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Finance in the South West 2014

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  • 1. Finance in the South West 2014 As business confidence returns… Lewis Banfield - Partner
  • 2. Administration Admin Timetable Slides – available on request (feedback forms) Questions – Please keep questions until coffee/lunch Presenters… www.francisclark.co.uk
  • 3. Presenters and other participants …and many more www.francisclark.co.uk
  • 4. Structure of morning • • • • Background and Grants (8.30am to 9.35am) Key note speaker SME, LEP and the ‘funding gap’ Grant schemes • • • SME experience, rewards, debt and equity (9.55am to 11.10am) Investment ready, business support and closing address (11.30am to 12.35pm) Q&A one to one / Networking (12.35pm to 2pm) www.francisclark.co.uk
  • 5. Twitter Follow us on twitter @francisclarkllp Tweet about this event using #FCFinanceSW www.francisclark.co.uk
  • 6. Key note speaker Michael Portillo • Former Cabinet Minister • Broadcaster • The recovery, the Euro, Scotland and future elections www.francisclark.co.uk
  • 7. Michael Portillo Finance in the South West 2014 www.francisclark.co.uk
  • 8. Tim Jones Heart of the South West Local Enterprise Partnership
  • 9. Strategy Vision Strategic Economic Plan Evidence Priorities Implementation Growth Deal (Local Growth Fund) Golden Thread from Vision through to Deals EUSIF Plymouth City Deal Regional Growth Fund Business People Place
  • 10. Our BIG opportunities Marine / City Deal Hinkley legacy Exeter Smart Jobs Aerospace Dependent on Rail, Road and Digital Connectivity Skills Infrastructure
  • 11. EUSIF - background • Proposals for investment of: Transit More ion Develop ed – ERDF (place blind) ERDF £43.47 £14.41 – ESF (place blind) m m – EAFRD (rural only) ESF £28.9 £14.41 • Split by Transition m m (Plymouth, Torbay and EAFR Not split Devon) and More developed (Somerset) D • Submitted 31st Jan Total £57.88 m £43.31 m £15.54 m
  • 12. SEP Priorities Business People Maximising Productivity and Employment Opportunities The infrastructure and facilities to create more and better employment  Enterprise infrastructure  Investing in strategic employment sites in our main cities and towns  Digital infrastructure Building on our Distinctiveness Creating a favourable business environment – the GAIN Growth Hub  Simpler, more coherent business support o Improved access to finance platform o Tailoring national policies to local potential Achieving more sustainable and broadly based business growth – the Global Market Growth package  Reaching new markets – including public sector, web-fuelled and supply chain  Globalisation (exports and inward investment) Support related to key opportunities – transformational investment package  Golden opportunities – Catapult-lites and networks  Horizontal Innovation – Capacity building, grand challenges and Innovation for all Creating the environment where businesses and individuals can reach their potential: Place Creating the Conditions for Growth Investing in skills and development to increase job opportunities and move people into the job market:  Moving people into employment - focusing on youth, long term unemployed and economically inactive  Careers advice and progression  Improving workforce skills Creating a world class workforce building on our distinctiveness and growth sectors:  Entrepreneurship and business skills  Technical and higher level skills development and retention  Maximising the skills and employment opportunities from our Golden Opportunities The Enabling Landscape  Transport and Accessibility  Sustainable solutions to flood and water catchment management  Unlocking delivery of stalled housing sites  Energy Infrastructure    Skills infrastructure and facilities Accessibility to education/employment Digital Literacy for inclusion, progression and business growth The infrastructure and facilities needed to support transformational change  Opening up specialist sites for marine sector development  Investing in science park and innovation infrastructure for nuclear, marine, environmental sciences and aerospace  Maximising our environmental assets
  • 13. Growth Deal • • • • Single Pot – promised £70bn Impact of austerity diluted the amount Current deal might total £2bn across 39 LEPs Money has been top-sliced from transport and education budgets • Timing issues and accountability still to be resolved
  • 14. More jobs, better jobs, greater prosperity heartofswlep.co.uk
  • 15. Grants Overview David Armstrong – Corporate Finance Director
  • 16. All change! • European Programme 2014 - 2020 – c£110m • Starting to see grant schemes arising out of the LEPs • State Aid • Assisted Area Map changing – winners rather than losers • City Deal • c750 grant schemes • BUT - SME funding gap remains! www.francisclark.co.uk
  • 17. Our successes • £12m of grant unlocked £36m of other funding • Create 840 and safeguard 640 jobs • What makes a good grant application? www.francisclark.co.uk
  • 18. So, what is available? National Regional Local • Assisted Area status + Size www.francisclark.co.uk Eligibility and Level of grant
