The document outlines the various government support initiatives aimed at improving access to finance for SMEs in Cornwall as of May 2011. It includes information on funding programs, business support services, and the closure of the business link service while detailing new measures like the Enterprise Finance Guarantee and the South West Loans Fund. Overall, the focus is on facilitating business growth and addressing financial gaps for small businesses in the region.

1. 1Finance in Cornwall 2011- Cornwall is open for businessRichard Wadman, Corporate Finance Director, Winter Rule

2. Administration&www.witerrule.co.ukwww.witerrule.co.uk

3. www.winterrule.co.uk3Presenters and participants

4. Structure of eventBackgroundBIS (National), Convergence (Cornwall)Business Link and SWRDAFinance, Business Support and TaxThe funds from grant through to VCOverview onlySufficient detail for you to ask one to one questions after / contact details on slidesQuestions/ NetworkingFinish 12 noonwww.winterrule.co.uk4

5. Government support to improve SMEs’ access to financeFinance in Cornwall 19 May 2011Seb Aslan – SME Finance Team

6. Government support to improve SMEs’ access to financeFinance in Cornwall 19 May 2011Seb Aslan – SME Finance Team

7. Business is the driver of economic growth and innovation One business gets started every minute in England Wales

8. 4.8 million SMEs in the UK, 99.9% of businessesThis Government has committed to two central things: to reduce the budget deficit and support private sector growth. This Department is the ‘Department of Growth’. That means stripping away the burdens and constraints on business and giving them a long term framework so that people say ‘Britain is open for business’(Mark Prisk MP, Minister for Business and Enterprise)

9. The UK is among the top countries in the world to start and grow a business1st in Europe for ease of starting a businessLowest barriers to entrepreneurship of all OECD countries3rd in the world for supporting business financing needs

10. Changes to Business Support and Access to Finance

11. Business SupportRevamped Website – including Start Up Hub40,000 Business MentorsBusiness Coaching for GrowthBusiness Link advisory service closed from 25 November 2011

12. Access to FinanceEvidence suggests that in the large majority of cases SMEs getting the bank finance they needHowever – mismatch between what the data is telling us and what we are hearing from the Business Representative bodiesThere are also areas of Market Failure – equity gap

13. Enterprise Finance Guarantee (EFG)Will now continue until 2014/15Will enable up to £2bn of lendingNew Export EFG – now live

14. Bank LendingGovernment has welcomed outcome of Merlin dialogBanks will make available £190bn of new credit in 2011£76bn of this new capacity will be to SMEs increase of 15%Government working with the BBA and Business Finance Taskforce – data on availability/price of finance – stronger lending code/lending principles – internal appeals

15. Equity FinanceContinuing programme of Enterprise Capital Funds – commitment of £200m over next four yearsGovernment welcomed bank’s commitment to the creation of £2.5bn Business Growth Fund – will target SMEs and provide £2m - £10m to those with strong growth potential

16. Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs)Chancellor announced reforms to EIS and VCTsFrom April the rate of EIS 30%Next year the amount which can be invested will doubleSize of company which can qualify for investment increasingAmount which can be invested in a single company increasing to £10m

17. Carleen KelemenDirectorConvergence Partnership Office for Cornwall and the Isles of Scilly19 May 2011

19. Business Link – current position and future- Alison Miles Or ‘Rumours of our demise have been greatly exaggerated’

20. Current landscape:The Business Link service currently provides information, advice and guidance to 45% of the business population in Devon, Cornwall & Somerset

21. 50,000 businesses provided with information in the last 12 months

22. Helped create over 1,700 new businesses in the last 2 years

23. Over 5,000 quality referrals for further support made to private public sector partnersChanges to the Business Link serviceBusiness Link service will continue to deliver quality information, advice and guidance up until 25th November. In addition Peninsula Enterprise will provide the following contracted service:Rural support

24. European funded growth and environmental support

25. High Growth skills service

26. International Trade

27. Specialist Social Enterprise support in Torbay and PlymouthFuture Business Support LandscapeNational website & national call centre

