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VENTUREFESTFUNDING FOR GROWTHJO OLIVEROCTOPUS VENTURES
VENTUREFEST – FUNDING FOR GROWTHINTRODUCTION   Octopus Investments - £3bn FUM   Octopus Ventures - £300M+ FUM   Seed, t...
VENTUREFEST – FUNDING FOR GROWTHGROWTH / EXPANSION CAPITAL   Growth / Expansion Capital   Series A - Series B++ to Exit...
VENTUREFEST – FUNDING FOR GROWTH   THE BAD NEWS           The Equity Gap is getting wider and deeper           Post the ...
VENTUREFEST – FUNDING FOR GROWTHTHE GOOD NEWS   Recessions have historically produced the best VC returns   Paradigm tec...
VENTUREFEST – FUNDING FOR GROWTHSOURCES OF CAPITAL   Bank Finance / Debt   Friends & Family; Angels; Seed   Venture Cap...
VENTUREFEST – FUNDING FOR GROWTHBANK FINANCE / DEBT Pros                             Cons  Relatively cheap capital      ...
VENTUREFEST – FUNDING FOR GROWTHFRIENDS & FAMILY; ANGEL; SEEDPros                           Cons Often the only option   ...
VENTUREFEST – FUNDING FOR GROWTHVENTURE CAPITAL / (PRIVATE EQUITY) Pros                  Cons  Value Add            Proc...
VENTUREFEST – FUNDING FOR GROWTHSTOCK MARKETS / AIMPros                                    Cons Access to multiple source...
VENTUREFEST – FUNDING FOR GROWTHOTHER / ALTERNATIVE SOURCES   Corporate venture arms   Grants/ matched funding/ R&D tax ...
VENTUREFEST – FUNDING FOR GROWTHTIPS1.   Network2.   Be Open and Receptive3.   Make it Easy for Investors4.   Corporate Fi...
VENTUREFEST – FUNDING FOR GROWTHUSEFUL CONTACTS   Angels     BBAA (http://www.bbaa.org.uk)     Angel List (http://angel...
Venturefest Bristol 2011, Jo Oliver, Octopus Ventures
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Transcript of "Venturefest Bristol 2011, Jo Oliver, Octopus Ventures"

  1. 1. VENTUREFESTFUNDING FOR GROWTHJO OLIVEROCTOPUS VENTURES
  2. 2. VENTUREFEST – FUNDING FOR GROWTHINTRODUCTION Octopus Investments - £3bn FUM Octopus Ventures - £300M+ FUM Seed, through Early Stage to Growth / Development Capital Portfolio of 60+ Companies Exits include LoveFilm to Amazon for $312m Portfolio Companies include Zoopla and Graze One of the most active VC in the UK in 2010* * Source: Ascendant Limited 2
  3. 3. VENTUREFEST – FUNDING FOR GROWTHGROWTH / EXPANSION CAPITAL Growth / Expansion Capital Series A - Series B++ to Exit No hard & fast rules, but a guide is:  Proven Technology  Commercial traction  Established Business Model  Revenues of £1m +  EBITDA positive on an underlying basis £1m - £10m+ capital raise 3
  4. 4. VENTUREFEST – FUNDING FOR GROWTH THE BAD NEWS  The Equity Gap is getting wider and deeper  Post the Credit Crunch – Growth funding is at multi-decade lows, from both banks and VCs Venture Capital Fund Raising Bank Lending to SMEs 7 20.0 6 15.0 % Change YOY 5 10.0 4 £bn 3 5.0 2 0.0 1 -5.0 0 May 2008 May 2009 May 2010 Jul 2008 Sep 2008 Nov 2008 Jul 2009 Sep 2009 Nov 2009 Jul 2010 Sep 2010 Nov 2010 Mar 2008 Jan 2009 Mar 2009 Jan 2010 Mar 2010 00 01 02 03 04 05 06 07 08 09 YearSource: Nesta 4
  5. 5. VENTUREFEST – FUNDING FOR GROWTHTHE GOOD NEWS Recessions have historically produced the best VC returns Paradigm technology shifts are making it cheaper and faster to start and grow very valuable businesses, in increasingly short periods of time: Time Taken to Reach $10bn Valuation 35 30 1976-05 25 1977-96 20 Years 15 1982-94 10 1998-03 5 2008-10 0 Apple Oracle Adobe Google Groupon 5 Source: Capital IQ
  6. 6. VENTUREFEST – FUNDING FOR GROWTHSOURCES OF CAPITAL Bank Finance / Debt Friends & Family; Angels; Seed Venture Capital / Private Equity Public Markets Other 6
  7. 7. VENTUREFEST – FUNDING FOR GROWTHBANK FINANCE / DEBT Pros Cons  Relatively cheap capital  Availability  Financial leverage  Profitability needed  Tax relief on interest costs  Security  Limited ceding of control  Subordination of equity  Flexibility  Cash costs of servicing 7
  8. 8. VENTUREFEST – FUNDING FOR GROWTHFRIENDS & FAMILY; ANGEL; SEEDPros Cons Often the only option  Length of process Limited servicing costs  Follow on availability  Control & Value Dilution Value Add investors (?)  Avoid complexity Tax benefits for investors 8
  9. 9. VENTUREFEST – FUNDING FOR GROWTHVENTURE CAPITAL / (PRIVATE EQUITY) Pros Cons  Value Add  Process  Cash reserves  (Partial) Loss of Control  Credibility  Equity Value dilution  Time & Cost of servicing shareholders  Permanent capital  Exit experience 9
  10. 10. VENTUREFEST – FUNDING FOR GROWTHSTOCK MARKETS / AIMPros Cons Access to multiple sources / larger  Costsamounts of capital  In the Public Eye Profile and credibility  Stock Market fluctuations Valuation transparency / reflection  Ownership not partnership Liquidity for shareholders  Lost in the crowd Acquisition currency 10
  11. 11. VENTUREFEST – FUNDING FOR GROWTHOTHER / ALTERNATIVE SOURCES Corporate venture arms Grants/ matched funding/ R&D tax credits Working capital optimisation Factoring/ finance leasing Crowd sourcing (though very nascent) 11
  12. 12. VENTUREFEST – FUNDING FOR GROWTHTIPS1. Network2. Be Open and Receptive3. Make it Easy for Investors4. Corporate Finance Advisor5. We are a People Business 12
  13. 13. VENTUREFEST – FUNDING FOR GROWTHUSEFUL CONTACTS Angels  BBAA (http://www.bbaa.org.uk)  Angel List (http://angel.co/)  Seed Summit (http://seedsummit.org/) Venture Capital  BVCA (http://www.bvca.co.uk/home) Grants  Technology Strategy Board (http://www.innovateuk.org/) Joliver@octopusventures.com 13

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