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Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
Sources of Finance
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Sources of Finance

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  • 1. Sources of Finance for Creative Businesses Jason Ball Investment Executive - London Seed Capital 31 st March 2006
  • 2. SOURCES OF FUNDING COVERED <ul><li>Grants </li></ul><ul><li>SFLGS </li></ul><ul><li>Asset Finance </li></ul><ul><li>Local Enterprise Support </li></ul><ul><li>Regionally Focused VCs </li></ul><ul><li>Young Entrepreneurs </li></ul><ul><li>Seed Technology and Arts </li></ul><ul><li>Business Angels </li></ul><ul><li>Other Specialist VCs </li></ul>
  • 3. GRANTS <ul><li>London Innovation – part of the London Development Agency </li></ul><ul><ul><li>Lists a number of grant funding sources available in London </li></ul></ul><ul><li>DTI R&amp;D Grant – Four levels, from… </li></ul><ul><ul><li>Micro projects, grant of up to £20k… </li></ul></ul><ul><ul><li>… to Exceptional projects (involving high-cost technology development, larger firms), = up to £500k </li></ul></ul><ul><li>EU various grants and loans </li></ul><ul><li>Further Info: </li></ul><ul><li>www.grantfinder.co.uk www.businesslink4london.com </li></ul><ul><li>www.sbs.gov.uk www.dti.gov.uk/r-d </li></ul><ul><li>www.london-innovation.org.uk / www.creativelondon.org.uk </li></ul><ul><li>www.londonchamber.co.uk/europe </li></ul>
  • 4. SFLGS <ul><li>Start-up businesses often have few assets to use as collateral – so hard to obtain loans </li></ul><ul><ul><li>Under SFLGS the Government guarantees the loan </li></ul></ul><ul><li>21 lenders including all high street banks </li></ul><ul><li>75% guarantee, no personal </li></ul><ul><li>Guarantee loans of up to £250,000 </li></ul><ul><li>Term up to 10 years </li></ul><ul><li>Availability to qualifying businesses with turnover up to £5.6m and age up to 5 years old </li></ul><ul><li>Further info: www.dti.gov.uk/sflg </li></ul>
  • 5. ASSET FINANCING <ul><li>Outstanding invoices often an SME’s biggest asset . </li></ul><ul><li>Factor controls SME’s sales ledger, providing credit collection and control. Pays 80-90% of invoice within 24hrs </li></ul><ul><li>Invoices are sent to and assigned to the factor </li></ul><ul><li>Factor pays the balance (less charges) when the invoice has been paid </li></ul>Two ways to exploit COMMERCIAL invoices: (1) Factoring and (2) Invoice Discounting (1) Factoring: suited to smaller firms (below £1m turnover).
  • 6. ASSET FINANCING (2) Invoice discounting: suited to larger firms <ul><li>Same as Factoring, with two important differences : </li></ul><ul><ul><li>Collection responsibility remains with the SME </li></ul></ul><ul><ul><li>Invoices remain assigned to the SME, not the invoice discounter </li></ul></ul>Both facilities involve two costs: Service charge (% sales) AND Interest Charge Further info: All major high street banks Independent Growth Finance: www.igfgroup.com
  • 7. LOCAL ENTERPRISE SUPPORT <ul><li>Numerous organisations offer support, including </li></ul><ul><ul><li>HBV Enterprise </li></ul></ul><ul><ul><li>Kingston Innovation Centre </li></ul></ul><ul><ul><li>Business Link 4 London </li></ul></ul><ul><ul><li>Portobello Business Centre </li></ul></ul><ul><ul><li>one London </li></ul></ul><ul><li>Further info: </li></ul><ul><li>www.hbv.org.uk www.kingstoninnovation.com </li></ul><ul><li>www.pbc.co.uk www.gle.co.uk/onelondon/Loans/SBLoans.htm </li></ul><ul><li>www.cdfa.org.uk www.sbs.gov.uk </li></ul><ul><li>www.businesslink4london.com </li></ul>
  • 8. LOAN FUNDS <ul><li>OneLondon £7m Loan Fund available: </li></ul><ul><ul><li>Seed (e.g. £5k) </li></ul></ul><ul><ul><li>Growth (e.g. £20k) </li></ul></ul><ul><li>Eligibility: </li></ul><ul><ul><li>“ Objective 2” areas (East/North-East areas; post-code specific), oneLondon and ELSBC, up to £250k </li></ul></ul><ul><ul><li>All other areas up to £20k standard </li></ul></ul><ul><li>Advice and mentoring support post-loan </li></ul><ul><li>Further info: </li></ul><ul><li>www.one-london.com http://www.goeast.org/002access.htm </li></ul>
