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WBS Entrepreneurship Mentoring Workshop -28 July 2011 - John Griffiths
 

WBS Entrepreneurship Mentoring Workshop -28 July 2011 - John Griffiths

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Sources of funding: Grants (MAS. UKTI), FF&F, Banks, Angels and VC’s

Sources of funding: Grants (MAS. UKTI), FF&F, Banks, Angels and VC’s

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    WBS Entrepreneurship Mentoring Workshop -28 July 2011 - John Griffiths WBS Entrepreneurship Mentoring Workshop -28 July 2011 - John Griffiths Presentation Transcript

    • Funding for Entrepreneurs and
      How to Raise It
      John Griffiths,
      Director, Connect Midlands
      WBS Entrepreneurship Mentoring Programme 28 July 2011
    • Objectives
      Options for funding your business
      What funds are best for you at the time
      Understand mindset of funder or investor.
      How to create a winning plan and pitch
      Understand how to raise money !
    • Agenda
      Connect and our track record
      Types of finance: grants, debt, angels, VC
      What do investors look for?
      Are you investment ready?
      Connect model
      Strategic & Business cases
      Interacting with investors
      Summary
    • Leading technology and growth network providing access to
      finance, innovation, professionals, successful entrepreneurs.
      Helps build route to market, management capability,
      and commercialise innovation
    • PRIME PARTNERS
      BUSINESS PARTNERS
      CORPORATE MEMBERS
    • Investment
      Readiness
      £200m to date!
      Connect Midlands is recognised as market leader in helping innovative,technology & high growth businesses become investment ready
      ....then showcasing them to the investment community to raise money they need to grow
      Growth
      ….and assisting them to grow shareholder value, create jobs,
      become world-beaters .
    • From idea to market – the rocky road of realisation
      The Goal.
      Growth
      & Profit
      market need
      funding
      management
      Potential for growth
      Ideas +
      concepts