  • 19. Regional Growth Fund • Programmes – Assisted Asset Scheme, PWGF2 etc • Projects – direct applications for >£1m • RGF5 & 6 • RGF6 opens Summer 2016 • Competitive process • Create sustainable private sector jobs • Roadshows • Yesterday’s news www.francisclark.co.uk
  • 20. City Deal Headlines • £300m (£34m public sector) • Unlock commercial opportunities in marine sciences, renewable technologies and to boost exports • Plymouth and South West Peninsula • Conversion of South Yard at Devonport Naval Base • Young People Business support and grants, including • GAIN grants • Innovation Vouchers, MAS and UKTI www.francisclark.co.uk
  • 21. Torbay Growth Fund: 2nd round • Grants or loan up to £150k • Minimum grant is £15k • Up to £12k per job • Capital or revenue projects • Job creation • Business investing in Torbay www.francisclark.co.uk
  • 22. Regional Growth Fund/Assisted Asset Purchase Bruce Pedrick Relationship Director
  • 23. Regional Growth Fund/Assisted Asset Purchase Overview Benefits for Business Key Features Eligibility Exclusions Examples Summary and next steps 23
  • 24. Regional Growth Fund/Assisted Asset Purchase Overview  £2.6 Billion fund operating across England  Scheme runs from 2011 - 2016  Non repayable grants – subject to eligibility criteria and agreed job targets  Create long term growth and sustainable employment  Encourage private sector investment  Lloyds Bank allocated £25 Million (June 13 to April 15) 24
  • 25. Regional Growth Fund/Assisted Asset Purchase Benefits To Business • Enables asset purchase (where businesses currently lack deposit) • Grants from £5,000 up to £500,000 • Up to 20% of the asset cost for small enterprises (up to 50 FTE and less than 10M Euro T/O) • Up to 10% of the asset cost for medium enterprises (up to 250 FTE and less than 50M Euro T/O) • Non repayable • Amount of grant will be minimum amount required to enable us to lend on normal lending terms • Remaining funding via HP / Loan (Min £100,000) facility
  • 26. Regional Growth Fund/Assisted Asset Purchase Key Features • Create / protect 1 job for every £15,000 grant received • Independent accountant to verify within 30 months after drawdown or 6 months after job target achieved • Grant is taxable income and classed as state aid • Unable to link in any other forms of state aid. • Meet normal viability criteria • Asset must be located in England (in an area outside London)
  • 27. Regional Growth Fund/Assisted Asset Purchase Eligibility • You need finance but lack the sufficient deposit • Able to commit to creating / protecting jobs for a min 12month period • An SME (as defined earlier) • No other state aid supporting purchase • Business not in financial difficulty.
  • 28. Regional Growth Fund/Assisted Asset Purchase Exclusions • Property investment / development – property purchases are eligible if property is for own use and held on Co Bal Sheet • Air transport equipment • Road freight transport for hire or reward – eligible if eg vehicle for a wholesaler who does their own deliveries • Fishery & Aquaculture • Primary production of Agriculture products • Coal • Export Related Activities – case by case
  • 29. Regional Growth Fund/Assisted Asset Purchase Recent Examples  Retailer – £195K RGF and £600K loan towards purchase of additional retail premises for expansion – KIV property must be for own use and held on Co Bal Sheet  Building Contractors - £145K RGF grant and £600K loan towards purchase of new offices  Tourism - £95K RGF grant and £380K loan towards assets to be used in refurb of bar/restaurant/catering area and a small renewable energy scheme  Restaurant - £150K RGF grant and £450K loan to purchase their freehold premises  Manufacturing - £110K RGF grant plus loan of £385k to acquire a new R&D factory/ warehouse towards purchase price of £590K 29
  • 30. Regional Growth Fund/Assisted Asset Purchase Summary and next steps • Support SMEs with asset purchases that may have been discounted • Bring forward growth plans and create/protect jobs • Speak to your Relationship Manager/Director or Francis Clark
  • 31. GRANTS - RGF JOHN HUTCHINGS PROGRAMME MANAGER RGF GRANT FUNDS PLYMOUTH UNIVERSITY
  • 32. PLYMOUTH UNIVERSITY AND WESTERN MORNING NEWS GROWTH FUND 1 AND 2 PWGF 1 and 2 Management Information RGF Round 1 – PWGF1 RGF Round 3 – PWGF2
  • 33. ….results so far PWGF1 • Awards made • Average grant • Total • Jobs forecast to be created • Cost per job 20 £46,000 £920,000 85+ £10,824 PWGF2 (….fully allocated…) • Awards made • Average grant • Total • Jobs forecast to be created • Cost per job 41 £90,300 £3,705,000 449+ £8,250 ……and has unlocked over £9.5M of private sector investment
  • 34. Geographic Spread of Applications EOIs Submitted 6% Submitted Applications 11% 13% 6% 17% 15% Cornwall Cornwall Devon Devon Plymouth Plymouth 42% Torbay Somerset 22% 43% Torbay 26% Companies Awarded Funding 6% 17% Cornwall Devon 43% 34% Somerset Plymouth Somerset
  • 35. • PWGF2 fully allocated in 9 months • Demand still evident • Several strong applications not funded • Enquiries still being received • What next?
  • 36. RGF4 – Plymouth and South West Peninsula City Deal …now open!!!!!