  • 9. SEED TECHNOLOGY and ARTS <ul><li>University Seed Funds – invest in university spin-out companies </li></ul><ul><li>The Recycling Fund – recycling companies with a UK focus </li></ul><ul><li>Film London – Film finance </li></ul><ul><li>NESTA – innovation, most projects £35-£80k </li></ul><ul><li>The Wellcome Trust – (‘Translation Awards’), healthcare sector </li></ul><ul><li>Further info: </li></ul><ul><li>www.unico.org.uk www.recyclingfund.com </li></ul><ul><li>www.filmlondon.org.uk www.nesta.org.uk </li></ul><ul><li>www.wellcome.ac.uk </li></ul>
  • 10. YOUNG ENTREPRENEURS <ul><li>Shell LiveWIRE - £10,000 prize 16-30yrs </li></ul><ul><li>Prince’s Trust: </li></ul><ul><ul><li>a low interest loan (up to £4,000 for a sole trader, or up to £5,000 for a partnership) </li></ul></ul><ul><ul><li>a grant of up to £1,500 in special circumstances </li></ul></ul><ul><ul><li>a test marketing grant of up to £250 </li></ul></ul><ul><li>Further info: </li></ul><ul><li>www.shell-livewire.org </li></ul><ul><li>www.princes-trust.org.uk </li></ul>
  • 11. EQUITY FINANCE <ul><li>Selling a share in your business </li></ul><ul><li>Various sources of equity finance: </li></ul><ul><ul><li>Friends and Family </li></ul></ul><ul><ul><li>Business Angels’ (private investors) </li></ul></ul><ul><ul><li>Venture Capital </li></ul></ul><ul><li>How do these link together? </li></ul>
  • 12. EQUITY FINANCE DIAGRAM CAPITAL NEEDS TIME Seed Start-up Early Growth Sustained Growth High Risk Low Risk Friends, Family &amp; Fools Business Angels Formal Venture Capital IPO Growth
  • 13. BUSINESS ANGELS <ul><li>High Capital Returns for risks involved </li></ul><ul><li>SMEs with a clear/concise Business Plan </li></ul><ul><li>Minority shareholder legal protection </li></ul><ul><li>Potential for explosive growth </li></ul><ul><li>Involvement post investment </li></ul><ul><li>Exit in medium term </li></ul>Business Angel = private investor who might invest their own money in your business. Angel Network = organisation that links suitable businesses to its membership of Angel investors
  • 14. BUSINESS ANGELS <ul><li>BBAA – angel network trade association </li></ul><ul><li>Example Business Angel Network: </li></ul><ul><ul><li>London Business Angels. Not-for-profit, 180 investors meet 7 times p/a, invests £100k - £750k , 33% success rate. 800 applicants p/a and 40 selected. </li></ul></ul><ul><ul><li>‘ Co-investment funds’ invest alongside angels </li></ul></ul><ul><li>Further info: </li></ul><ul><li>www.bbaa.org.uk www.lbangels.co.uk </li></ul><ul><li>www.londonseedcapital.com </li></ul>
  • 15. INVESTMENT FUNDS <ul><li>The Capital Fund: up to £250k, further £250k possible after 6 months – Greater London only </li></ul><ul><li>Bridges Community Ventures: £150k+ in companies based in deprived areas </li></ul><ul><li>London Seed Capital: £50k to £100k business angel co-investment fund – London and South East </li></ul><ul><li>GoEast Ventures: £50k to £350k East London </li></ul><ul><li>Creative Capital Fund: £75k co-investment, up to £500k available as follow-on funding </li></ul><ul><li>Further info: </li></ul><ul><li>www.thecapitalfund.co.uk www.bridgesventures.com </li></ul><ul><li>www.londonseedcapital.com www.bvca.co.uk </li></ul><ul><li>www.goeastventures.co.uk www.ccfund.co.uk </li></ul>
  • 16. VENTURE CAPITALISTS <ul><li>Larger amounts of funding: £1m+ </li></ul><ul><ul><li>Equity investors who seek a seat on the Board </li></ul></ul><ul><li>Typically invest in later stage companies </li></ul><ul><li>Represented by British Venture Capital Organisation (BVCA) </li></ul><ul><ul><li>Members invest in all sectors of the economy </li></ul></ul><ul><ul><li>170 full members </li></ul></ul><ul><li>Further info: </li></ul><ul><li>www.bvca.co.uk </li></ul>
  • 17. Jason Ball Thank you for your interest Tel: 0044 207 089 2309 www.gle.co.uk www.londonseedcapital.com [email_address]

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