This event was prompted by three developments in and/or affecting the local food and drink producers: 1.Increased demand for product – including for export 2.Cessation of a number of grant schemes – historically a source of expansion funding 3.Popularity and accessibility of Crowdfunding to businesses in the sector

1. The future of funding for Food & Drink businesses
Food and Drink sector team breakfast briefing
4th September 2018

2. pkf-francisclark.co.uk
Administration

3. pkf-francisclark.co.uk
.
2nd Annual PKF Francis Clark Food and
Drink sector focused event
• F&D sector newsletter (in packs)
• Blogs
• Last year’s event: Innovation and funding for food and
drink producers
• This year’s inspiration:
• Demand for (Cornish) F&D product – including for export
• Cessation of a number of grant schemes – historically a
source of expansion funding
• Popularity and accessibility of Crowdfunding to businesses in
the sector

4. pkf-francisclark.co.uk
.
Presentations followed by discussion
Presenter Topic
Richard Wadman (10 mins)
PKF Francis Clark
“What, no grants” (truth of their death
has been a little exaggerated)
Bertie Herrtage (15 mins)*
Crowdfunder
Crowdfunding: rewards
Mark Tyler (15 mins)
Crowdcube
Crowdfunding: equity
Gavin Poole (10 mins)
Stephens Scown
Legal matters
Aim: finish presentations by 9:20am; finish event by 10am
* = For personal reasons Bertie was unable to attend. Richard Wadman spoke (briefly) on Crowdfunder

5. What no grants
Richard Wadman, Corporate Finance Director

6. pkf-francisclark.co.uk
.
• Food and Drink Production
• LEADER
• RDPE
• European Maritime Fisheries Fund
• Innovation
• Cornwall Agri-tech
• Innovate UK?
• Other (care re eligibility, specifically primary agriculture) e.g.,
BIG2 and Superfast Business Cornwall
Grants - as at October 2017
Flowchart in pack

7. pkf-francisclark.co.uk
.
• Food and Drink Production
• European Maritime Fisheries Fund?
• Innovation
• Cornwall Agri-tech (Innovation grants)
• Innovate UK?
• Productive and sustainable crop and ruminant agricultural
systems (UK businesses can apply for a share of up to £20 million to improve
productivity and sustainability across UK crop and ruminant production systems).
• Open grant funding competition: round 2
Opportunity to apply for a share of up to £20 million to deliver game changing or
disruptive innovations with significant potential for impact on the UK economy.
• Export
• Exporting is GREAT?
Grants - as at September 2018

8. pkf-francisclark.co.uk
.
Overview of the funding options
Equity Debt Grants
Crowdfunding

9. pkf-francisclark.co.uk
.
Debt
• Funders requirements?
• Serviceability and security
• Eligibility?
• If sourced through EU funds?
• A number of options (see next slide)
• Crowdfunding / Peer to Peer/ “Alternative
Finance”
• 12 minutes to fully fund on Funding Circle
• Mini-Bonds e.g. the “Burrito Bond”
Chilango raises more than £2m
through crowdfunded mini-bonds

10. The Good NewsOver 360 lenders to choose from
Slide borrowed from Capitalise presentation – August 2018 breakfast briefing

11. pkf-francisclark.co.uk
Equity
• Funders requirements
• Scalability/ Growth and Exit
• Crowdfunding
• PE / VC – Food and Drink
specialists

12. pkf-francisclark.co.uk
Rewards
• Funders requirements
• Understandable and deliverable project
• Product that people want to buy (and want to
support)
• Sense of “Community”?/ A “cause” to believe in
• Crowdfunder
• “Crowdfunder is the perfect site for fundraising for
food and drink in the UK..”
• A business plan and legal structure are
(still) key!
• https://www.crowdfunder.co.uk/guides/community-
shares/checklist

13. pkf-francisclark.co.uk
.
Business Support
• Growth Hub
• Oxford Innovation – including
• Access to Finance
• Breakthrough
• Transform
• Accelerate Through Innovation
• Cornwall Agri-tech

14. pkf-francisclark.co.uk
.
And do not forget about R&D Tax Credits…
As Katie from PKF Francis Clark asked last year:
Are you missing out?
• In 2015, food and drink accounted for 16% of UK
manufacturing output, making it the largest
manufacturing sector.
• Since 2000/2001 33,000 SME claims for R&D tax relief
• In South West in 2013/14 only 1,260 claims were
made, vs 16,060 claims nationally

15. pkf-francisclark.co.uk
• Blogs & factsheet
• Growth Hub & Access to Finance team
Keeping up to date

16. pkf-francisclark.co.uk
Rewards: Crowdfunder
• A conduit
• The UK’s #1 crowdfunding platform
• Based in Newquay
• https://www.crowdfunder.co.uk/how-it-works
• helped over 80,000 individuals, charities, businesses and community
projects to raise over £55 million
• a pot of more that £4 million of extra funding from the public and
private sector for projects
• Share expertise: expert guides, interactive sessions and event
“Crowdfunding can be a fantastic tool for both new and established f&d businesses. The core
benefits are of course raising money but also raising the profile of your business. In its essence
crowdfunding is a marketing exercise and is especially effective for f&d businesses because
offering rewards in return for pledges enables you to pre-sell your products and establish a new
customer base.”