  • 37. Aims of the Fund • • • • • • • Rebalancing the local economy – more private sector employment Creating new, and sustainable jobs Helping local businesses to grow Access to additional funding to enable project completion Looking for good value for money Co-investment from the private sector Spend by 31st March 2015 – No pressure then! • Projects need to be “spade ready”
  • 38. RGF4 – Plymouth and South West Peninsula City Deal • A further £3 M to be “granted” • Smaller Grants - £25k - £150k – limited to a fund of £1.168M • Larger Grants - £250k - £1M max per applicant •     Industry Sector focus Marine and supply chain Advanced Manufacturing Digital Environmental Technologies (……….but other industries may apply) • de minimis or General Block Exemption • Across the Heart of the South West LEP and Cornwall & Isles of Scilly LEP areas • All Local Authorities are partners, Chambers (lead by Plymouth), GAIN, PCC lead body, Plymouth University programme managers
  • 39. ? Speak with the Grant Team at the end of the presentations Thank You for listening
  • 40. SMART and other grants David Bullen – Corporate Finance Senior Associate
  • 41. SMART Previously known as “Grant for R&D” Science, Engineering and Technology: New Products and Services Grant support for SMEs: • Proof of market (9 months, £25k, 60%) • Proof on concept (18 months, £100k, 60%) • Development of prototype (2 years, £250k, 35% / 45%) Competitive / Batch Applications Smart v R&D Tax Credits - cannot have both for same project www.francisclark.co.uk
  • 42. Innovation Vouchers £6m for UK SMEs - Grants of up to £5k Criteria • challenge for your business/ specialist help • first time that you have worked with the knowledge supplier • In one of priority themes Innovation and themes: • “new or improved products, new or improved processes, new or improved services, investigating new markets or managing your intellectual property” • Agrifood; Built Environment; Energy Waste & Water; Open Data Innovators and Inventors; Cyber Security TSB funds generally - www.innovateuk.org/fundingsupport;jsessionid=B70572D282A5EFA40F8B31DC80CEB806.3 www.francisclark.co.uk
  • 43. Innovation 4 Growth SMEs and Large Companies based in the South West Part fund R&D Projects: eligible costs incl staff salaries, materials, equipment etc Grants £25k to £150k (At up to 35% intervention) Development of new or improved products, technologies, processes or services Job creation and/ or safeguarding All funding to be issued by 30/4/15 Application deadline 10th March. Start with Registration Form www.innovation4growth.co.uk www.francisclark.co.uk
  • 44. Other grant schemes • European Fisheries Fund  • FLAG – Fishing businesses & Fishing communities  Axis 2 – Fish Processing Energy Entrepreneurs’ Fund • • Grants of < £2m • Innovative low carbon energy ideas • • • Opened for final £10m in January 2014 Applications judged “on their ability to cut costs of existing technologies and the potential for future carbon savings and commercial viability” FITs, RHI etc. FC Blog for updates - www.francisclark.co.uk/newsviews/blog/ www.francisclark.co.uk
  • 45. Debt.. Energy Efficiency Financing Scheme • • Business trading > 36 months • Investment in energy efficient equipment (and renewable energy generation?) • • Siemens Financial Services and Carbon Trust Loan e.g., Interest rate c 9% for a 7 year term loan repayable in monthly instalments. ReEnergise SmartEnergy Finance • Investment in renewable energy and energy efficient projects • £5m fund www.francisclark.co.uk
  • 46. Break Session 2 start time 9.55am www.francisclark.co.uk
  • 47. Finance in the South West 2014 Rewards, Debt and Equity, but first… Lewis Banfield - Partner
  • 48. Structure of morning • • • • Background and Grants (8.30am to 9.35am) Key note speaker SME, LEP and the ‘funding gap’ Grant schemes • • • SME experience, rewards, debt and equity (9.55am to 11.10am) Investment ready, business support and closing address (11.30am to 12.35pm) Q&A one to one / Networking (12.35pm to 2pm) www.francisclark.co.uk
  • 49. STRICTLY CONFIDENTIAL POWER TO LEARN SOME IMPORTANT THINGS ON FUNDING Rory Kindlon - CFO February 2014
  • 50. The Who, What, Why and How WHO WHERE WE ARE GOING - THE PLAN  Online advertising is now bought in real time  Few companies in the world are able to apply machine learning  We have built a platform to do this  Makes the best digital media decisions in real time SCALE + SPEED + SMARTS 275.8 127.9 38.4 0.2 5.0 Mar-14E Mar-15E UK Germany Mar-16E New York Mar-17E San Fran. Mar-18E Hong Kong THE HOW - KPIs & DRIVERS THE WHY  Online advertising has failed to learn  $42bn Market  99.8% ads not clicked  >30% ads not viewed  61% traffic generated by bots  For Plymouth STRICTLY CONFIDENTIAL 50
  • 51. My background  Co-Founder and CFO of IO Technologies Group Ltd  20 Years in Finance with experience in Tech Startups, Investment Banking, PE, Accountancy  In a former life:  Director of Corporate Finance at Skyscape Cloud Services  Partner at Akira Partners, London-based TMT M&A boutique  Qualified chartered accountant with Andersen’s  Key strengths:  Funding & private equity  Corporate strategy  Industry knowledge  Value creation STRICTLY CONFIDENTIAL 51
  • 52. Funding requirements, history and strategy £1.4m raised to date Date Source Amount Valuation Runway Uses PreMay 13 Founders £350k n/a May 13 • Recruit Management Team • Develop Plan May 13 Round 1 F&F £100k +100% Sep 13 • Grow team to 8 • Build MVP / Secure first customer Aug 13 Round 2 HNI £410k +100% Dec 13 • Grow team to 19 • Customers on platform to 4 Dec 13 PWGF 1 £100k n/a Jan 14 • Match Funding • Contribution towards 12 new jobs Jan 14 Round 3 HNI £550k +300% May 14 • Grow team to 34 • Customers on platform to 12  R&D Tax Credits  Grants £200k £100k+ STRICTLY CONFIDENTIAL  Round 4  Round 5 Further £2.5m Further £5m+ 52
  • 53. 5 important things  MANAGEMENT  PASSION, DRIVE & AMBITION  MARKET  DYNAMICS & TRENDS  PRODUCT  COMPELLING VALUE PROPOSITION  ADVANTAGES OVER ALTERNATIVES  OPERATIONS  AUTOMATION  QUALITY AT SCALE  FUNDER RETURNS  JOB CREATION / ECONOMIC BENEFITS  RISK ADJUSTED RETURNS STRICTLY CONFIDENTIAL 53
  • 54. Stay focussed on key milestones Clients 17 56 176 Headcount 43 67 85 ARR (£m) £1.4m £6.7m £24.8m 2 HIGH VOLUME TRAFFIC GAME ON AND LEARNINGS 1 PREPARE PLATFORM FOR PERFORMANCE TOE TO TOE WITH COMPETITION 3 Reach critical performance London Dec-13 San Francisco Jul-14 STRICTLY CONFIDENTIAL New York Dec-14 Jul-15 54
  • 55. Important Values FAITH UNITY COURAGE STRICTLY CONFIDENTIAL 55
  • 56. THANK YOU STRICTLY CONFIDENTIAL 56
  • 57. Phil Geraghty – Managing Director Supported by
  • 58. Funding and validating local projects Crowdfunder is the UK’s largest crowdfunding Network. Helping businesses, community groups and Charities to raise funds and bring people together. We have worked with 1000’s of projects all over the UK and raised over £1.2m. We are backed by Nesta’s Innovation in Giving Fund and here in the South West by Plymouth University.
