Finance in Cornwall 2017 - First Session

Finance in the Cornwall 2017
Richard Wadman 16 May 2017

pkf-francisclark.co.uk
Administration
Admin
Timekeeping
Format

• Follow us on twitter @pkfFrancisClark
• Tweet about this event using #FCFinanceinCornwall
Twitter

Since Finance in Cornwall 2016….
“Cornish Sea Salt has
won the Queen’s Award
for International Trade
for Outstanding Short
Growth in Overseas
Sales.”
ISO
Spaces
raises
£450k

PKF Francis Clark
PKF Francis Clark offices

Overview/ Background
• “Finance and support for your business” (330 schemes)
• https://www.gov.uk/business-finance-support-finder
• ICAEW identified 362 lending institutions in the UK
• Opportunities covered by presentations that follow
• Mainstream banks
• Debt alternatives
• Equity sources
• Grant funding
• Tax reliefs
• “from Start Up Loans to a public listing and lots in between”
Different
requirements

Presentations
And more… (25 presentations in total, covering “full range” of funding and business support options)

Structure of morning
• Background, Equity, Debt and Business
Support (8.30am to 10am)
• Cornwall and IOS LEP
• Equity and Grants
• Business support
• Investment ready
• Coffee Break (10.05am to 10.25am)
• Funding, Business Support, Investment
Ready and SME perspective (10.25am to 12noon)
• Start Up (trading for < 2 years)
• or Established Business
• Coffee Break (12noon to 12.20pm)
The hustings
(12.20pm to
1pm), followed
by Lunch
Questions in by
end of 1st coffee
break please

Cornwall & Isles of Scilly
the natural place to grow
great business…
Sandra Rothwell
Chief Executive
Cornwall and Isles of Scilly LEP
Vision 2030

THE PLACE OF EQUITY
Relationship, expertise and shared goals
Focus on growth
Exit and value for all shareholders
“Entrepreneurial spirit”

KEY ISSUES IN AN EQUITY
DEAL
 Dilution, anti-dilution and “the ratchet”
 Valuation
 Intellectual Property

BUSTING MYTHS ABOUT
EQUITY DEALS
 It isn’t about asset stripping!
 It shouldn’t be a last resort
 You aren’t “giving away” your company
 It can and should happen early in your company’s cycle

COMBINING EQUITY WITH
OTHER FORMS OF FUNDING
 Grants: key component for Match Funding, but certainty
required
 Debt: complements debt packages, but beware of security
issues

 Full service firm
 108 corporate deals completed in 2015 (mainly South West)
 Lawyers with experience of private equity and venture capital deals
 Strong support from specialists
 Supporter of SMEs in the region
 Always happy to discuss informally

Mark Tyler
Senior Associate
Corporate
Stephens Scown LLP
Tel: 01872 265100
Email: m.tyler@stephens-scown.co.uk
Web: www.stephens-scown.co.uk

The information in this presentation is intended to be general information only
and should not be interpreted as legal advice. English law is subject to change
so whilst Stephens Scown LLP seeks to ensure the information contained in
this presentation is up to date and accurate, the law can change quickly and
no guarantee is made as to its accuracy which means the information should
not be relied upon. Presentation slides should not be viewed as an alternative
to professional advice and Stephens Scown LLP does not accept liability for
any action taken or not taken as a result of this information.

Chamber Innovation and
Investment Network
Kim Conchie
Chief Executive, Cornwall Chamber of Commerce

Angel Network: MyVAN
Rob Misselbrook

Introduction
• Mylor Ventures Angel Network (MyVAN)
– Business Angels with a SW focus, members of the
UKBAA
– Active Experienced investors with added value:
• Networks and sales connections
• Technical
• Bring their own disciplines
– Invest their own cash
– Will often take a board or NED position

An integrated Approach
• Mylor Ventures Angel Network (MyVAN)
and/or….
Your own cash
Family and Friends
Crowd (Crowdcube, Seedrs, Funding Circle)
and/or….
Grants
[VCs – EBITDA>£0.5m]