17. pkf-francisclark.co.uk
Crowdfunder: Food and Drink

18. pkf-francisclark.co.uk
Crowdfunder: Food and Drink

19. MarkTyler–HeadofLegal
TheFutureofFoodandDrinkand
EquityCrowdfunding’sroleinit

20. The Power
of the
Crowd

21. ANGELS

22. CROWD

25. 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

26. HOW DOES IT WORK?
 We check you out and you check us out
 You create a pitch
 We approve as a financial promotion
 You get ready
 We plan the campaign
 You launch
 Typically 30 – 60 days on site
 You close the campaign
 We complete the investment for you

30. WHO ARE OUR INVESTORS?
 Retail or “everyday” investors
 High net worth individuals
 Investment professionals

31. DEMOCRATISATION OF INVESTORS

32. £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

33. What sort of businesses generally succeed with an
equity crowdfunding campaign?
Success?

34. Food and Drink businesses on site?
• Food & Drink is one of our biggest sectors
• 12 on site currently
• A Deli, a rum company, a brewing business, café, fast food delivery
service

36. £504 MILLION +Successfully raised
£0
£20,000,000
£40,000,000
£60,000,000
£80,000,000
£100,000,000
£120,000,000
£140,000,000
2011 2012 2013 2014 2015 2016 2017

37. 751
Successful raises

38. £15,306,110
£39,479,630
£44,303,188
Stage of Growth
Start up Early stage Growth
41%
35%
24%

39. 577,277+Investor community
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2011 2012 2013 2014 2015 2016 2017

40. £1,000,000
Largest single investment
£
£10,000,000
Biggest deal
£651,471
Average raise
£1,789
Average investment
52%
Pitch success rate
£10,736,120
Average amount invested per month

41. Crowdfunding is for growth businesses in any sector – easier for
consumer facing but B2B has good chances of success
Secure an army of investor advocates and awareness as well as funds
Success rate of 58% vs 25% outside of crowdfunding
Sprint not a marathon - typically 3 months end-to-end vs 10 months
outside of equity crowdfunding

42. THANK YOU
Mark Tyler Head of Legal
www.crowdcube.com
mark.tyler@crowdcube.com

43. Legal matters matter 04/09/2018
Gavin Poole
Partner
Head of Food and Drink
Stephens Scown LLP
Tel: 01872 265100
Web: www.stephens-scown.co.uk

44. Legal matters matter 04/09/2018
• 20 years experience in Cornwall
• Specialist food and drink team
• Investments into food and drink businesses
– Existing/new debt, equity, grant
– Acquisitions, sales, joint ventures
– Shareholder arrangements
– Asset protection

45. Legal matters matter 04/09/2018

46. Legal matters matter 04/09/2018
• Context
• Key areas of focus
• Crowdfunding tips for food and drink businesses

47. Legal matters matter 04/09/2018

48. Legal matters matter 04/09/2018
• Brexit image

49. Legal matters matter 04/09/2018

50. Legal matters matter 04/09/2018
• Platform image = SEARCH

51. Legal matters matter 04/09/2018
• Key areas
– Due diligence/access to clear information
– Shareholder arrangements
– Management
– Protection of assets
– No surprises

52. Legal matters matter 04/09/2018
• Shareholder agreements
– Journey
– Safeguarding value
• I can transfer my shares to anyone, right?
• My shares are worth a fortune, aren’t they?
• You’ll pay me in one instalment of cash, yes?
• I can poach your….OK?
• I don’t think you’re being reasonable…
and more…

53. Legal matters matter 04/09/2018
Food and Drink crowdfunding tips
1. “We were determined to get as many people as possible to
share in our future success”
2. “Everything was planned out meticulously”
3. “We spoke to all the different crowdfunding
platforms…choosing the most appropriate platform”
4. “We had a comprehensive reward structure”
5. “The hard work was done well before the crowdfunding
campaign launched”
6. “Gaining further financial backing from our original investors
was pivotal”
7. “The main challenge was developing a fresh and engaging
marketing plan to drive traffic to our funding page”
8. “Momentum is the lifeblood of your crowdfunding
campaign…energy and enthusiasm of our team”

54. Legal matters matter 04/09/2018
• 80 year history of Stephens Scown F&D team
– Employment law
– Intellectual property protection
– Contracts and Ts and Cs
– Property and planning
– Acquisitions and joint ventures
– Disputes
• Blogs/newsletters/events etc
• Advised on peer-to-peer arrangements

55. Legal matters matter 04/09/2018

56. The future of funding for Food & Drink businesses
Food and Drink sector team briefing – Wrap up: Tom Roach, Francis Clark
4th September 2018

57. Next…
Q&A and/ or discussion
• With opportunity for Q&A for presenters
• Discussion
Breakfast briefings – non sectorial
• Cornwall and Isles of Scilly Investment Fund (2nd October)
– invite in pack
Food and Drink sector
• Newsletter and Future Events…
• Non Francis Clark - You Can Export – Selling Cornish Food & Drink to the
World – 7 September 2018, Export Hub, Cornwall Services, A30, St Austell, PL26 8UF
pkf-francisclark.co.uk

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