Investors) Viewers Custodian % % £ 20/11/09 Human Capital (Actors, Producer, Me)

Everyone was on the same side 20/11/09

Example: Albion Trust...a charity 20/11/09

..which provides affordable office space for social enterprises 20/11/09

...due to demand they bought a disused church next door 20/11/09

...and planned a £4m development 20/11/09

But if they borrow, the rents will be unaffordable 20/11/09

Solution? An Albion Partnership? Albion Partnership Investors Tenants Custodian % % £ 20/11/09 Managers

The Capital Partnership aligns stakeholder interests.... 20/11/09

...but it’s not a magic bullet 20/11/09

Conventional finance requires binding contracts 20/11/09

Partnership finance requires consensual agreement 20/11/09

But there may be no magnetism.. 20/11/09

...or partners may fall out... 20/11/09

A Capital Partnership is not an Organisation 20/11/09

...it does not own anything, do anything, employ anyone, or contract with anyone... 20/11/09

...it is simply a framework within which the stakeholders self organise ... 20/11/09

A Master Partnership Master Partnership Financial Capital (Money, IP etc) Users Custodians % % £ 20/11/09 Human Capital ( Developers, Operators)

… .is a simple new framework for sharing resources

Maybe a LINK Partnership? LINK Partnership Financial Capital (Assets, IP etc) Users Custodians % % £ 20/11/09 LINK Members ( Developers, Operators)

Thank You 20/11/09

Link Alt Finance 19 11 09

by ChrisJCook

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Link Alt Finance 19 11 09 Presentation Transcript