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Invention and that Eureka Moment
- 1. Innovation and that Eureka moment From pensions to IP - the importance of ideas Adam Tavener, Clifton Asset Management plc
- 2. Who am I?
- 3. Clifton Asset Management Second largest provider of alternative business funding in UK 1. 2. 3. Funding Circle Clifton Market Invoice £200m £166m £100m
- 4. Why am I here? Pensions = = Disruption - transformation
- 5. It all starts with an idea! 2004 - £100 billion Use your own money to grow your ideas and business Intellectual Property – an asset class that can be held within pension
- 6. What is IP? • Not just technology • Ideas, databases, processes • Most businesses have it • Most don’t realise they have!
- 7. Who has got it? Banks don’t understand 84% of 500 SMEs valued their IP at zero
- 8. Undiscovered IP “Intellectual property is too important an asset to be undervalued by banks, who are the main source of finance.” Vince Cable
- 9. Banking on IP? “The increasing use of IP and intangibles in the pensions area is a particularly interesting development.” “One company which has made considerable use of pension-led funding to finance businesses is Clifton Asset Management.” “Asset-based and alternative financing methods should be prioritised for IPbacked finance interventions.”
- 10. So how do we do it? £ NEED £ Released Company £ Lease payments made Scheme Bank Account Sets Up Combined Pension monies IP Value £ Sold to Scheme SSAS or SIPP Pension Scheme Transferre d
- 11. Technology tool QuickIP Get started now 4 easy steps to a free valuation
- 12. Who are our clients? • DMACK Tyres set up by Dick Cormack 2007 • Matched funding £75,000 use of pension and SIPP, £75,000 from bank • £10m turnover
- 13. Imaginet • Web solutions company founded 1995 by Nigel Roberts • Lack of tangible assets meant banks not interested in lending • Used pension-led funding to access finance - since accessed two further times • Recently used pension-led funding to secure £60,000 matched funding from Welsh Government’s Digital Development Fund
- 14. Secrets of success: Social importance, Stakeholders • Working with IP Office and Government • Business Bank • Invited to Financial Innovators Summit at No. 10
- 15. Secrets of success: Customer journey Built integrated way of delivering our product seamlessly across our range of brands Customer Journey
- 16. Secrets of success: Awareness • Press coverage, battle for awareness • Business Development, getting partners
- 17. Secrets of success: Partnerships
- 18. Alternative funding • Alternative financing approaches, such as crowd sourcing, pension-led funding and peer-to-peer lending, have matched the ingenuity of SME owners with innovative finance methods, allowing them to raise vital funding to support growth •But greater signposting needed
- 19. Eureka! • We have created a new relationship with an old product • Bringing pensions out of the darkness and making them useful at a time when people need them • Our Eureka moment has seen us add value to what seemed a valueless asset class – Intangible Assets
- 20. Fintech and the future “SMEs are the lifeblood of the UK economy. Their ability to grow is a key determinant of the nation’s future economic health” Banking on IP? Report 2013
Editor's Notes
- I’m Adam Tavener, Chairman and founder of Clifton Asset Management plc. A financial innovator responsible for the creation of what is now referred to as ‘pension-led funding’. This allows SME owners to invest in and back their own ideas and initiatives. Have been doing this in one form or another for more than 20 years. Passionate advocate of collaboration in the Business Funding Sector.
- Built from nothing a company which has become the second largest provider of alternative business funding in UK. Employ 100 staff from Bristol base. So far we have funded 1,500 – 1,600 SMEs across the UK – many of them several times. Collectively they employ 20,000 people and turnover in excess of £2bn.
- I’m here to talk about pensions. Bit of a boring subject I hear you say. But is it? Pensions are just money and only boring if you believe the myths put out by the industry. In fact pensions, properly utilised, are an incredibly powerful transformative force in the SME sector and can, and do, act as a growth accelerant without so many of the drawbacks surrounding traditional SME funding products. I don’t find that boring at all!
- In 2004 Finance Act changed the rules surrounding pensions. Suddenly access to £100 bn. This money could be used to provide investment and funding for SMEs. Business owners could use their own money to help grow their ideas and their businesses. But how to do it? Although some businesses had tangible assets many didn’t – needed an asset as security. The step forward – intellectual property.
- Not just technology. It’s ideas, databases, processes, reputations and relationships. Most businesses have it – most don’t know they have. Even scaffolding companies (no disrespect) have IP and we have helped them utilise it. Is your business worth more than its balance sheet?