28. National Business Coaching for Growth programme

29. National mentoring network – 40,000 voluntary mentors

30. Entrepreneurial support for women, Black, Asian & Minority Ethnic groups & service leavers

31. Development of some Solutions for Business providers

32. for further informationSWRDA closure and impact on funding Closure 31 March 2012Most funds of relevance to SMEs in Cornwall administered by SWRDA will carry on:Take note of contact details on presenters slides

33. Speak to us

34. Website www.businesslink.gov.uk or www.bis.gov.ukContact us on : 0845 602 3657Alison Miles: ext 8903 Max Strelling: ext 8347Wayne Hackman: ext 8906www.businesslink.gov.ukIn the South West peninsula the Business Link service is delivered by Peninsula Enterprise

35. Grant for Business InvestmentPaul Wilson – Business Investment Adviser South West RDA

36. What is Grant for Business Investment?ERDF funded grant scheme to support innovative, knowledge based projects demonstrating productivity improvement with skilled employment.

37. What type of project can be supported?Investment in productivity improving plant and equipment in an existing business.

38. Investment in equipment as part of the commercial launch of a business.

39. Investment in additional employment.What’s not suitable for GBI?Very small projects (£10k minimum grant).Local services (including franchises).Tourism normally ruled out through displacement.Some sector restrictions.

40. How much can I get?Subject to State Aid ceilings for maximum (50% small business, 40% medium business, 30% large business).Job numbers also determine the quantum. Average is equating to c£10,000 per job.Need is the best place to start. Ensure rest of finance package is well developed.

41. Eligibility criteriaDemonstrated need (No prior commitment).Viability.Eligible investment – normally capital projects but making increased use of salary support grants.Productivity.Skill levels.Jobs.

42. Quality featuresERDF Cross Cutting Themes (Low Carbon and Equality & Diversity)

43. High skill levels / salary levels (£20k minimum)

44. Innovation and R&D

45. Training

46. ExportsApplication processEnsure broadly eligible and supportable before applying.

47. Full application requires business plan, financials (historic and projections) and application form.Payments and conditionsPaid in arrears by instalments linked to investment, jobs and productivity

48. Conditions to make the investment, deliver the jobs and achieve productivity growth

49. Security – risk dependant. (Debenture or Parental Guarantee)Contacts information/supportPaul Wilsonpaul.wilson@southwestrda.org.uk01752 234855OrRichard Hoskinrichard.hoskin@southwestrda.org.uk01752 234824www.southwestrda.org.uk/gbi

50. The Low Carbon Grant Fund (LCGF)Stuart Farmer Cornwall Development Company

51. ERDF Low Carbon Grant Fund (LCGF)A £5M ERDF funded scheme

52. Launched by the Convergence Programme for Cornwall & the Isles of Scilly on the 26th April 2011

53. Providing grants of between £70K to £1M (subject to match)

54. Support eligible businesses to reduce carbon emissions by

55. Improving Energy / Resource Efficiency

56. Delivering Green House Gas reductions through innovation

57. Enable generation of Low Carbon Energy Whocan apply for LCGF?All ERDF eligible businesses in Cornwall and IOSSME’s maybe eligible up to 50% funding Non SME’s eligible up to 30%Applicants in a position to start their project within 6 months of the grant being awarded

58. New businesses are not ruled out, however additional financial due diligence will be soughtWhat must applicants considerTwo stage process,

59. Stage 1, Open call for Expressions of Interest (Closes 01st June 2011)

60. Stage 2, Detailed business plan

61. LCGF will invest in projects that have GHG (Greenhouse Gas) Reduction as their primary outcome where

62. They are not supported through existing schemes (FIT / RHI etc…..)

63. Mandated through the existing regulatory framework

64. Would otherwise be undeliverable due to issues of commercial viability

65. Links to research and higher education institutes (such as ESI)Whatwill EOI’s be assessed on?Weighting20%60%10%10%Project Description (innovation will be taken into account when scoringCarbon Saving Calculator, (GHG Saved Per £ Invested)Economic benefits to the business (productivity / jobs)Wider economic benefits to Cornwall & IOS (Supply-chain development/ R&D Links/ Best practice dissemination)