  • 59. The Market What is Crowdfunding? There are three different types of crowdfunding Equity • Sell a % of your established business for money • Dragons den Lending • Borrow money online from lots of people rather than the bank Reward s • Only type that builds communit • People give money in return for rewards • We do rewards based crowdfunding
  • 60. Crowdfunding is best explained by example Phil from Leeds Bread wanted to setup a co-operative organic bakery in Leeds. The bank said he was mad, but that did not stop him, and he setup a crowdfunder Campaign. He raised over £8000 from 114 people He knew the first 30 people, but the rest were friends of friends and other local people who loved his idea. Great ideas spread. The deal was simple, you put £100 into the project and you get a loaf of bread every week for a year. He offered the reward and people got involved.
  • 61. History What have we achieved so far
  • 62. Partners Working with Partners “Our scalable, cost effective way of reaching audience” Crowdfundi ng Charities Crowdfunding Cornwall & The University Crowdfunding Food Crowdfunding Communities
  • 63. Come talk Speak to us if… 1. You have a project to fund 2. Your clients/customers have project to fund 3. You are a potential partner wanting to make a difference 4. You would like to be part of our growth
  • 64. SWIG Finance South West Investment Group Call: 01872 223883 info@swigfinance.co.uk www.swigfinance.co.uk
  • 65. Who Are SWIG?
  • 66. CDFI ‘ CDFIs lend money to businesses, social enterprises and individuals who struggle to get finance from high street banks…They offer loans and support at an affordable rate to people who cannot access credit elsewhere… ’ A key plank of Governments’ Access to Finance Strategy Call: 01872 223883 info@swigfinance.co.uk www.swigfinance.co.uk
  • 67. Operating across the South West for 25 years Over £25 million to over 1,500 local businesses
  • 68. HOW CAN WE HELP? We provide FINANCE to Start up and Growth businesses
  • 69. Business Support We are linked into a wide variety of business support agencies and other sources of finance + Your Business = Business support Business Growth
  • 70. Get in touch www.swigfinance.co.uk info@swigfinance.co.uk 01872 223883 SWIG Services Ltd Lowena House, Glenthorne Court, Truro Business Park Threemilestone, Truro, Cornwall, TR4 9NY
  • 71. BY DAV I D B ROW N
  • 72. PEER TO PEER/CROW DSOU RCI NG DEBT • Alternative Funding • A Market Place to bring lenders & borrowers together • Varied concepts across increasing number of Companies and Platforms • Business loans now available
  • 73. PEER -TO-PEER LENDI NG SEC TOR • Began in 2005 with Zopa • 121% sector growth in 2013 • Q4 2013- £843M lent • To be Regulated by FCA April 2014 • UK has most advanced website platforms • Folk2Folk 6th largest in UK
  • 74. HOW I T WORKS • P2P Companies match creditworthy borrowers with investors looking for competitive returns • Loans posted onto website and auction the right to participate in Loans • Subscribed by multiple lenders, loan executed once sum raised • Website based platforms with varied models used in assessing Loans
  • 75. FOLK2FOLK I N T HE SOU T H W EST • Secured Lending only • Speed of decision making • Auction letters of credit • Local knowledge • Face2Face in addition to online proposition
  • 76. BACKG ROU ND • Set up by the owners of Parnalls Solicitors in Launceston • Financial and Legal sector professionals • Local expertise • Quick decisions • Personal touch
  • 77. LENDERS B ENEF I TS • Alternative option for their savings • Attractive returns • Secured loans • Spreading risk • Investing in the South West economy
  • 78. B ORROW ERS B ENEF I TS • Fast Local decision • Any purpose • Interest Only • Flexible
  • 79. SEC TORS 6% 8% 43% 15% Property Build/Purchases Renewables Commercial Development Agriculture Leisure Other 20% 8%
  • 80. SANTANDER GROWTH CAPITAL PETER ABEL, DIRECTOR SOUTH WEST
  • 81. GROWTH CAPITAL FILLS THE FUNDING GAP as identified in the Rowland Report
  • 82. OUR BROAD CRITERIA – WHAT ARE WE LOOKING FOR? Not start-ups. At least 3 years of financial history Annual turnover £0.5m – £25m Track record of operating profitability and cash generation Proven management teams with ambition Privately owned businesses rather than Private Equity backed Demonstrable Growth in a combination of sales and / or profits
  • 83. AREAS WHERE GROWTH CAPITAL SUITABLE Expansion projects to drive rapid growth Funding of proven rollout concept Investment in New Product Development Investment in sales & marketing overhead for new products / areas Acquisition funding support Capex investment to support growth plans
  • 84. OUR GROWTH CAPITAL PROVIDES KEY BENEFITS TO SMEs Debt offering - No warrants and no dilution of equity Enhanced debt capacity - Cash flow lend not limited to tangible security Preserves cash Interest only. Cash interest is L+5%. Rolled interest of 5% No prepayment penalty fees Provides flexibility on term Full banking and security - No automatic requirement for PGs Access to Breakthrough programme Additional support
