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

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

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