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Incubating, accelerating and financing london’s tech scene ( public version)

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Incubating, accelerating and financing london’s tech scene ( public version)

  1. 1. Incubating, Accelerating andFinancing London’s Tech Sector Start-ups. . Presented by John Spindler CEO of Capital Enterprise @capenterprise 1
  2. 2. Scale focused start-ups are…different • Ambitious: want to be worth £10M+ minimum in 3-5 years. • Solve a big problem for potential customer in a “Game Changing / disruptive” new way. • Introduce new technology/ business model innovations • Smart Team & Key Partners buy - in. • Ability to adapt and change as they develop. • At some stage will need investment • Expectation of success is “radically uncertain” @capenterprise 2
  3. 3. Scale Focused Start-ups need to progress by stages… Steve Blank- The Start-up Owners Manual See Steve Blank, Four Steps to the Epiphany
  4. 4. Go Lean to prove concept and market“Lean Start-up is aboutreducing market risk byworking out how to fail fast” @capenterprise 4
  5. 5. Lean Canvas Model @capenterprise 5
  6. 6. Idea to Tech Business- Three Chasms.
  7. 7. Start- Up Funding road –map. Idea Hackathons/ Hatcheries/ Meet-ups. Bootstrap- FFF Problem/ Space Exploration MVP Factories Start-up Loans Design/ Innovation Awards Prototype Crowdfunding i.e. Kickstarter Accelerators Beta Test Seedrs/ Crowdcube SEIS Adapt/ PivotX2 Accelerators Super Angels/ Launch Angel Groups Early Stage VC’s @capenterprise 7
  8. 8. Forming & Exploring Ideas @capenterprise 8
  9. 9. Forming Businesses.. ideas from??? @capenterprise 9
  10. 10. Developing the team & the tech• Hipster (Designer)• Hacker (Developer)• Hustler (Distributor) @capenterprise 10
  11. 11. Sources of Start-up Help for Tech EntrepreneursInformation:• Capital Enterprise What’s On in London-• Meet-up -• Mobile Academy-• Makers Academy-• Skills Matter-• Start- up Britain -• British Library-• Google Campus-• General Assembly-• Innovation Warehouse-• IC Tomorrow -• UCL Decide-• Start-up Weekend- London-• Launch 48-• Start-ups on Air at Google Campus-• Hubventurelabs -• 3 Beards-• Founders Fit- @capenterprise 11
  12. 12. Prototyping @capenterprise 12
  13. 13. Funding Product DevelopmentGrants & Awards General• J4B- Portal for grant finding• Technology Strategy Board ( R&D Funding) - -• Knowledge Transfer Networks-• IC Tomorrow-• NESTA-• London European Enterprise Network-• E Funding for SME R&D -• EU Funding for R&D collaborations:• Knowledge Transfer Partnerships funding support- my-businessTranslation/ Follow on research funds.•••••• @capenterprise 13
  14. 14. CrowdfundersCrowd funding Platforms-Reward based Crowdfunding platforms- will help you toraise funding to build a proto-type and market test agreat idea or product.- Great for pre-selling cool techhardware.•• (USA)••••••••• https://www.banktothefuture.comSeed/ Early stage Investment @capenterprise 14
  15. 15. Need less than £10K to start? Grant- No Funds New Enterprise Unemployed? Allowance Scheme Need Less than £10K to Launch a Self Fund business Community Development Write a simple Finance Institution Borrow Business Plan & 12 month cashflow Start-Up Loan Bank- Sources of Grants- Competition funding £1000 issued to 10+ businesses per month- Princes Trust £1000- £15,000 Enterprise Loans for Under 25’s- or New Enterprise Allowance Scheme – Check who delivers the scheme in London by e-mailing Capital Enterprise.- Community Development Finance Associations- - Also check out North London Community Finance- ELSBC Access to Finance – Business Plan support for those looking to raise up to £10K• Soft loans for Creative Businesses- @capenterprise 15
  16. 16. Incubation – Virtual or Real @capenterprise 16
  17. 17. Idea to Tech Business- Three Chasms.
  18. 18. Accelerators In London
  19. 19. Accelerators help by ..Offering early StageEntrepreneurs… …so that they can test..• Fellow Community of • Product- Assess Functional use/ entrepreneurs & supporters improve design & UX• Runway support & funding • Market Reaction- interest/ (£15-£100K at standardised investment terms. ) usage/revenue - AARRR ( 3-6 months on average)• Physical Space & Facilities • Revenue/ profit Potential- pricing, market timing, LTV/CCA• Mentors ( 1st Industry- 2nd Investors) • Business Model- “To Pivot or Not To Pivot”• Help to Rapid Field Trail with users & customers. • Investor reaction- interest and valuations• Demo days- Introductions to Investors/ customers • Team- ability to work together and deliver.
