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Ed French Investment Director,  Finance Yorkshire Seedcorn Fund Ben Hookway CEO Vidiactive Welcome
Agenda <ul><li>Introductions </li></ul><ul><li>State of the funding market </li></ul><ul><li>Implications and responses </...
<ul><li>CEO Vidiactive Ltd </li></ul><ul><li>CEO Next Device (sold to Mentor) </li></ul><ul><li>6 years in US </li></ul><u...
Ed French <ul><li>Fund Manager for Finance Yorkshire Seedcorn Fund and SYIF Seedcorn Fund </li></ul><ul><li>Investment Dir...
<ul><li>. </li></ul>Finance Yorkshire Seedcorn Fund <ul><li>£15m Fund </li></ul><ul><li>Up-to £780,000 </li></ul><ul><li>£...
Funding has got tougher * BVCA Report on Investment Activity 2010
Typical Fund Lifecycle Build Portfolio Complete Portfolio Support Portfolio
Where is the bar going? <ul><li>2012 </li></ul><ul><li>Product </li></ul><ul><li>Team </li></ul><ul><li>Users </li></ul><u...
Challenge 1: Scarcity of funders <ul><li>Investors </li></ul><ul><li>“ Happy Days ” ? </li></ul><ul><li>Syndicate early or...
Challenge 2: Risk aversion <ul><li>Investors </li></ul><ul><li>Everyone ’ s focusing on the same deals: </li></ul><ul><ul>...
Challenge 3: Time to funding <ul><li>Investors </li></ul><ul><li>Fast response is a big differentiator </li></ul><ul><ul><...
Challenge 4: Reaching investors <ul><li>Investors </li></ul><ul><li>Opportunity to get involved it better deals </li></ul>...
Challenge 5: Tyre-kickers <ul><li>Investors </li></ul><ul><li>Building syndicates and raising follow-on funding is frustra...
The good news! <ul><li>Trade investment is up- good for differentiated plays- care needed… </li></ul><ul><li>Hiring is eas...
Conclusions <ul><li>Tough time to raise funding, but still possible for great propositions </li></ul><ul><li>Take time, wo...
Questions Finance Yorkshire Seedcorn Fund is managed by Enterprise Ventures Limited.  Enterprise Ventures Limited is autho...
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Adapting To A Funding Desert - tips for Entrepreneurs and Investors in early-stage companies

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Transcript of "Adapting To A Funding Desert - tips for Entrepreneurs and Investors in early-stage companies"

  1. 1. Ed French Investment Director, Finance Yorkshire Seedcorn Fund Ben Hookway CEO Vidiactive Welcome
  2. 2. Agenda <ul><li>Introductions </li></ul><ul><li>State of the funding market </li></ul><ul><li>Implications and responses </li></ul><ul><li>The good news </li></ul><ul><li>Conclusions </li></ul>
  3. 3. <ul><li>CEO Vidiactive Ltd </li></ul><ul><li>CEO Next Device (sold to Mentor) </li></ul><ul><li>6 years in US </li></ul><ul><li>Experience in US, Europe, Asia </li></ul>Ben Hookway
  4. 4. Ed French <ul><li>Fund Manager for Finance Yorkshire Seedcorn Fund and SYIF Seedcorn Fund </li></ul><ul><li>Investment Director on RisingStars Growth Funds </li></ul><ul><li>Porfolio semiconductors, software, medical devices </li></ul><ul><li>Engineer </li></ul>
  5. 5. <ul><li>. </li></ul>Finance Yorkshire Seedcorn Fund <ul><li>£15m Fund </li></ul><ul><li>Up-to £780,000 </li></ul><ul><li>£50-400,000 typical first investment </li></ul><ul><li>12 Investments Completed </li></ul><ul><li>Highly active </li></ul><ul><li>Wide spread of sector </li></ul><ul><li>High risk high growth potential </li></ul>Lite cool
  6. 6. Funding has got tougher * BVCA Report on Investment Activity 2010
  7. 7. Typical Fund Lifecycle Build Portfolio Complete Portfolio Support Portfolio
  8. 8. Where is the bar going? <ul><li>2012 </li></ul><ul><li>Product </li></ul><ul><li>Team </li></ul><ul><li>Users </li></ul><ul><li>Revenues </li></ul><ul><li>2000 </li></ul><ul><li>‘ I have an idea’ </li></ul><ul><li>‘ Have some cash’ </li></ul><ul><li>2006 </li></ul><ul><li>Product or prototype </li></ul><ul><li>Founder team </li></ul><ul><li>Some prospects? </li></ul><ul><li>Some users? </li></ul>