- Banks don’t understand IP – not able to put value on it. I regularly meet business owners who run companies of different sizes in different sectors. These dynamic people are used to developing ideas and products – but astonishingly few realise the monetary value that inventiveness and brand hold for them. Our research across almost 500 sSMEs found an astonishing 84% valued their IP at zero.
- Vince Cable understands the importance of IP. Globally IP has become one of most valuable but least-exploited assets in business, especially with SMEs. In 2010 World Bank estimated royalty and licence fees alone generated £5.25billion in UK. Yet virtually no funding solutions exist to leverage IP, except, of course, the UC, Angel and Crowdfunding markets which all involve the sale of part of the business.
- Last November the Intellectual Property Office published a report to reinforce the need for finance to be made available to better exploit UK businesses’ IP. Called simply ‘Banking on IP?’ the report was commissioned by Department for Business, Innovation and Skills and we were asked to consult. It recognises IP as an important asset class which can be used for business funding but is currently seriously under-utilised. Research by Nesta and Work Foundation highlight company investment in intangibles now outstrips that in tangible assets.
- Pension-led funding was the answer. Used IP assets to help hundreds of businesses secure investment. The financial instruments most frequently used is a sale and leaseback mechanism. This evolves the business while taking personal control of their own pension and using it to invest in their own intellectual property.
- As developed idea also developed technology. We’re not a tech company but we have launched some tech which helps give people a simple idea of IP. Quick IP – it’s accessed through our website and allows business owners to input some simple information, which is then put through an algorithm which produces an indicative value of the intellectual property which they own. As far as I know this is unique to Clifton.
- One client who successfully used IP to build business was Dick Cormack, DMACK. Set up 2007. Matched funding - £75,000 pension from us using pension-led funding and SIPP, £75,000 from bank. £10m turnover. Has won a contract to supply tyres to the world rally championship. Recent £3.5m private equity investment.
- Another client Imaginet – recently name Online Agency of the Year – Online Retail Awards 2013. Web solutions company founded 1995 by Nigel Roberts (pictured). Lack of tangible assets meant banks not interested in lending. Used SSAS scheme to access pension using IP from business. Has used further 2 times. Recently used to secure £60,000 matched funding from Welsh Government’s Digital Development Fund.
- Is what we are doing socially important? The numbers employed by our client companies would suggest so. As a result we are engaged with a number of government initiatives aimed at proving better access to funding for SMEs and promoting the value of intellectual property.
- Built an integrated way of delivering our product seamlessly. Moving parts. There are a whole lot of legal and technical issues surrounding the delivery of a pension-led funding solution. To an outsider they would seem quite bewildering, but we have designed a process which is seamless and integrated, providing funding for the client in an efficient, cost-effective and timely manner. This process is largely dependent on our own technology which we have continuously developed over the last eight years or so.
- In the early days there were a whole raft of pensions industry voices telling us that it couldn’t be done. We tackled this head on, on two main fronts – the national press and financial journalists, who have been fantastically supportive. We also created our own introducer/ distributor network of trusted financial intermediaries such as brokers and accountants, who now account for over 50% of our new business flow.
- What do these companies have in common? Like us they are Financial Innovators. Moving forward we are teaming up with people who, like us, are disrupting the norm and bringing something innovative to financial markets.The non-bank funding sector needs to collaborate if it wants to compete with and be a real alternative to the high street. By acting together our collective viability is vastly improved and our influence exponentially enhanced.
- Alternative financing approaches, such as crowd sourcing, pension-led funding and peer-to-peer lending, have matched the ingenuity of SME owners with innovative finance methods, allowing them to raise vital funding to support growth. But greater signposting needed. Realistically this means engineering behavioural change from organisations such as banks or parts of the accounting profession that wouldn’t traditionally look for a non-bank funding solution as a first choice.
- We have created a new relationship with an old product We have disrupted an industry, pensions, by forcing it to consider how new and more relevant investments can energise the SME sector, thus creating growth and value. And we have created a method of leveraging real access to growth funding from the great overlooked asset class – ideas!
- And so onwards to the future: Banking on IP? Report says:“ SMEs are the lifeblood of the UK economy. Their ability to grow is a key determinant of the nation’s future economic health” We need a different, transformative, way of doing things to help the UK’s financial and technical businesses continue to deliver their potential. IP and alternative business funding have a key role to play in that and indeed, so does pension-led funding. Thank you for your time.