  20. 20. Accelerators want businesses who..…
  21. 21. AcceleratorsAccelerators : Training & Mentoring programmes that provide fast-track to seed funding forScalable new businesses• Lean Start-up : -• Start-Up Weekend:• Launch 48:• Tech Hub : – Google Campus-• FIG-• Y-combinator-• Tech Stars-• Seed Camp: ( Applications open)• Hackfwd:• Emerge Venture Labs-• Ignite 100-• BBC Worldwide Labs-• Tech Stars Europe -Springboard-• Student Start-ups-• Accelerator Academy-• Fintech Innovation Labs-• Wayra-• Innotribe- ( Fin Tech Only)• The Bakery -!/• Innovation Warehouse-• Healthbox-• Collider12- out – and @capenterprise 21
  22. 22. Proving the Business Model Key Milestones• Human Resources - Hiring key people that will make a huge impact on your organization (not just employees for workload purposes, but like a shit-hot marketing person, for example).• Product – MVP- Beta- First Pivot-Full Launch- On-going Iterations• Market – Market validation. As in, first customers, or first paying customers, etc• Funding – Maybe some money being committed to a round that the investor in question can lead or participate in.Other examples of milestones include*:• Proof that you can work together as a team, usually historical evidence• Proof that you can build something, i.e. working prototype• Proof that it’s useful to someone – first users and clients• Proof that you can talk to investors – every financing round, even small ones• Proof that you can talk to audiences – 100k users or 1M users or 10M users…• Proof that the initial team is able to attract talent –• Proof that ecosystem agrees with your ideas – bringing respected industry advisors partners on board• Proof that there is market – £1M annually/ Proof that the market is big! – £25M annually and beyond• Proof that you can manage your finances – cash-flow positive operation• Proof that you can scale – £10M annually @capenterprise 22
  23. 23. Metrics• AARRR• Customer Acquisition Costs VS Life Time Value• Retention/ Churn m/9-metrics/• Referral/ Viral Coefficient• Revenue http://guidetostartupmetr @capenterprise 23
  24. 24. Investment Essentials Type Amount Purpose Source SeeSeed Under £50K Proof Of Conept FFF Crowdfunding www.seedrs.comSeed £50K-£500K Launch to "Beachhead" Angels/ Seed Note Average valuation for a Investors pre-revenue company in London is between £350- £600K Launch to "Beachhead" + Syndicates of Not as common in the UK as USSuper Seed £500-£2m Build scalability Investors VCs/ Family Traditionally where UKSeries A Trust/ Supper investor money enters the(Small) £1m-3M Scale Angels market @capenterprise 24
  25. 25. SEIS is…… “a game changer”?Seed Enterprise Investment Scheme-SEIS is a tax break launched in April 2012 for UKtax payers to encourage them to buy shares in start-up companies registered in theUKThe Facts:• SEIS investors can input £100,000 in a single tax year rising to a maximum £150,000 over two or more tax years in to a single company• Investors cannot control the company receiving their capital• Investors pick up 50% tax relief in the tax year the investment is made, regardless of their marginal rate.• In the 2012-13 tax year, tax payers can roll any chargeable gain in the tax year in to a SEIS with a full capital gains tax exemption (another 28%)• The business must be a start-up company -registered in the UK within 2 years of claim.• The company must not employ more than 25 workers.• The company must have assets of less than £200,000.• The company has to trade in an approved sector – generally not in finance or investment, for example, a property company raise capital as a SEIS. @capenterprise 25
  26. 26. …A potentially “Scalable” businesses will … • Solve a relevant Problem for a Large Addressable Market. • Have a Credible Founders Team. • Have a Semi-Proven Business Model. • Large Returns on initial capital- i.e. Capital Efficient to scale. @capenterprise 26
  27. 27. Seed Investors want …. Winners! 1. Skilled and credible management teamInvestors want to find.. 2. BIG Market Opportunity- a big problem for a potential large set of customers that you can solve? 3. The Idea/ Prototype to be proven and market validated. 4. No Technical Risk 5. Evidence that the Business Model is both repeatable and scalable. 6. Business Model ready to execute 7. Road Map & Forecasts based on proven assumptions 8. Metrics 9. Adequate financial returns ( 10X within 3 years?) 10. People they can trust/ work with 11. A clear exit route- How will they claim there reward?? @capenterprise 27