66. Call For EOI Closes 01st June 2011

67. Contracts Expected Autumn 2011Contact: Janet Bowen at jbowen@cornwall.gov.ukCornwall CouncilCounty HallTruro TR1 3AYTel: 0300 1234 100www.cornwall.gov.uk

68. Funding for Business Improvement Initiatives (vouchers)Josie Gough – ERDF Secretariat Josie.gough@southwestrda.org.uk

69. What? Vouchers to cover up to 50% of the costs for businesses on projects to realise their growth ambitions. Why? Private sector feedback on how to invest Convergence funding in the 2nd half of the Programme, maximising the impact of funding.Who? To be administered by objective organisation with a private sector led decision making panel. All ERDF eligible businesses looking to significantly grow will be eligible to apply.

70. How? Details of how to apply will be available once the contract has been award to the administration body. Commitment to proportionality! When? Hoping to get a contract finalised this summer, subject to a brief set up period, applications should be open towards the end of 2011.

71. RURAL DEVELOPMENT PROGRAMME FOR ENGLAND (2007-2013)Catherine Martin

72. 44RDPE Funding in Cornwall Axis 1: Improving the competitiveness of the agricultural and forestry sector.RDPE funds available under Axis 1for;Adding value to agricultural productsTraining and skillsOn-farm advice and small capital grantsAxis 3: Improving rural quality of life and diversification of the rural economy.RDPE funds available under Axis 3 for;Farm DiversificationRural Micro-enterpriseCommunity and Social Enterprise

73. 45RDPE moving forwardsTransfer to Defra from 1st July 2011Programme currently open for businessMore information will become available in the coming weeksCurrent team transferring across to Defra.

74. 46

75. Springboard FundBob DowProject DirectorTrellisick Gardens19th May 2011

76. Aims of the Springboard FundFinancial help to projects that will make aneconomic impact in Cornwall or DevonGrants or loans to worthy projects thatwould otherwise be unlikely to proceed

77. Springboard FundOpen to eligible projects both from businesses and from not for profit organisations Projects from any sectorFunding can be for early stage activity to start a new project or to make a step change in growth

78. What the Springboard Fund doesAwards of £30K to £150K Application process is staged:-Eligibility Initial review Full evaluationFinal stage being a presentation to the Panel

79. EligibilitySignificant impact on the economy of Cornwall or Devon through new job creationOther potential funding sources must have been exhausted (minimum of 25% match fundingThe project must demonstrate viability

80. Projects with potentialImpact extending beyond applicant organisation

81. Creation of new high calibre jobs

82. Creation of activity/environment that will facilitate other economic benefits in the future

83. Partial funding already secured/identified

84. Additional benefits such as positive environmental impact or up-skilling of jobsProjects not likely to succeedPoor business/project plan lacking understanding

85. Impact only on profitability of applicant organisation

86. Few new jobs created/low skilled

87. Little future benefit

88. No other funding source explored or identified

89. Project could proceed without Springboard funding

90. Supporting a non viable businessHow to applyAll applications must be submitted via the application form on the websiteWebsite has eligibility criteria, application form and further detailswww.springboardfund.co.uk

91. The South West Loans FundLaunched 2009Part of the South West ERDF 2007-2013 programmes

92. The South West Loans FundFund commissioned by:South West RDAFund holder and contractor:South West Investment Group (Capital) LtdFund Managers:SWIG Services LtdSmall Loans for BusinessLoans up to £50,000 FC Fund Managers Finance for BusinessLoans up to £250,000