What Angels Look For:
• Businesses with
– Strong Value propositions
– Large markets
– Intellectual Property
– Credible Management
• Capital Efficiency
• Gross margin must cover HR asap
• EIS/SEIS
• Willingness to let Angels participate
• [NED Register]

MyVAN ref Crowd & Grants
• Crowd (Fixed timeline)
– Pump priming (MyVAN)
– Detailed preparation
– Alongside corporate/VC/PE
• Grants (Non dilutive)
– When available
– Reduce overall risk

What Angels Look for - Preparation
• Investment Readiness Toolkit
– Templates
• IMs, Models, Presentations
– Documents
• NDAs, Contracts, SH Agreements
– Policies
• Procurement, Ethical, Environmental
• Its always a buyers market but good companies
well prepared always get funded

Process - Delivery
• MyVAN
– Apply at www.mylorventures.co.uk/angel-network/
– Investment Readiness (1 – 2 months)
– Due Diligence (Stephens Scown template)
– Summary Document– ‘yes/no’
– Meetings/Skype
– Agreement/Participation
– Execution
• Crowd – note timeline benefits
• Grants – non dilutive but ensure focus is maintained

Looking Ahead
• Possible Cornwall & IoS Fund [Financial
Instruments]
• Angels/FUND/[crowd] – the perfect mix
• Sustainable funding resource for the region
• Get ready:
– Cornwall Chambers Investment Initiative
– Jun 5th (PIC), Jul 3rd (HWIC), Sep 25th (TIC)
– Main event Oct 26th

rob@mylorventures.co.uk
07760 282106
Chambers Investment Event
www.cornwallchamber.co.uk

DANIELHARDY
EquityCampaignManager
EquityCrowdfunding

WHY CROWDFUND?
 Global Investor Reach
 Cost effective
 Marketing effect
 Crowd feedback
 Expertise
 Fair Terms
 Financial return
 ‘Armchair Dragon’
 Support friends and family
 Access exciting investments
 Lower/spread risk
 Simple to invest

Under 25
25-34
35-44
45-54
55-64
65 or over
DIVERSE COMMUNITY
Gender split
• 74% male, 26% female
• 3% of angel network members are female
• 4% of VC partners are female
• 9% of AngelList members are female

£70,000
Annual salary
42%
Investment from high net worth &
sophisticated investors
 Technology
 Marketing
 Financial Services
 Management
Consulting
 VC and Private
Equity
TOP JOBS TOP 5
£
£
£
investor employers

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015
Percentage of Seed deals
crowdfunded*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015
Percentage of Venture
deals crowdfunded*

£301 MILLION +Successfully raised
£0
£20,000,000
£40,000,000
£60,000,000
£80,000,000
£100,000,000
£120,000,000
2011 2012 2013 2014 2015 2016

0
5000
10000
15000
20000
25000
30000
35000
40000
45000
2011 2012 2013 2014 2015
522
Successful raises

£28,829,372
£66,096,144
£88,845,206
Stage of Growth
Start up Early stage Growth
41%
35%
24%

£1,000,000
Largest single investment
£
£10,000,000
Biggest deal
£440,242
Average deal
£1,789
Average investment
52%
Pitch success rate
£4,387,087
Average amount invested per month

396,000+Investor community
0
20,000
40,000
60,000
80,000
100,000
120,000
2011 2012 2013 2014 2015 2016

THANK YOU
Daniel Hardy Equity Campaign Manager
@dan_crowdcube
www.crowdcube.com
@crowdcube

one agency
Rural Development Programme for
England - The Growth Programme
Grant Funding Opportunities
James Glover, Deputy Head of Delivery - South
Rural Payments Agency
51

PROTECT one agency
Purpose
• Grant funding available for rural businesses
• Application process and timescales
• Further information and support
52

