Raising Finance and Understanding Key Business Metrics
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Presentation delivered at the Business Slide show to Entrepreneurs looking to raise finance for their business.
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Raising Finance and Understanding Key Business Metrics
- 1. Raising finance and the importance of business metrics John Cheney John.cheney@workbooks.com
- 3. What’s the story ?
- 4. Importance of execution Prospects to Cash
- 5. Targeting Who is my target customer? Type of organisation Type of individual Motivation for purchasing How many potential prospects? Market size What do I know about them already? Using a competitor Interests Targeting
- 6. Marketing Which are my most effective channels for marketing? Online? Direct? What is the cost of a lead? How many leads convert into a sale? Marketing
- 7. Selling Sales Effectiveness How many deals can a sales person close in a period? Who are my best sales people? What’s my cost of sale? Competition Who are my competitors? Why are we winning/losing? Selling
- 8. Delivery Cost of Delivery Gross margin & profitability? Time of delivery How long from Order to Invoice? Can it be quicker? Delivering
- 9. Have an execution plan Prospects to Cash Understand the Metrics!
- 10. Build your plan Detailed business plan Vision, Opportunity, Market Landscape, People, Execution Investment opportunity & ROI Exit Strategy & Valuations (Comparisons) Financial Model P&L, Balance Sheet, Cash flow, Key Metrics Executive Summary 3 pages!
- 11. Angel Investors High Net Worth Individuals Often experienced & successful business people Typically invest between £10k – £500k per investment EIS qualification is often very important
- 12. Enterprise Investment Scheme A Government scheme to encourage people to investment in small businesses Key benefits Investors can get 20% income tax relief Investors can get 40% capital gains roll-over relief Qualifying gains can effectively be tax free There are rules You need to be a qualifying business You can only raise £2m at a time There are more rules... http://www.hmrc.gov.uk/eis/
- 13. Find Angels Where can I find them? Angel Networks (www.bbaa.org.uk) Your Networks Lawyers, Accountants Friends & Family What do Angels want? Equity stake – normally ordinary shares To see a return on their investment To back great teams Passion, enthusiasm, drive, expertise Involvement Board seat or Advisory role
- 14. Venture Capitalists Professional Investment firms Money from Pensions, VCTs, other institutions Funds have sizes and a life cycle Typically have investment criteria Stage: Seed, Early Stage, Growth Stage Sector: Cleantech, IT, Life Sciences, etc Geography Investment sizes reflect stage Seed £500k - £1m Early Stage £1m - £3m Growth: £5m+
- 15. Finding VCs Where can I find them? European Venture Capital Association - www.evca.eu British Venture Capital Association - www.bvca.co.uk What do VCs Want? Equity Stake, maybe debt Focus on Internal Rate of Return (IRR) Preference shares (different rights) Board Seat – with a fee Often syndication
- 16. Third Party Advisors Benefits Network of contacts Can organise road show and manage process Sounding board to validate plan Negotiate terms Downsides Cost (% of funds raised + retainer) Look for track recent track record and references
- 17. Closing the deal Get good legal advise!
- 18. Benefits & Issues Benefits Investment capital Dispassionate advise Your increased professionalism Credibility Issues Managing shareholders Risk of different views Change is shareholders status or strategy
- 20. Any Questions?
Editor's Notes
- VisionWhat are you trying to build?What’s the exit strategy?How will you create value for your shareholder?OpportunityWhat problem are you trying to solve?Why has nobody else solved it?Do people really need it?How does it add value to their business/lives?How profitable can it be?LandscapeHow big is the market opportunity?How much of the market can you realistically win?Who are the competition?Why are you better placed?Can you defend your market from other entrants? skills do you need?PeopleWhy are you the right person to back?Who else is in your team?What otherExecutionHow are you going to find leads?How many leads will convert into customers?How many sales people will you need?What’s the cost of customer acquisition?How will you deliver your good/services