  9. 9. Challenge 1: Scarcity of funders <ul><li>Investors </li></ul><ul><li>“ Happy Days ” ? </li></ul><ul><li>Syndicate early or not at all </li></ul><ul><li>Less chance of a safety net </li></ul><ul><li>“ Money round the table ” </li></ul><ul><li>Pursue exit earlier and for longer </li></ul><ul><li>More trade investors- hazards! </li></ul><ul><li>Companies </li></ul><ul><li>Syndicate early or not at all </li></ul><ul><li>Managing expectations: building confidence </li></ul><ul><li>Allow more time….. </li></ul><ul><li>Competition comes from exit not competitive investors </li></ul><ul><li>Take the money! </li></ul>
  10. 10. Challenge 2: Risk aversion <ul><li>Investors </li></ul><ul><li>Everyone ’ s focusing on the same deals: </li></ul><ul><ul><li>Revenue </li></ul></ul><ul><ul><li>Management </li></ul></ul><ul><li>Can you counter the cycle? </li></ul><ul><ul><li>Low valuations= better returns? </li></ul></ul><ul><li>Companies </li></ul><ul><li>Building out the team </li></ul><ul><li>Build relationship with VCs </li></ul><ul><li>“ NRE ” revenue or early sales </li></ul><ul><li>“ Selling the silver ” </li></ul><ul><li>User engagement not just user count </li></ul><ul><li>Customer referencing </li></ul>
  11. 11. Challenge 3: Time to funding <ul><li>Investors </li></ul><ul><li>Fast response is a big differentiator </li></ul><ul><ul><li>Can you find faster ways to complete deals? </li></ul></ul><ul><ul><li>Avoiding “ syndicate lag ” </li></ul></ul><ul><li>But? </li></ul><ul><li>Do you really want to be the first to say no? </li></ul><ul><li>Companies </li></ul><ul><li>Can you extend your available time? </li></ul><ul><ul><li>NRE Projects- don ’ t ask don ’ t get </li></ul></ul><ul><ul><li>Grants (start early) </li></ul></ul><ul><ul><li>Expect to be “ resource poor ” for longer </li></ul></ul><ul><ul><li>Is your team ready? </li></ul></ul>
  12. 12. Challenge 4: Reaching investors <ul><li>Investors </li></ul><ul><li>Opportunity to get involved it better deals </li></ul><ul><li>Swamped by low-quality deals </li></ul><ul><li>Use network and other investors to build quality dealflow </li></ul><ul><li>Entrepreneurs </li></ul><ul><li>Concerted sales campaign </li></ul><ul><li>C.F. advisor? </li></ul><ul><li>Reaching alternative investors (trade esp.) </li></ul><ul><li>Persistence, patience, thick skin BUT flexible! </li></ul>
  13. 13. Challenge 5: Tyre-kickers <ul><li>Investors </li></ul><ul><li>Building syndicates and raising follow-on funding is frustrating </li></ul><ul><li>Be honest with entrepreneurs- word gets round faster if you string people along </li></ul><ul><li>Can you bridge fund to get a better position? </li></ul><ul><li>Entrepreneurs </li></ul><ul><li>“ Qualify ” early look carefully at website for signs of new first investments </li></ul><ul><li>Referrals? Appointments? </li></ul><ul><li>Beware shifting threshold </li></ul><ul><li>Partner consensus </li></ul>
  14. 14. The good news! <ul><li>Trade investment is up- good for differentiated plays- care needed… </li></ul><ul><li>Hiring is easier- funded companies can pick & choose </li></ul><ul><li>Grants & seed funds highly active </li></ul>
  15. 15. Conclusions <ul><li>Tough time to raise funding, but still possible for great propositions </li></ul><ul><li>Take time, work really hard, listen and be resilient </li></ul><ul><li>Loads of help and great people around </li></ul>
  16. 16. Questions Finance Yorkshire Seedcorn Fund is managed by Enterprise Ventures Limited. Enterprise Ventures Limited is authorised and regulated by the Financial Services Authority.
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