  • 85. BREAKTHROUGH PROGRAMME – NOT JUST FUNDING The Breakthrough programme will invest £200 million in fast-growth SMEs, supporting local enterprise and community initiatives, creating jobs, inspiring entrepreneurs of the future and turbo-boosting a private sector led economy 1. Breakthrough Growth Capital Santander has up to £200 million to invest in fast-growth SMEs turning over between £500k – £25m across the UK. The investment programme will run over the next 3 – 5 years and invest in up to 200 SMEs. 4. Breakthrough Talent Santander has launched an online portal for SMEs participating in the Breakthrough investment programme to access the best student and graduate talent across our partner University network – including Universities in Scotland. 2. Breakthrough Live Santander is running regional Breakthrough Live conferences for fast-growth SMEs. Working with Santander Universities the Breakthrough Live conferences bring together leading entrepreneurs to share experiences. 5. Breakthrough Responsibly In keeping with our focus on responsible business, Santander has launched a number of initiatives to encourage more responsible and inclusive business practice and to invest in Social Enterprise development. www.santanderbreakthrough.co.uk 3. Breakthrough Masterclasses Santander is running a unique experience programme for fast-growth SMEs that takes them behind the doors of the world’s most iconic and best fast-growth businesses, to learn first hand how they did it – real experience to help their own growth journey. 6. Breakthrough International This initiative will help SMEs participating in the Breakthrough programme to reach new overseas markets if their growth plans and ambitions are beyond the UK. It includes subsidised trade missions, educational roadshows and support accessing information on exporting.
  • 86. SOME OF OUR GROWTH CAPITAL INVESTMENTS     Communications Technology Completed July 2012 £1m Growth capital loan 10 new jobs     Vet Practices Completed July 2012 £1.25m Growth capital loan 120 new jobs     Software Completed March 2013 £0.5m Growth capital loan 14 new jobs     Legal Services Completed January 2013 £1.1m Growth capital 20 new jobs     Software Completed January 2013 £0.5m Growth capital loan 6 new jobs     Engineering Completed September 2012 £0.4m Growth capital loan 20 new jobs     Healthy Fast Food chain Completed May 2013 £0.7m Growth capital loan 50 new jobs     Telecommunications Completed March 2013 £1m Growth capital loan 50 new jobs     Healthy Fast Food chain Completed March 2013 £1.25m Growth capital loan 150 new jobs     Software as a service (SaaS) Completed April 2013 £0.5m Growth capital loan 14 new jobs     Media services provider Completed April 2013 £0.7m Growth capital loan 15 new jobs     Women’s clothing e-tailer Completed September 2013 £0.7m Growth Capital loan 30 new jobs     Cleaning products Completed September 2012 £0.85m Growth capital loan 5 new jobs     Thai restaurant chain Completed September 2012 £2.4m Growth capital loan 90 new jobs
  • 87. THANKYOU PETER ABEL, DIRECTOR SANTANDER GROWTH CAPITAL, SOUTH WEST Tel: 07809 493791 Email: peter.abel@santander.co.uk Website: www.santanderbreakthrough.co.uk ……a bank for your ideas!
  • 88. Equity – why even Boris is talking about it.. Nick Woodmansey – Corporate Finance Senior Associate
  • 89. Equity Who is talking about it? • Francis Clark • CBI – “Slice of the Pie – tackling the under-utilisation of equity finance” • Boris Johnson - “The real opportunity for Britain is to move away from just bank financing towards equity financing of all kinds, to try to get private investors to put money into startups - so that you're not relying on the banks who've not traditionally been brilliant.” www.francisclark.co.uk
  • 90. Background to equity • Why equity? • • Ambitious growth • Lack of security • • In banking terminology – an equity proposition! Lack of track record More than just the initial money • Drive growth • Mentoring & discipline • Introductions • Further capital www.francisclark.co.uk
  • 91. Structuring equity investments • Cash investment made into: • • • Shares Loans Required return • 20 to 40% IRR (annual yield) • 3 – 5 x cash multiple • Majority of the equity return is on exit • Portfolio return is lower www.francisclark.co.uk
  • 92. Enterprise Investment Scheme (‘EIS’) • Investor income and capital gains tax relief • Unquoted • Unconnected • Minority stake • But there are exclusions! • Watch compliance! • Two formats • EIS • Seed EIS www.francisclark.co.uk
  • 93. Enterprise Investment Scheme Investment limit EIS £1,000,000 SEIS £100,000 Investment timeframe 3 years 3 years Income tax relief 30% 50% Capital gains tax on sale No tax charge No tax charge Reinvestment of previous gains Exempt gain Loss relief www.francisclark.co.uk Defer tax Against personal tax liability
  • 94. Sources of, and/ or, routes to equity? • Friends, Families and Fools • Virtual Networks - e.g. Crowdcube • Angel Networks - e.g. SWAIN • Venture capitalists and Private Equity • Active in SW include www.francisclark.co.uk
  • 95. The problem  “Q1 2013 showed the lowest ever level of use of external finance by SME’s” – SME Finance Monitor, Aug ‘13  “Access to finance is a “major barrier” to growth for more than one in five small companies” – FT, Mar ’12  “Less than one in five SME’s have attempted to raise finance in the last year – with 40 per cent of applications rejected” – RealBusiness, Sept ‘13
  • 96. The solution  Crowdcube is the world’s first and leading equity crowdfunding platform giving entrepreneurs a new way to raise investment  Fully authorised and regulated by the Financial Conduct Authority
  • 97. The solution
  • 98. Success so far £19 million Stage of Growth funded so far… >60,000 members £2,800 By Category £180,000 average investment average deal £1.9 million biggest deal £250,000 largest single investment Successfully funded deals 95+
  • 99. Case studies
  • 100. What are the benefits?  New way to raise finance  Financial return  UK wide investor reach  ‘Armchair Dragon’  Easier to promote  Support friends and family  Cost effective  Participation  Marketing effect  Lower/spread risk  Crowd feedback  Simple to invest
  • 101. Michael Wilkinson Investment Manager Michael@crowdcube.com @MW_Crowdcube www.crowdcube.com
  • 102. Finance in the South West February 2014 Angel Investment Philip Tellwright Chief Executive SWAIN
  • 103. Business Angel networks Copyright SWAIN 2013
  • 104. Copyright SWAIN 2013
  • 105. Area of operations Copyright SWAIN 2013