PROTECT one agency
Background
• RDPE Growth Programme provides funding for Projects in England which
creates jobs and growth in the rural economy.
• The Government has confirmed that it will guarantee funding for RDPE
Growth Programme grants if these are agreed and signed before the UK’s
departure from the EU subject to 2 conditions (1) VFM (2) Priorities
• £120 million is now available through three new national calls for projects.
The calls have been developed in collaboration with Local Enterprise
Partnerships (LEPs) and will be open to support:
 Business development
 Food processing
 Rural tourism infrastructure.
• Of that £120 million, £9.4 million is available for rural businesses whose
projects are located in the Cornwall & Isles of Scilly Local Enterprise
Partnership (LEP) area.
53

PROTECT one agency
Business Development Grants - £1.35m
Who can apply?
• Micro & Small rural businesses (and farmers who are diversify into non-
agricultural activity) are eligible to apply, and your project must be in a rural
area of the LEP.
What are the grants for?
• To help rural businesses grow and create more jobs.
• Grant funding can help pay for (list of ineligible costs will be available in the
handbook):
 constructing or improving buildings
 buying new equipment and machinery
How much money can you apply for?
• Grants can cover up to 40% of eligible costs of a project. The minimum
grant for Cornish rural businesses is £50,000 and Isles of Scilly £10,000 with
State aid rules limit funding to €200,000, around £170,000
54

PROTECT one agency
Food Processing Grants - £3m
Who can apply?
• Any size Food and drink business can apply that processes agricultural and
horticultural products in rural or urban areas e.g. meat, milk, grain and root
vegetables.
• To help businesses grow and create new jobs.
• Grant funding can help pay for (list of ineligible costs will be available in the
handbook):
 constructing or improving buildings
 buying new equipment and machinery
• A minimum grant request of £50,000 in Cornwall & £10,000 in IoS.
• Maximum grant of £1m per business.
• Intervention dependent on nature of activity, for example primary agricultural
production (annex 1) in and out of process could be eligible for up to 50%.
55

PROTECT one agency
Tourism Infrastructure Grants - £2.18m
Who can apply?
• If the project is commercial and will make a profit, only small businesses and
farmers who want to diversify can apply.
• If the project won’t make a profit, a wide range of organisations can apply
(including public bodies and charities).
• The grants will help fund the costs of capital expenditure on tourism
infrastructure. The aim is to support projects that will encourage more
tourists to come, to stay longer and to spend more money in rural areas.
• £50,000 minimum grant amount in Cornwall and £10,000 on IoS.
• Maximum grant rate for commercial projects will be 40%. Higher levels of
support available for semi-commercial (80%) and not-for-profit (100%)
activity.
56

PROTECT one agency
Top Tips
• Jobs & Growth – whole purpose of the Growth programme is to create jobs and
economic growth across rural areas, so tell us how your project will do this.
• Sell us your idea – explain clearly what your project does and how it will benefit the
economy. It is a competitive process.
• Don’t ask for full amount if you don’t need it – we will assess your application on a
competitive basis ensuring it represents value for money for the public purse. You
should only apply for the amount you need to for the project to proceed.
• Show us what the grant funding means to your project – why is it critical you
receive public money to enable it to happen.
• Do the market research – you have to be able to evidence that there is a real need/
demand for what you want to do.
58

PROTECT one agency
Further info
All information including EOI application is available on the www.gov.uk
website RDPE Growth Programme - GOV.UK or simply input ‘Growth
Programme’ into Google search.
There is a handbook available for each of the 3 calls. Handbook includes:
• who can apply
• how and when to apply
• which specific activities you can claim for (and which you can’t)
• what grants are available in your area
• Please also contact the RPA if you would like to discuss your project/ would
like any further advice: Rural Payments helpline : 03000 200 301 and/or
Email: GPEnquiries@rpa.gsi.gov.uk
Key Dates to Note:
• EOI in by 31st January 2018
• All projects must be delivered and claimed by December 2019
59

.
European Programme 2014 - 2020
• Funding aligned to the European Structural &
Investment Funds (“ESIF”) Strategy
https://dorsetlep.s3.amazonaws.com/Documents/DorsetESIFStrategy_2016.pdf
• £507m allocated to Cornwall & Isles of Scilly
• Administered via around “Calls”
• Brexit.. Then,11 “Calls” across the SW on 16
December
• “Revolving door”
• One ESF call open at present