93. The South West Loans FundThe Fund provides loans on commercial terms To: SMEs (including start-ups)

94. Based in South West Region (or relocating to)

95. Growth or growth potential

96. Financially viable proposition

97. Planned requirement for investment

98. Identified finance package

99. Eligible for ERDF

100. Cannot raise sufficient finance from banks and other sources The South West Loans FundERDF - What the Fund can supportCapital expenditureWorking capitalNet economic benefit - ‘added value’, e.g:Business A:Start-up manufacturing innovative, interactive youth sports and exercise equipment. Contract to supply, but investment needed for full production set up. £50,000 SL4B growth loan agreed. The business now has a small production unit and is creating skilled jobs for local people.Business BExisting company designs, supplies and installs a range of energy-saving products including lighting systems for high bay warehouses and soft start motor controllers. £100K F4B loan approved to support its expansion in the UK and key export markets.

101. The South West Loans FundERDF - what the Fund cannot supportDisplacement (e.g. Pure retail or local domestic services)Other exclusionsPrimary agriculture

102. Financial services

103. Speculative property development

104. Activities that the State ‘should provide’ e.g. education, healthRe-financing Not lender of last resort to business ‘in difficulties’

105. The South West Loans FundProcessContact the appropriate Fund ManagerIf we think you are eligible, complete a 2-page form This helps to assess whether or not to proceed to full applicationIf all OK – proceed to full application and business planTurn around time 2-6 weeks

106. The South West Loans FundAt 19 May 2011:

107. The South West Loans FundContact:Small Loans for Business (up to £50K)SWIG Services LtdLowena HouseGlenthorne CourtTruro Business ParkThreemilestoneTRURO TR4 9NY01872 223883info@southwestinvestmentgroup.co.ukwww.southwestinvestmentgroup.co.ukFinance for Business (up to £250K)FC Fund Managers14 High CrossTRURO TR1 2AJ01872 272288enquiries@fcfundmanagers.comwww.fcfundmanagers.com

108. SWAINFinance in Cornwall19th May 2011Bruce Colley – Investment Director

109. What do we do?

110. Process?

112. Investment AttractivenessBusiness plan demonstrating significant sustainable growthUnique product – the right price – barriers to entry – protected IP …A management team -> ability to create profits (capital growth) An exit strategyA realistic valuationCommitment

113. Facts & stats

114. Facts & stats

115. Cloud Nine OfferingLow-cost modular design – fitted interiorsMicrogeneration ready Sustainable materialsLego configurationsShort-term or long term site useAffordable eco-housingIndefinite life buildingsCan use “difficult” sitesKernow Eco Housing Ltd

116. The CompanyCornish Sea Salt is a food manufacturing business that harvests sea water to produce a pure and natural culinary sea salt in a purpose built facility. Situated just 8 metres from Grade A accredited waters – the highest to denote water purity – at Porthkerris in Cornwall.The company was incorporated in July 2004 and commenced trading in February 2008, following a three year project to identify and secure a site, source and commission the technology, undertake market research and raise investment finance.With a production capacity of 500 tonnes per annum, Cornish Sea Salt has developed a process that blends age-old chemistry with innovative and energy-efficient technology that is environmentally benign. The company owns the harvesting building and has a X year lease for the Porthkerris site; it also has a X year lease for the Pol Gwarra foreshore and leases a 250m² warehouse unit at St Keverne (less than 1 mile from the harvesting plant).Cornish Sea Salt Co bespoke harvesting plant Pol Gwarra, Lizard PeninsulaKey DatesCornish Sea Salt established – July 2004Porthkerris site secured – Dec 2006Investment agreement – June 2007Harvesting building completed – Sept 2007Salt Plant commissioned – Dec 2007Trading commenced – Feb 2008Key AssetsHarvesting building - £XXX,XXXSalt making equipment - £XXX,000Porthkerris lease – X yearsForeshore lease – X yearsWarehouse lease – X yearsBrand trade marks & domains

117. 20/05/201172Adding valueRaw FleeceScour and CardKnitting and weaving yarnsFabric Throws Blankets ScarvesGarments and furnishingsBuy in at 50p-£10 per Kg.Cost £6-7 per Kg.Cost £14-20 per Kg.Cost £20-40 per Kg.Cost £50-100 per itemAdd to blends£6-12 per Kg.£15 trade £30 retail per Kg.£25-40 trade £60-120 retail per Kg.£35 trade £90 retail per metre (o.5 Kg.)£100-£500 per item (o.5 Kg.)

