Session A4 Funding – beyond grants, competitions and bootstrapping Chair Richard Brooks, Chief Executive, FD Solutions Speakers Brian McCaul, Director of Innovation, Queen’s University Belfast Gonçalo de Vasconcelos, Co-founder and CEO, SyndicateRoom Dr Nicola Broughton, Investment Director, Mercia Technologies PLC

1. Equity Crowd Funding
for Tech Transfer
…based on a bit of experience!
Brian McCaul
Director of Innovation
CEO Qubis Ltd
Queen’s University, Belfast

2. Why?
And especially why for universities
& commercialisation activity
And why it needn’”⁹t hinder later-stage rounds
and may even help you

3. could be the biggest shift in our sector

4. Research Development
Tech transfer
Commercialisation
Market Entry
Valley of Death
Profit/Loss
time
Crowd Equity *has* focused on smaller seedrounds
Nearer to the TTO…

5. This is - at the *moment* an early stage phenomena
…but that’”⁹s what we tend to do!

6. Mainly Startup and early stages
Crowdcube

7. …there is increasing
activity at venture stage…
Crowdcube

8. Mainly Tech

9. Technology was the sector with the highest
number and value of investments, in line
with its performance in the wider market
“
”
Equity Crowdfunding in the UK:
Evidence from the Equity Tracker

10. Technology and intellectual-property-led firms make the most successful crowdfunders,
the report showed, representing the lion’”⁹s share of both deals and investment, with 50
deals between 2011 and 2014 and totalling £13.7m.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11494394/Fifth-of-UK-equity-deals-now-use-cash-from-the-crowd.html
At least 1/5th of seed market

12. EIS & SEIS
Angel Cofund
Displacing Angels which were themselves displacing VCs in this space
Investor Friendly: generous tax breaks
…or EII here

13. Centre for Entrepreneurs Report
Crowdfunding has been credited by some with bringing equity investing into
the mainstream and has been described as a catalyst for the creation of a
new funding landscape.

14. To their minds, they are buying shares at half or a
third of the price the pre-money valuation would
suggest.
If the company goes bust, they get 50% or 30%
income tax loss relief;
if it succeeds, they will scoop the gains CGT free.
Accessible Tax Breaks for the Crowd
“
”

15. Founder Friendly deal terms
and re-balancing the power
A successful crowdfunding campaign
can serve as a positive signal for other
funders and can help you attract more
funding or funding at better terms.
Liam Collins, Nesta
“
”

16. Fast-growth crowdfunding companies platforms
are parting with less equity
…even removing all sub-£100k deals crowdfunded companies
are on average giving away lower equity stakes.
Beauhurst
lower equity stakes than counterparts raising capital through more traditional routes.

17. The largest early-stage seed market in the UK

18. The Seed Market
In 2013, angel networks were replaced by government-backed funds, followed by crowd funders, as the top funders
More than the next 2 together…

19. More scalable funding market

20. More scalable funding market

21. growingat580%lastyear

22. spreading the
investment regionally…

23. Investors By Region

24. Will it drive crazy valuations ?
Will it complicate investment ?
Will it fuel a ‘series A cliff’..?

25. No… it may not just expand but
improve the equity market…
There is a correlation between the rise in crowdfunded seed activity and
increasing seed deals in general

26. Could be reducing early dilution -
but that won’t protect against down rounds
…or it could be used to test valuations

28. BetterTerms CompletedRound AgileValuation De-risked
Hittargetin48hours!

29. Testing Valuations - Pre-IPO…?

30. Technology from
MMU Over-raised
£700,000 from 37
angel investors

31. ..it may even change the way that valuation is done!
…as more data is collected

32. It’s leaner
Tests demand
Early Validation & Fast Failure

34. Get the feedback your
product deserves, not the
feedback your pitch earns

35. It’”⁹s more than just funding…
Equity based crowd funding increase revenue 351%- not inc funding
Not only tests demand but createsdemand
Survey of several hundred firms randomly tested that used crowd or other
forms of finance for sponsored by Ellenoff Grossman and Scholes LLP

36. …could help testing the value proposition
and helping with customer discovery…?

37. Raising funds with SyndicateRoom was quick & efficient
and it also helped us to raise our profile through
press coverage on Forbes and TechCrunch.
Lord Douglas Dundonald: Chairman, Radio Physics Solutions
“
”

38. Completing rounds…
Quicker rounds …
Either nominated equity holder
or A,B shares
or just on-line Angel syndication
Nor is it inherently complex or unmanageable…
in fact it may help manage complexity

40. “32% thought it was the most likely
funding choice in the next 12 months.
Figures from Irwin Mitchell suggest that crowdfunding has come a long way since being regarded as just a niche option for funding a business.
Entrepreneurs are doing it…
”

41. Venture capitalists are doing it…
£750,000 £750,000 == £1,500,000+
=£3,800,000 £1,200,000 £5,000,000+
£6,000,000 £1,420,000 £7,420,000
=+

42. Publicly-listed, winemaker and craft brewer Chapel Down (listed on ISDX) launched a £1.6M crowdfunding campaign on Seedrs.
In three weeks, they overfunded to almost £4M, from around 1,400 investors
Even PLCs are doing it…
the largest equity crowdfunding campaign ever. http://blog.seedrs.com/2014/09/26/crowdfunding-public-companies/

43. Crowdcube has set up a venture fund, managed by
Braveheart Investment Group, in which the ‘crowd’ can
invest as a Limited Partner.
Seedrs offers the option of investing in a fund or an
incubator programme.
both means of spreading the risk across a group of
companies that are chosen by more experienced investors.
Crowdcube has also started providing debt-based
‘mini-bonds’

44. So…

45. What next?
this will grow
it will migrate to later stages
it needn’”⁹t complicate future investment
we should get on board
That’s it!

46. Thanks
go raibh maith agat
@brianamc
b.mccaul@qub.ac.uk