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TSS Fresh Finance Bath 20 October Crowdcube


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TSS Fresh Finance Bath 20 October Crowdcube

  1. 1. Darren Westlake Luke Lang Tech Startup School 2011
  2. 2. <ul><li>Introduction </li></ul><ul><li>Preparation </li></ul><ul><li>F&F </li></ul><ul><li>Bank loans/EFG </li></ul><ul><li>Grants </li></ul><ul><li>Angels </li></ul><ul><li>VC’s </li></ul><ul><li>Bootstrapping </li></ul><ul><li>Crowdfunding </li></ul><ul><li>P2P </li></ul><ul><li>Summary </li></ul>Agenda Agenda
  3. 3. <ul><li>Many options, need to choose the right one at the right time </li></ul><ul><li>Can use a combination or can use them in sequence </li></ul><ul><li>Debt </li></ul><ul><li>Equity </li></ul>Introduction Introduction
  4. 4. <ul><li>Cash and expertise </li></ul><ul><ul><li>Different options available depending on requirement </li></ul></ul><ul><li>Investment readiness </li></ul><ul><li>Put yourself in the shoes of an investor </li></ul>Preparation Preparation
  5. 5. <ul><li>What? </li></ul><ul><ul><li>Debt/equity from F&F </li></ul></ul><ul><li>How much? </li></ul><ul><ul><li>£500 - £50,000 </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>No cost </li></ul></ul><ul><ul><li>Less demanding? </li></ul></ul><ul><ul><ul><li>Equity </li></ul></ul></ul><ul><ul><ul><li>Involvement </li></ul></ul></ul><ul><ul><li>Quicker? </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Mixes business and pleasure </li></ul></ul><ul><ul><li>Expertise less likely </li></ul></ul>Friends and Family Friends and Family
  6. 6. <ul><li>What? </li></ul><ul><ul><li>Loan repaid over 1-15 years </li></ul></ul><ul><ul><li>Government guaranteed loans available (75%) </li></ul></ul><ul><ul><li>10-20% interest </li></ul></ul><ul><ul><li>3-6 months lead time </li></ul></ul><ul><li>How much? </li></ul><ul><ul><li>£1000 to £25,000 </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>Often free to set up </li></ul></ul><ul><ul><li>Retain equity </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Monthly payments from your cashflow </li></ul></ul><ul><ul><li>No expertise gained </li></ul></ul>Bank Loans/EFG Bank Loans/EFG
  7. 7. <ul><li>What? </li></ul><ul><ul><li>Cash from government or EU </li></ul></ul><ul><ul><li>Usually limited by sector, activity or geographic area </li></ul></ul><ul><ul><li>designed to encourage investment in innovation, research and development </li></ul></ul><ul><ul><li>Often ‘match funded’ </li></ul></ul><ul><li>How much? </li></ul><ul><ul><li>£5000 to £500,000 </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>Free money! </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Difficult application process </li></ul></ul><ul><ul><li>Limited availability </li></ul></ul><ul><li> </li></ul>Grants Grants
  8. 8. <ul><li>What? </li></ul><ul><ul><li>Equity investment from High Net Worth or Sophisticated Investors </li></ul></ul><ul><ul><li>Via organised networks or personal contacts </li></ul></ul><ul><li>How much? </li></ul><ul><ul><li>£5000 to £500,000 </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>Cash plus expertise and experience </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Many like to be ‘hands on’ </li></ul></ul><ul><ul><li>Networks often charge advance fees </li></ul></ul>Business Angels Business Angels
  9. 9. <ul><li>What? </li></ul><ul><ul><li>Equity investment from a Venture Capital fund </li></ul></ul><ul><ul><li>Several ‘rounds’ – seed, Series A (growth), B etc. </li></ul></ul><ul><li>How much? </li></ul><ul><ul><li>£250,000 to £25m </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>Backing from experienced team </li></ul></ul><ul><ul><li>Source for future funding if required </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Likely to ask for high equity %age </li></ul></ul><ul><ul><li>Likely to be demanding </li></ul></ul>Venture Capital Venture Capital
  10. 10. <ul><li>What? </li></ul><ul><ul><li>Create positive cashflow to get through to profitability/funding </li></ul></ul><ul><ul><li>Broader - do whatever it takes to get through to profitability </li></ul></ul><ul><ul><ul><li>Sell stuff, beg, borrow, barter, buy cheap, delay payments </li></ul></ul></ul><ul><ul><li>Aim is to survive, retain equity, increase valuation </li></ul></ul><ul><li>How much? </li></ul><ul><ul><li>£50-£50,000 </li></ul></ul><ul><li>Pros </li></ul><ul><ul><li>Can retain equity </li></ul></ul><ul><ul><li>Not reliant on third parties </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Risky, not for the faint-hearted </li></ul></ul>Bootstrapping Bootstrapping
  11. 11. Crowdfunding Crowdfunding <ul><li>Crowdfunding is an approach to raising the capital required for a new project or enterprise by appealing to large numbers of ordinary people for small donations </li></ul><ul><li>Social Media </li></ul><ul><li>Crowdfunding examples </li></ul><ul><ul><li> - $212m funding raised, >800,000 lenders, ~500,000 entrepreneurs </li></ul></ul><ul><ul><li> – 7,496 projects funded, $27m pledged in 2010, runrate $7m/mth </li></ul></ul>
  12. 13. Crowdcube and Crowdfunding <ul><li>Crowdcube provides a web-based central hub for entrepreneurs to meet micro-investors </li></ul><ul><li>It uses the power of Crowdfunding to provide a unique service to two types of people: </li></ul><ul><ul><li>for entrepreneurs to source funding more accessibly than conventional routes </li></ul></ul><ul><ul><li>for smaller investors to have the opportunity to invest in exciting Limited businesses </li></ul></ul>What is Crowdcube? “ $100 invested in Microsoft at their IPO would now be worth approximately $35k.”
  13. 14. How it works
  14. 15. Benefits Benefits
  15. 16. <ul><li>“ Providing sufficient information, credibility and trust to an investor to motivate him to invest in a proposition” </li></ul><ul><li>Essentially it is about carefully grooming it and its people to present the right image and proposition to investors and bankers </li></ul><ul><li>The plan needs to be prepared carefully , conscientiously and with the right focus </li></ul><ul><li>Getting it right will secure finance quicker and cheaper </li></ul>Investment Readiness What is ‘Investment Readiness’?
  16. 17. Key stages in the readiness process <ul><li>Preparation of the business plan (inc. Financials) </li></ul><ul><li>How much money you need? </li></ul><ul><li>Identifying the most appropriate sources of money </li></ul><ul><li>What impact will it have on any ownership dilution? </li></ul><ul><li>Get as much feedback as you can </li></ul><ul><li>Identify and correct business shortfalls or omissions </li></ul><ul><li>Refine business plan </li></ul><ul><li>Marketing of the proposition </li></ul>
  17. 18. Thanks