.
Rural businesses (and food producers)
• Good news!
• “Rural” – defined by “Magic Map”
• Size, location, activity.. (Flowcharts in pack)
• Two schemes: RDPE/ EAFRD and LEADER

.
European Maritime Fisheries Fund
• Investment in fishing vessels, portside infrastructure
and aquaculture
• Sustainability, health & safety, innovation and adding
value rather than capacity. 6 funding areas:
• investments on board fishing vessels
• gear replacements
• improvements to shore-based facilities
• advisory services, partnerships, training and innovation
• investments in fisheries management and seafood processing
• investments in aquaculture, animal health and inland fishing
• 50% grant rate. Projects to 2018
• https://www.gov.uk/guidance/european-maritime-and-fisheries-fund-emff-
before-you-apply

About the fund
• £3.6 million ERDF voucher investment programme
delivered by Cornwall Development Company.
• Fund open until December 2018
• Investments between £2,500 and £75,000 targeted at
200 growth and growth potential businesses; creating
360 new jobs
• Maximum funding 45% of project costs
• Primarily aimed at capital investment projects
• Benchmark is £10k of grant per FTE created
BIG2

Eligibility
• Aimed at growth and growth potential businesses
• Ability to create new skilled jobs
• Seeking gap finance to enable project to proceed
• Innovative products and services
• Develop or expand your national and/or international
customer base
Next steps
• Check eligibility and complete an application at
www.businessinvestmentforgrowth.co.uk, or
• Contact the BIG2 team on 01872 322372
BIG2

.
Other…
• The Carbon Trust Green Business Fund
• up to £10,000 capital contribution per company towards your energy saving
equipment purchase
• https://www.carbontrust.com/client-services/programmes/green-business-fund/
• SWMAS – Local Manufacturing Advisory Programme
• Range of tailored business support and capital grant of £2,000
• https://www.swmas.co.uk/business-support/local-manufacturing-advisory-programme
• Export for Growth; Superfast Business Cornwall and Access to
Finance
• Marine Challenge Fund
• Grants for RD&I within the marine sector

.
Innovation / R&D
Innovate UK:
• Sector specific and open rounds
• www.gov.uk/government/organisations/innovate-uk
Horizon 2020 – SME Scheme:
• Similar to the Old SMART scheme
• http://ec.europa.eu/easme/en/sme-instrument-
factsheets
R&D Tax Credits

.
Keeping up to date
• http://www.francisclark.co.uk/news-views/blog/
• Grants and Funding Update – newsletter
• Finance in Cornwall factsheet
• Cornwall & IOS Growth Hub

Investor ready
Ed Marffy May 2017

.
Selecting the right funding: Options
Equity Debt Grants
Crowdfunding

Selecting the right funding: Selection
Understand
funding
options and
funders
requirements
Understand
your
requirements
• Appropriate
• Tailoring your
pitch
• Competition

.
• Business plan
• Projections
• Housekeeping
Preparation: General

.
• Industry & current
operations
• Future strategy
• Communicates
“business case”
• Professional
• Especially important
for start-ups
• Tailored
Business plan

.
• Realistic
• Supported
• Add up
• Underpin business case
• Balance sheet & Cash flow
• Monthly cash headroom
• Sensitivities – Negative &
Positive
Projections

.
• Licences / contracts
• Intellectual property - ownership?
• Tax – CT, VAT, PAYE/NI
• Statutory + management accounts & other records
Housekeeping

.
Equity
• Growth
• Restricted matters
• No market = “locked in”
Exit route
Funder requirements
• Understand valuation
• Expertise vs independence
• Passive / active
• Potentially more subjective
Preparation

Debt
• Cash flow
• Security
• Covenants – appropriate?
• Govt. initiatives – eligibility
Funder requirements
• Accounts and records
• Projections
• Credit rating
• Shop around
Preparation

