Business start up show: Raising Funding & Business Metrics

Raising finance and the importance of business metrics
John Cheney
John.cheney@workbooks.com

What’s the process?

What’s the story
?

Importance of execution
Prospects to Cash

Targeting
Who is my target customer?
Type of organisation
Type of individual
Motivation for purchasing
How many potential prospects?
Market size
What do I know about them already?
Using a competitor
Interests
Targeting

Marketing
Which are my most effective channels for marketing?
Online?
Direct?
What is the cost of a lead?
How many leads convert into a sale?
Marketing

Selling
Sales Effectiveness
How many deals can a sales person close in a period?
Who are my best sales people?
What’s my cost of sale?
Competition
Who are my competitors?
Why are we winning/losing?
Selling

Delivery
Cost of Delivery
Gross margin & profitability?
Time of delivery
How long from Order to Invoice?
Can it be quicker?
Delivering

Have an execution plan
Prospects to Cash
Understand the Metrics!

Build your plan
Detailed business plan
Vision, Opportunity, Market Landscape, People, Execution
Investment opportunity & ROI
Exit Strategy & Valuations (Comparisons)
Financial Model
P&L, Balance Sheet, Cash flow, Key Metrics
Executive Summary
3 pages!

Angel Investors
High Net Worth Individuals
Often experienced & successful business people
Typically invest between £10k – £500k per investment
EIS qualification is often very important

Enterprise Investment Scheme
A Government scheme to encourage people to investment in small businesses
Key benefits
Investors can get 20% income tax relief
Investors can get 40% capital gains roll-over relief
Qualifying gains can effectively be tax free
There are rules
You need to be a qualifying business
You can only raise £2m at a time
There are more rules...
http://www.hmrc.gov.uk/eis/

Find Angels
Where can I find them?
Angel Networks (www.bbaa.org.uk)
Your Networks
Lawyers, Accountants
Friends & Family
What do Angels want?
Equity stake – normally ordinary shares
To see a return on their investment
To back great teams
Passion, enthusiasm, drive, expertise
Involvement
Board seat or Advisory role

Venture Capitalists
Professional Investment firms
Money from Pensions, VCTs, other institutions
Funds have sizes and a life cycle
Typically have investment criteria
Stage: Seed, Early Stage, Growth Stage
Sector: Cleantech, IT, Life Sciences, etc
Geography
Investment sizes reflect stage
Seed £500k - £1m
Early Stage £1m - £3m
Growth: £5m+

Finding VCs
Where can I find them?
European Venture Capital Association - www.evca.eu
British Venture Capital Association - www.bvca.co.uk
What do VCs Want?
Equity Stake, maybe debt
Focus on Internal Rate of Return (IRR)
Preference shares (different rights)
Board Seat – with a fee
Often syndication

Third Party Advisors
Benefits
Network of contacts
Can organise road show and manage process
Sounding board to validate plan
Negotiate terms
Downsides
Cost (% of funds raised + retainer)
Look for track recent track record and references

Closing the deal
Get good legal advise!

Benefits & Issues
Benefits
Investment capital
Dispassionate advise
Your increased professionalism
Credibility
Issues
Managing shareholders
Risk of different views
Change is shareholders status or strategy

What’s the process?

Any Questions?

http://www.slideshare.net	31
http://blog.workbooks.com	25
http://www.workbooks.com	10
http://www.lmodules.com	1
http://drupaldev.workbooks.com	1

Business start up show: Raising Funding & Business Metrics

by Workbooks Online on May 24, 2010

Accessibility

Categories

Tags

Upload Details

Usage Rights

5 Embeds 68

Statistics

Business start up show: Raising Funding & Business Metrics — Presentation Transcript