118. Data analysisWhat we doDataAnonymised data and informationInformationElectricityGasWaterTemperatureHumidityHeatingFeedback devicesManager / policy makerMobile phoneUsersScreens

119. Deal profile87 deals (14 deals per year);63 businesses (64% first round); £6.75m from SWAIN investors;£44m total finance;Ave. Stake 18.5%Typical post money valuation <£1mFailure rate approx 20%

120. Introduction to Venture Capitalby Alistair BrewMay 2011

121. INTRODUCTION TO VENTURE CAPITALIntroduction to Octopus Ventures

122. What we do and look for

123. Current Climate for fund raising

124. Tips for fund raising

125. ConclusionsOCTOPUS VENTURESDivision of Octopus Investments

126. Fast growing fund management company

127. £2bn FUM

128. £300m+ in unquoted VCTs

129. One of the most active SME investors

130. 24 deals in 2010 & 3 deals in 2011 to date

131. £500k-5m investment size

132. Early stage, growth capital and MBO’s

133. Equity, mezzanine and debt (via Octopus Specialist Finance)

134. Portfolio of over 60 companiesWHAT WE DOWe partner exceptional entrepreneurs who wish to build big businesses that create, transform or dominate an industry sector. We partner these businesses through their growth prior to selling the business and our stake to trade or financial purchasers. Our objective is to make returns of multiples of our original investment from each business in which we invest.

135. WHAT WE DOWe partner exceptional entrepreneurs who wish to build big businesses that create, transform or dominate an industry sector. We partner these businesses through their growth prior to selling the business and our stake to trade or financial purchasers. Our objective is to make returns of multiples of our original investment from each business in which we invest.EQUITY OWNERSHIP

136. TYPES OF DEALDevelopment Capital

137. Acquisition Finance - Good time for bolt-on acquisitions

138. Competition struggling

139. Prices can be very low

140. Not all cash up front

141. Change of Ownership situations - MBOsWHAT WE LOOK FOR IN A BUSINESSStrong growth potential deriving from inherent competitive advantage

142. Critical

143. Management team

144. Product/Service and proven business model

145. Growth Market

146. Other

147. Assets including intangible assets such as a brand

148. Deal characteristics – pricing, ‘skin in the game’

149. Exit prospectsVENTURE CAPITAL RETURNSTarget Returns

150. 3x + money multiple

151. 30% + IRR over 3 - 4 years

152. Where returns come from

153. Earnings growth

154. Multiple Arbitrage

155. [Gearing]VENTURE CAPITAL RETURNSTarget Returns

156. 3x + money multiple

157. 30% + IRR over 3 - 4 years

158. Where returns come from

159. Earnings growth

160. Multiple Arbitrage

161. [Gearing]“GROWING THE CAKE”

162. FUND RAISING - A LOOK BACK....2007 The end of the road:

163. Easy debt – too much money

164. Box ticking due diligence

165. Lower quality thresholds

166. High prices

167. Unrealistic projections

168. THE TOP OF THE MARKET Anybody could raise moneyIMPACT OF DOWNTURN AND CREDIT CRUNCH2008/9No money available from banks or investors

169. Companies contracting

170. Conditions unpredictable

171. Weaker companies had no chance

172. Some government initiatives (Capital for Enterprise)

173. Very few deals

174. But interest rates lowTHE NEW WORLDLate 2010 onwardsAppetite to do deals now returning but……Limited bank funding available (sub 2x EBITDA)

175. VC price expectations lower

176. High levels of Due Diligence