.
Grants
• Eligibility – sector, size,
location…
• Impact / project – i.e.
usually not for general
expenses
• Ongoing compliance
Funder requirements
• Competition - priorities
• Process – time
prescriptive, panels
• Match funding
• Cash flow – arrears
• Admin
• Patience
Preparation

(c) copyright PKF Francis Clark, 2016
You shall not copy, make available, retransmit, reproduce, sell, disseminate, separate, licence, distribute, store electronically, publish, broadcast or otherwise
circulate either within your business or for public or commercial purposes any of (or any part of) these materials and / or any services provided by PKF Francis
Clark in any format whatsoever unless you have obtained prior written consent from PKF Francis Clark to do so and entered into a licence.
To the maximum extent permitted by applicable law PKF Francis Clark excludes all representations, warranties and conditions (including, without limitation,
the conditions implied by law) in respect of these materials and /or any services provided by PKF Francis Clark.
These materials and /or any services provided by PKF Francis Clark are designed solely for the benefit of delegates of PKF Francis Clark.
The content of these materials and / or any services provided by PKF Francis Clark does not constitute advice and whilst PKF Francis Clark endeavours to
ensure that the materials and / or any services provided by PKF Francis Clark are correct, we do not warrant the completeness or accuracy of the materials
and /or any services provided by PKF Francis Clark; nor do we commit to ensuring that these materials and / or any services provided by PKF Francis Clark
are up-to-date or error or omission-free.
Where indicated, these materials are subject to Crown copyright protection. Re-use of any such Crown copyright-protected material is subject to current law
and related regulations on the re-use of Crown copyright extracts in England and Wales.
These materials and / or any services provided by PKF Francis Clark are subject to our terms and conditions of business as amended from time to time, a
copy of which is available on request.
Our liability is limited and to the maximum extent permitted under applicable law PKF Francis Clark will not be liable for any direct, indirect or consequential
loss or damage arising in connection with these materials and / or any services provided by PKF Francis Clark, whether arising in tort, contract, or otherwise,
including, without limitation, any loss of profit, contracts, business, goodwill, data, income or revenue. Please note however, that our liability for fraud, for
death or personal injury caused by our negligence, or for any other liability is not excluded or limited.
PKF Francis Clark is a trading name of Francis Clark LLP. Francis Clark LLP is a limited liability partnership, registered in England and Wales with registered
number OC349116. The registered office is Sigma House, Oak View Close, Edginswell Park, Torquay TQ2 7FF where a list of members is available for
inspection and at www.pkf-francisclark.co.uk. The term ‘Partner’ is used to refer to a member of Francis Clark LLP or to an employee. Registered to carry on
audit work in the UK and Ireland, regulated for a range of investment business activities and licensed to carry out reserved legal activity of non-contentious
probate in England and Wales by the Institute of Chartered Accountants in England and Wales. Partners acting as insolvency practitioners are licensed in the
UK by the Institute of Chartered Accountants in England and Wales. A partner appointed as Administrator or Administrative Receiver acts only as agent of the
insolvent entity and without personal liability. Francis Clark LLP is a member firm of the PKF International Limited network of legally independent firms and
does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
Disclaimer & copyright

Chris Phillips - Growth Hub
Growing business in
Cornwall & Isles of Scilly

What is the Growth Hub?
• Provides a single point for accessing information and support
to start or grow a business.
• Funded by European Union, Cornwall Council, Dept. for
Business, Energy & Industrial Strategy, Local Enterprise
Partnership
Who can get support?
• All businesses in Cornwall and the Isles of Scilly can get
support through the Growth Hub.
• Every business with an aspiration to grow will have the
opportunity to meet with a Business Connector.