      Growth
      Time 
      †† Graveyard for start-ups & businesses ††
    • Types of Finance
      Main Stock Market
      AIM
      Plus
      Availability of Funds
      Venture
      Capital
      Grants
      Debt
      Business
      Angels
      3 Fs
      Size of Company
      8
    • What do investors look for ?
      Experienced & ambitious management team
      Sound business case & plan
      High growth prospects
      High market share potential
      IPR
      Sustainable competitive edge & USPs
      Sales already or close to market ?
      Shares & enough to be attractive
      Exit route – money out in 3-7yrs ?
    • Management ?
      investors back the jockey -
      not the horse
    • The basics – Your Turn
      a). 5 minutes discussion in pairs on:
      What is the vision of your business?
      How much £ do you require?
      What do you need it for ?
      What type of funding & when?
      Grants; Debt and Banks; Equity, Angels, VCs
      Who might you sell to ?
      b). 2 minutes feedback each
    • Grants
      Upsides:
      Free Money
      Don’t have to pay it back
      Great way to kick start business
      Some validation for matched / follow on funds
      Downsides:
      Beaurocratic
      Don’t chase unless fits your growth plan
      Targets and outputs and outcomes
    • Grants
      TSB – Grants for R&D
      Proof of Market: is there a market ? 60% grant to £25K
      Proof of Concept : NP & PD, 60% grant to £100K
      Development :to pre-production,35%-45% grant to £250K
      MASWM–Manufacturing & NPD Reviews / Projects
      Short tem improvement or strategic change
      Reviews, free
      Projects, 50% grant to £10K by no money left until 2012 ?
      UKTI – Advice and help with exporting
      Advice, strategic reviews, info from Trade Advisers
      Market research and visits, 33% to 60% grants
    • Debt
      Many types eg:
      Loans & Overdrafts
      Factoring / Invoice Discounting
      Asset Finance
      EFG – up to £1m, 75% Govt guarantee
      Alternatives to banks egs:
      CDFI, to £50K (ART/ BCRS/CWRT..)
      Thin cats, £50K - £3m
      Funding Circle, £5K - £50K
    • Banks and Debt
      No share of ownership
      Always repayable
      Carrier interest payments
      Availability depends on
      Viability
      Serviceability
      Security
      Balance sheet & trading history
    • What Banks look for
      Strong management team
      Sustainable competitive advantage
      Decent scale
      IPR and or USPs
      Growth sectors often favoured
      Business growth
      PLUS :
      Regular interest/capital repayments
      Trading business
      Security- debentures, personal guarantees
      Interest cover
    • Business Angel Finance
      Risk money (unsecured) invested by individuals
      • Exchanged for a share of the business
      • Reduces risk for other providers of finance
      • Often accompanied by investors skills / knowledge
      • Typically invest in range £20K to £1m+
      • Often in networks and syndicates but can be alone
      • Tim Powell – Minerva, later
    • Angels in the West Midlands
      Networks:
      Minerva
      Beer & Partners
      Central England Business Angels
      Advantage Business Angels
      High-Net Worth Individuals
      BBAAwww.bbaa.org.uk
      See www.westmidlandsfinance.com
    • What Business Angels look for
      Strong management team (which they can strengthen)
      Proposal with sustainable competitive advantage
      Decent scale
      IPR (sometimes)
      Growth sectors (sometimes)
      Capital growth & exit
      More from Tim later
      PLUS:
      Fun, stimulation, involvement
      Sector they know & understand
      Non Executive Director
    • Venture Capital
      Money at risk
      Mostly shares – sell a percentage ownership for a cash investment
      Money does not need to be repaid
      Investor objective - capital gain
      An exit has to be planned
      £100K to £5m+ for early stage, (5-10x)
      West Midlands: Midven, Mercia Technology
      National: many more
    • What Venture Capitalists look for
      Strong management team
      Proposal with sustainable competitive advantage
      Decent scale (essential)
      IPR and or USPs
      Growth sectors
      Significant capital growth, (5-10)
      An exit
      PLUS
      Shareholder
      Board position or appoint Director
      Take a business from platform A to B
      Exit agreed as part of investment
    • Differences between grants, debt, equity
      What are they ?
    • Be Prepared – Get Yourself Ready
      to Raise Finance and Investment!
      Strong
      Proposition
      +
      Proof Points
      Compelling
      Business Plan
      Focussed
      Pitch
      £
      +
      +
      =
    • Key areas for business development and “investability”
    • Strategic & Business Case
      Strategic Case:
      Exec Summary (2 pages)
      10 slide presentation
      Does the investor like you & your proposal?
      Business Case:
      The business plan (BVCA guidelines)
      Further due diligence
      Can you defend your assumptions?
      Does the investment case make sense?
    • CMIC
      Springboard
      Roundtable
      Green
      Coaching
      Pathfinder Workshops
      Corporate Finance Support
      Amber
      Amber 2 day workshops
      Assessment Panels
      Networking
      Right Funds for You, Events, Presentations
      Connect Midlands’ investment readiness programme, InvoRed
      • Showcasing
      • (Pitching to investors)
      • Preparation
      • Education
      • Awareness
      26
    • FUNDING STAGE
      Pre-Start
      Existence
      Survival
      Success
      Take-off
      Maturity
      LIFE CYCLE STAGE
      LIFE CYCLE STAGE
      Springboard
      SMEs seeking up to £500k pitch to an audience of investors and support intermediaries
      Investment Conference
      SMEs seeking up to £5m to pitch to an audience of investors and intermediaries
      Roundtable
      SMEs seeking early stage finance to present to target investors over an exclusive lunch or dinner
      InvoRed
      Supports SMEs to help them shape propositions and become investment-ready
    • Timetable for Equity
      Draw up plan/pitch: 1 month
      Approach VC and get a meeting: 1-3 months
      Further meetings: 1-3 months
      Due diligence: 2-4 months
      Final negotiations/legal's: 1-3 months
      Conclusion: min 6 months,can take 12 months
      Connect Investment Conferences: great way of meeting many investors at once – 22 Nov London
    • Interacting with Investors
      Be Realistic
      getting it wrong loses credibility
      about valuation
      Be Honest
      trust is a big part of the financial industry; it is a deal breaker
      Be Prepared
      you might only get one shot at fundraising
      you will be challenged!
    • Some Successes !
      £2.8m since 2005
      Monica Healthcare
      £1.04m since 2004
      £88K since 2004
      FDAS
      £4.72m since 2003
      Prime Principle
      Haemostatix
      £5m +
    • Review Session Objectives
      Options for funding your business ?
      What funds are best for you at the time ?
      Understand mindset of funder or investor ?
      How to create a winning plan and pitch ?
      Understand how to raise money ?
      Have we done these ?
    • Summary and ConclusionsConnect Midlands and Connect InvoRed
      Understand finance options and best for you
      Strong Proposition, Proof points, Plan, Pitch
      Think like an investor !
      Connect worked with 2,000 SMEs,
      Assisted >1,000 on investment readiness (IR)
      Over 300 entrepreneurs raised £200m
      Used by BIS to set national IR framework