  28. 28. Send a slide deck and get introduced Ten slides. Ten is the optimal number of slides in a PowerPoint presentation because a normal human being cannot comprehend more than ten concepts in a meeting—and business angels are very normal. If you must use more than ten slides to explain your business, you probably don’t have a business. The ten topics that an investors cares about are: 1. Summary and call to action/ what do you want? 2. Problem 3. Your solution 4. Business model 5. Underlying magic/technology 6. Marketing and sales 7. Competition 8. Team 9. Projections and milestones 10. Status and timeline @capenterprise 28
  29. 29. Business Angels Public Supported Co-Investment Schemes• NESTA -• Capital 4 Enterprise-• Angel Co-Fund-• Mayor Of London Co-Investment Fund-• Enterprise Capital Fund- Seed/ Early stage Investment Platforms:- Capital Enterprise top 10 Angel Network in London1. London Business Angels: Oxford Early Investments- Envestors- Finance South East- www.thefsegroup.com5. Angels Den- www.angelsden.com6. Venture Director- www.boundarycapital.com7. Start-up Funding Club- E100- London Business School - #1 seed- Ascension Ventures- an alternative list check out- @capenterprise 29
  30. 30. Active London Angels… • http://bamlondon.blogs html • @capenterprise 30
  31. 31. Early Stage VC’s & InvestorsAccel Partners: Stage agnostic, see their portfolio here. • ACT: Early to mid-stage, see their portfolio here. • Bloom Equity: Early to mid-stage angel syndicate, see their portfolio here.Anthemis Investment- Stage Agnostic, see portfolio here • DFJ Esprit: Early to mid-stage, see their portfolio here.Balderton- Stage Agnostic- See there portfolio here • Charlotte St: Early to Mid Stage, see there portfolio here • Dawn Capital: Early to mid-stage, see their portfolio here.Eden Ventures- Early- mid stage – see there portfolio here • MMC - Series A Fund- Co-Investment fund with Mayor of LondonIndex Ventures: Stage agnostic, see their portfolio here. • Notion Capital – SAAS and Cloud specialist- See portfolio here • Seraphim Capital – Early-mid stage see there portfolio here.Passion Capital: Early Stage, see their portfolio here. • Kernel Capital: Early stage, see their portfolio here.Delta Partners: Early to mid-stage, see their portfolio • Octopus Ventures: Early to mid-stage, see their portfolio • M8 Capital : Mobile Specialists, see their portfolio hereImperial Innovations: Restricted entry requirements but • Episode1: Early Stage Software Companiesthe largest Series investor in the UK in 2012-13 , see theirportfolio here • Arts Alliance: Minimum investment £500K in Media related tech- see portfolio here • EC1 Capital: Early stage, see their portfolio hereAtomico: Stage agnostic, see their portfolio here. • Connect Ventures- Early stage and very cool.Profounders: Early and mid-stage, see their portfolio • Ballpark Ventures – Early stage Super Angel investorshere. • Pen Tech Ventures- Early Stage to mid- See portfolio HereAIB Seed Capital Fund: Managed by two funds which Alternatively you can check out Crunch Base / Angel List 31invest under-€250k and over-€250k, see theirportfolio here. @capenterprise
  32. 32. Specialist FundsWomen- Stargate Capital- Trapezia- FSE- Incito- Aspire Fund - Bridges Sustainable Fund- Ingenious Media- Cleantech Fund opportunities/clean-energy- Carbon Trust- Low Carbon Accelerator- CT Investment Partners- Wellington Partners- MEWE360: £1m fund set up by Ingenious Media- Big Society Capital- Sources of Social Finance- Bridges Venture Fund Big Issue Investment- Social Finance- Social Investment Fund- @capenterprise 32
  33. 33. UK Mobile Investments 2012 • Highgate Labs NA• Mytaxi £8.3M • Somo NA • Playdemic NA• Hailo £31.4M • The Mobank Group £2.25M• Mobile Travel Technologies £3.2M • SkyDox £20M• Net60Six £500k • Huddle £16m• AirSense Wireless NA • iNeed £50k• StylistPick £11M • Capablue NA • Kabbee £3.25M• MymCart £475K • REALRIDER £285K• MobileReport NA • Wilcocks & Associates NA• Astute Labs NA • Busuu £5M• Chupamobile NA • MobiCart £300k• Parcel Genie NA • Fanatix £750K • HowDo NA• Knowledge Transmission NA • Proteo 200k• Blink Booking £2.5M • SlickFlick 100k• Albagaia £240K • Outplay Entertainment £2.6M• eWowBooks £100K • LoveThis 1.25m• Serious Parody £770K • YPlan £1.1m • Unifyo NA• Quipper £2.3M • RouteMonkey 500K• Mindshapes £4M • Paperless Receipts 1M• TreatTicket NA • ERN £1.5M• Adaptis Solutions NA• Lifecake NA • Total deals 45, total amount invested (disclosed) £120.910M @capenterprise 33
  34. 34. Q &A@capenterprise 34
  35. 35. If you want an introduction then send me a slide deck @capenterprise 35