  • 106. Statistics Deals done by sector 11% 18% 5% 17% Cleantech Food/drink IT 24% Manufacturing Media/comms 8% Medical devices Service 17% Copyright SWAIN 2013
  • 107. Stats 10 years 103 companies financed 144 rounds of funding £75m raised in total Failure rate 29% Ytd to March 2014 15 deals £1.1m 4 more completions anticipated Copyright SWAIN 2013
  • 108. Original ethos Copyright SWAIN 2013
  • 109. Key features business angel activity • Personal – preferably regional • Confidentiality • Understand more complicated businesses • Add value • Provide support • Will follow their money because of the relationship which has been established Copyright SWAIN 2013
  • 110. Keeping pace with fashions Copyright SWAIN 2013
  • 111. Where value is generated John - 30 investments • Currently @ 3.5x money Selection Value Added End Sale 30% 50% 20% Copyright SWAIN 2013
  • 112. banc
  • 113. Why do investors invest? 1. To make a return 2. To participate and contribute 3. Because returns are poor elsewhere 4. Because they get tax relief Right product; right people Add value
  • 114. Typical Investor Requirements 5x – 10x cash 3-5 years Exit Seat on the Board Some influence and control Copyright SWAIN 2013
  • 115. Nesta Research 2009 (1) Copyright SWAIN 2013
  • 116. Nesta Research 2009 (2) Copyright SWAIN 2013
  • 117. Investors “ought to…” Copyright SWAIN 2013
  • 118. Changing face of funding sources Copyright SWAIN 2013 Source Platform Black
  • 119. Crowd plus lead investor Copyright SWAIN 2013
  • 120. The road ahead Copyright SWAIN 2013
  • 121. Finance in the South West February 2014 Angel Investment Philip Tellwright Chief Executive SWAIN
  • 122. PRIVATE EQUITY AN INTRODUCTION George Adams Piper Private Equity LLP 1
  • 123. Private Equity It’s Position In The Milky Way Of Company Funding 2
  • 124. Private Equity Let’s Look A Bit Closer 3
  • 125. What Are Private Equity People Like? 4
  • 126. The Reality We’re quite normal – but there is a big variety We’re focused on growing value We can bring expertise, further cash, opportunities and contacts We have some rules, but can be extremely flexible Not every company is suitable 5
  • 127. A Few Aspects o Expertise: Varies by type of PE House eg sector specific eg issue specific o Rules: Information & Data Behavioural Ultimately relationship is key o Flexibility: Cash In/Out Minority / Majority Management In / Out / New Higher Risk / Steadier Returns 6
  • 128. Piper  We Invest in consumer brands  Retail, Leisure, Consumer Products & Services  £3m to £15m Passionate about brands 7
  • 129. Our Track Record Delivered diet company Latin American restaurant chain Family clothing catalogues Luxury handmade rugs Beach and resort clothing for men Cocktail bar chain Casual clothing brand Sports nutrition products Adult soft drinks Food Service brand Travel clothing retailer Womenswear catalogue for over 45’s Chain of Caribbean restaurants Luxury footwear Upholstered furniture retailer Bar chain Burger restaurant chain Café / bar / restaurant chain Exam revision specialist We have an excellent track record and have developed deep sector knowledge in each of these markets Passionate about brands 8
  • 130. What Piper Looks At  We look at:  The Consumer Proposition  Team  Growth  Exit 9
  • 131. The End Thank You
  • 132. Introduction to BGF Edwin Davies, Investment Associate 26.02.14 Growth Capital Investors
  • 133. BGF About us Long-term growth capital for UK companies £2.5bn of capital from five of the largest UK banks Long-term business builder through expertise as well as capital Independent, quick and autonomous decision making 90+ staff, 7 regional offices, local deal origination, execution and support Growth Capital Investors
  • 134. Investment Criteria Long-term growth capital for UK companies Established UK companies with sales of c. £5 – 100m Businesses with past and potential future growth Capable management team £2-10 million equity requirement (per funding round) Minority equity stakes Growth capital funds can be used for: Acquisitions, working capital, R&D, capital investment, overseas expansion Some “cash out” to shareholders but this must be less than 50% of the BGF investment Generalist sector focus but excluding: Property investment and development; Some regulated financial services businesses; Some on ethical grounds Growth Capital Investors
  • 135. Growth Capital Investors
  • 136. BGF Why are we different Focus on growth capital for SMEs Flexible, long-term view on exit Flexibility on investment structures Minority investor and partnership approach Regional office network Huge network of experienced business leaders to support growth at board level Focused diligence process and sensible investment timelines Growth Capital Investors
  • 137. Break Session 3 start time 11.30am www.francisclark.co.uk
  • 138. Finance in the South West 2014 Investment ready, Business support and closing address… Lewis Banfield - Partner
  • 139. Structure of morning • • Background and Grants (8.30am to 9.35am) Key note speaker SME, LEP and the ‘funding gap’ Grant schemes • • • SME experience, rewards, debt and equity (9.55am to 11.10am) • • Investment ready, business support and closing address (11.30am to 12.35pm) Q&A one to one / Networking (12.35pm to 2pm) www.francisclark.co.uk
  • 140. Investment ready… Matthew Willmott – Corporate Finance Associate
  • 141. Matching requirements Understand your requirements www.francisclark.co.uk Understand funding options and funders requirements
  • 142. The Readiness Process • When, why and what funding is needed • Communicating the business proposition Business plan and projections • Viable plan and credible management • Building the relationship www.francisclark.co.uk