365 days later…
Our Navigators
have taken
900
business enquiries
Over
1 million
social interactions
Over
20,000
web users
Our Connectors
have worked with
700
businesses on their
growth plans

Don’t take our word for it…

Funded by: Delivered by:
Presented by Heather Coupland
16th May 2017

Overview
Delivered by Oxford Innovation
Successfully helped raise £162M
Fully Funded Support – no fees
Any Eligible SME (small/medium enterprise) looking to
access finance/funding
Education before Intervention
Post Investment Support

Relationships
Collaborative working with Professional Services
Professional Services Grant
Innovative Crowdfunding/Equity Partnerships
Working closely with Grant Funders
Developing relationships with Alternative Funding Sources
Cornwall & IOS SEIS fund for equity investment
Non Executive Director (NED) Grant

How do we do it?

1:1 Meetings

Masterclasses

Challenging

Getting Fit

Benefits
Fully Funded Support – no fees to pay
Delivered by Professionals who will explore the
best options for your business needs
Working with you to build the strongest
application possible
Discretionary grants to provide essential Legal and
Accountancy advice

Finance in Cornwall
Richard Wadman 16 May 2017

Break (20 mins)
Session 2 start time 10.25am
• Screen 1
(Established businesses)
• Screen 2
(<2 years trading)
Remember questions for hustings in by end of this coffee break please

(c) copyright PKF Francis Clark, 2017
You shall not copy, make available, retransmit, reproduce, sell, disseminate, separate, licence, distribute, store electronically, publish, broadcast or otherwise
circulate either within your business or for public or commercial purposes any of (or any part of) these materials and / or any services provided by PKF Francis
Clark in any format whatsoever unless you have obtained prior written consent from PKF Francis Clark to do so and entered into a licence.
To the maximum extent permitted by applicable law PKF Francis Clark excludes all representations, warranties and conditions (including, without limitation,
the conditions implied by law) in respect of these materials and /or any services provided by PKF Francis Clark.
These materials and /or any services provided by PKF Francis Clark are designed solely for the benefit of delegates of PKF Francis Clark.
The content of these materials and / or any services provided by PKF Francis Clark does not constitute advice and whilst PKF Francis Clark endeavours to
ensure that the materials and / or any services provided by PKF Francis Clark are correct, we do not warrant the completeness or accuracy of the materials
and /or any services provided by PKF Francis Clark; nor do we commit to ensuring that these materials and / or any services provided by PKF Francis Clark
are up-to-date or error or omission-free.
Where indicated, these materials are subject to Crown copyright protection. Re-use of any such Crown copyright-protected material is subject to current law
and related regulations on the re-use of Crown copyright extracts in England and Wales.
These materials and / or any services provided by PKF Francis Clark are subject to our terms and conditions of business as amended from time to time, a
copy of which is available on request.
Our liability is limited and to the maximum extent permitted under applicable law PKF Francis Clark will not be liable for any direct, indirect or consequential
loss or damage arising in connection with these materials and / or any services provided by PKF Francis Clark, whether arising in tort, contract, or otherwise,
including, without limitation, any loss of profit, contracts, business, goodwill, data, income or revenue. Please note however, that our liability for fraud, for
death or personal injury caused by our negligence, or for any other liability is not excluded or limited.
PKF Francis Clark is a trading name of Francis Clark LLP. Francis Clark LLP is a limited liability partnership, registered in England and Wales with registered
number OC349116. The registered office is Sigma House, Oak View Close, Edginswell Park, Torquay TQ2 7FF where a list of members is available for
inspection and at www.pkf-francisclark.co.uk. The term ‘Partner’ is used to refer to a member of Francis Clark LLP or to an employee. Registered to carry on
audit work in the UK and Ireland, regulated for a range of investment business activities and licensed to carry out reserved legal activity of non-contentious
probate in England and Wales by the Institute of Chartered Accountants in England and Wales. Partners acting as insolvency practitioners are licensed in the
UK by the Institute of Chartered Accountants in England and Wales. A partner appointed as Administrator or Administrative Receiver acts only as agent of the
insolvent entity and without personal liability. Francis Clark LLP is a member firm of the PKF International Limited network of legally independent firms and
does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
Disclaimer & copyright

Finance in Cornwall 2017 - First Session

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Editor's Notes