  • 143. Investment ready – housekeeping • Compliance and Legal  Licences / contracts/ legal title?  IPR ownership in the company?  Statutory Accounts/management accounts  VAT, PAYE/NI, Books and records in order? www.francisclark.co.uk
  • 144. Requirements: Grants • “Project” eligibility – sector, size, location… • Timescale – prescriptive, process and panels, not retrospective • Match funding • ‘Need for grant’ versus viable proposition • Other factors - Environment, Equality, on going requirements www.francisclark.co.uk
  • 145. Requirements: Debt • Serviceability & Headroom • Security / Personal Guarantees • Conduits for government initiatives • Covenants – achievable / appropriate? www.francisclark.co.uk
  • 146. Requirements: Equity • Exit route and returns to the investor • Investors expertise vs. loss of independence? • Be prepared to discuss valuation • Be aware of FSMA regulations www.francisclark.co.uk
  • 147. Investor Ready - Conclusions • Appropriate funding / understand the funder • Business Case • Plan B? • Know the ‘deal breakers’ – due diligence • Build in extra time www.francisclark.co.uk
  • 148. Business Plans and Financial Projections Nick Tippett – Corporate Finance Associate
  • 149. “Business Plan” • Business case • Tailor to audience • Informing v giving away IP www.francisclark.co.uk
  • 150. Structure of a business plan • • • • • • • • • • • Front cover Contents Executive summary Background to the business Products and services Customers and markets Business operation Management Financial history Financial projections Appendices www.francisclark.co.uk
  • 151. Projections: the perfect scenario • Monthly integrated profit and loss, cashflow and balance sheet covering a period of three years • Documented assumptions • Ability to sensitize the model www.francisclark.co.uk
  • 152. Projections: the real world! • Choose an approach that works for the business • Focus on the KPIs of the business • Make basic assumptions • Compare to actual results www.francisclark.co.uk
  • 153. Common issues • Inconsistencies between Business Plan (narrative) and Projections (figures) • Profit ≠ cash • Do not forget about tax (VAT and tax on profits) • • Match funding to cash requirements, business model & exit strategy Read through documents ‘cold’ www.francisclark.co.uk
  • 154. GrowthAccelerator overview Presented by Bruce Colley 26th February 2014 www.growthaccelerator.co Access to Finance July 2013 m
  • 155. Access to finance Business development Growth Mapper 1-2-1 Coaching Growth Manager Connectivity Workshops Leadership & Management Funding Help to Innovate Master Classes www.growthaccelerator.co m
  • 156. “I want to grow my company, but.......” "My bank won't support me with my funding requirements“ "I haven't had to raise finance before - what are my options?” 1 "I want an investor who will bring in expertise and contacts” “My bank want me to factor – is it the best option?”
  • 157. Eligibility? • SMEs only - less than 250 employees, £40m turnover • Ambition to double in turnover, profits or employees in 3 years • Registered in England • Independently owned • Any sector Access to Finance 18th December 2013, Tortworth Court, Bristol July 2013
  • 158. What makes this service unique? 1. This is a Selective Service, only for those with the ambition to double in the next three years 2. It is Personalised to Address Your Business Challenges 3. It is the UK Government Investing in High Growth Businesses, delivered by a consortium of private sector partners 4. It use commercial, experienced coaches (800 across the country – 200 specialist Access to Finance) 5. Access to Finance The service is focused on Results 18th December 2013, Tortworth Court, Bristol July 2013
  • 159. Progress to date? 1. Worked with over 11,000 high growth businesses across England 2. Raised finance for a wide range of companies in the SouthWest – ranging from: traditional debt, invoice finance, asset backed RDF, matched funded TSB, angel (traditional and crowd), funding circle and VC Access to Finance 18th December 2013, Tortworth Court, Bristol July 2013
  • 160. Scope of the service Core support Current position Review of your business. Business diagnostic. Establish eligibility and suitability. Review coaching and package of support. Access to finance require a reasonable business plan to be in place Masterclasses Access to finance support Funding Investment readiness Introduction requirements Fine tuning of business plan Agreeing priorities and Debt or equity (angels, Developing thoughts in line schedule for introductions crowdfunding, with appropriate Introductions to up to networks, syndicates, masterclasses three sources of finance banks, specialist Agreeing the opportunity note Liaising with Investment financiers, VCs…) and the pitch proposition relations team Review suitability of Identifying gaps in the due Hand over to corporate business plan diligence finance advisor / lawyer as Agree finance action Reviewing on-going appropriate plan professional support MC1: Understanding finance - To understand advantages/disadvantages of alternative sources of external finance MC2: Preparing for finance - To craft a strong ‘pitch’ to increase your success of accessing external finance MC3: Closing the deal – Legal and Valuation - To maximise your ability to complete a financing deal Post funding Connectivity On going leadership and management training Leadership & Management £2000 matched funding towards leadership and management training per senior manager. Can be effective in developing the management teams ability to further develop the investment proposition (i.e. marketing plan, financial planning etc.) Also available post investment to help develop management capacity Investment relation team Fast track workshops Provides additional information on relevant VCs, banks, angel syndicate and networks. Also providing feedback on your opportunity note The fast track w/s programme is an intensive series of workshops backed up by one-to-one coaching that gets you ready for finance and helps to put you in front of investors and other sources of finance (micros and start-ups) Access to Finance July 2013
  • 161. What do I do next? Contact me: Bruce Colley Access to Finance b.colley@oxin.co.uk 18th December 2013, Tortworth Court, Bristol July 2013 07436 108297
  • 162. The Growth Acceleration and Investment Network The Peninsula’s Growth Hub
  • 163. GAIN… • Is a network of business service providers dedicated to raising awareness and increasing take-up of the support available • Adds value to, and does not duplicate, existing networks and business support www.gaininbusiness.com
  • 164. Helping business find the right support… • GAIN Business Engagement Service – A phone / e-mail based light touch diagnostic, signposting and brokerage service for any business • The GAIN Digital Exchange – gaininbusiness.com Both to be launched in April 2014 For more information - 0800 052 5600 www.gaininbusiness.com
  • 165. Flexing provision and filling gaps MAS for marine Innovation Vouchers Start Up Support Export Support Programme / Web fuelled Enhanced FDI Finance Partnership www.gaininbusiness.com
  • 166. www.gaininbusiness.com
  • 167. Business support - other David Bullen – Corporate Finance Senior Associate
  • 168. Business support (and funds?) • • • • MAS UKTI Business Growth Vouchers There are others… www.francisclark.co.uk
  • 169. MAS www.francisclark.co.uk
  • 170. UKTI Support to........ • Develop an export strategy – Passport to Export (£3,000), Gateway to Global Growth (£3000) • Undertake market research (including identifying potential partners) – EMRS (50% match), OMIS (subsidised) • Visit & develop new export markets – MVS (£200-£850) • Improve international communications: website, email, languages & culture – ECR (subsidised), ECR EV (£3000) • Exhibit overseas – TAP & TAP SOLO (£1,000 to £2,500) • Carry other marketing and sales development activities - European funding (ERDF) (£1,000 to £30,000) www.francisclark.co.uk
  • 171. Business Growth Vouchers • • • • • Up to £2,000 support (50% match funded) 5 categories of support: - Managing cashflow, late payments and negotiating finance Developing skills and taking on staff Improving Leadership and Management Marketing, attracting and keeping customers Making the most of digital technology FC registered for the first point above http://enterprisenation.com/marketplace https://www.gov.uk/apply-growth-vouchers www.francisclark.co.uk
  • 172. Michael Portillo Finance in the South West 2014 www.francisclark.co.uk
  • 173. Finance in the South West 2014 Thank you and please network Lewis Banfield - Partner
  • 174. Structure of morning • • • • Background and Grants (8.30am to 9.35am) Key note speaker SME, LEP and the ‘funding gap’ Grant schemes • • • SME experience, rewards, debt and equity (9.55am to 11.10am) Investment ready, business support and closing address (11.30am to 12.35pm) Q&A one to one / Networking (12.35pm to 2pm) www.francisclark.co.uk
  • 175. Summary • • • • • SMEs – the country needs you SW a great place to do business Some great businesses in the SW Confidence? Funding and support – options • Thank you www.francisclark.co.uk
  • 176. Network: there are here to speak to you …and many more www.francisclark.co.uk
  • 177. Disclaimer & copyright (c) copyright Francis Clark LLP, 2014 You shall not copy, make available, retransmit, reproduce, sell, disseminate, separate, licence, distribute, store electronically, publish, broadcast or otherwise circulate either within your business or for public or commercial purposes any of (or any part of) these materials and / or any services provided by Francis Clark LLP in any format whatsoever unless you have obtained prior written consent from Francis Clark LLP to do so and entered into a licence. To the maximum extent permitted by applicable law Francis Clark LLP excludes all representations, warranties and conditions (including, without limitation, the conditions implied by law) in respect of these materials and /or any services provided by Francis Clark LLP. These materials and /or any services provided by Francis Clark LLP are designed solely for the benefit of delegates of Francis Clark LLP. The content of these materials and / or any services provided by Francis Clark LLP does not constitute advice and whilst Francis Clark LLP endeavours to ensure that the materials and / or any services provided by Francis Clark LLP are correct, we do not warrant the completeness or accuracy of the materials and /or any services provided by Francis Clark LLP; nor do we commit to ensuring that these materials and / or any services provided by Francis Clark LLP are up-to-date or error or omission-free. Where indicated, these materials are subject to Crown copyright protection. Re-use of any such Crown copyright-protected material is subject to current law and related regulations on the re-use of Crown copyright extracts in England and Wales. These materials and / or any services provided by Francis Clark LLP are subject to our terms and conditions of business as amended from time to time, a copy of which is available on request. Our liability is limited and to the maximum extent permitted under applicable law Francis Clark LLP will not be liable for any direct, indirect or consequential loss or damage arising in connection with these materials and / or any services provided by Francis Clark LLP, whether arising in tort, contract, or otherwise, including, without limitation, any loss of profit, contracts, business, goodwill, data, income or revenue. Please note however, that our liability for fraud, for death or personal injury caused by our negligence, or for any other liability is not excluded or limited. www.francisclark.co.uk