Raising Finance will deliver an overview of the main types and sources of business funding. It will explore what different finance providers are looking for and consider how businesses can devise a funding roadmap appropriate to their needs.

1. NVI Swansea
Raising Funding
David Notley

2. Jargon
Some examples:
•Gearing
•ROI
•Preference Shares
•Debenture
•Invoice discounting
•Mezzanine Finance
•Cash burn

3. Sources of
Finance
• What are they?

4. Borrowing
GrantEquity
Forms of Finance

5. Borrowing Characteristics
• It has to be repaid with interest over agreed period.
• Therefore 2 key questions:
– Can the business generate sufficient cash to pay the
interest and capital?
– What security do we have if it all goes “horribly wrong”?

6. Borrowing Types
Working Capital Asset Backed Other
Overdraft Leasing/HP EFGS
Invoice Discounting Property Mortgage Friends and Family
Credit from Suppliers Term loan with business
security
Crowd Funding
Up front payments from
Customers
Term loan with personal
security – Beware the PG!
Vendor Finance

7. Borrowing Sources
UK
• Main high street banks –
but there are 395 others –
see www.bba.org.uk
• Many specialist factoring
companies
• Asset finance companies -
see www.abfa.org.uk
• Crowd Funding
• Green Investment Bank
• Department for Business
Innovation & Skills - BIS
Wales
• Finance Wales
• UK Steel Enterprise
• Local Authorities
• Credit Unions
• Pembrokeshire Lottery
• Business Wales
www.business.wales.gov.uk

8. Crowd Funding
• The Funding Circle
• Kickstarter
• Crowdcube
• SEEDRS
• Platform Black
• Many others...............
• Varying business models

9. Equity Characteristics
• Investing in shares in a private limited company
is risky.
• This means 3 key questions:
– How big is this opportunity?
– Are the management capable of exploiting it?
– Where is the exit route?

10. Risk Capital Sources
and Spectrum
Flotation - IPO
VC/PE
Corporate Venturing
Business Angels
Crowd Funding & SEIS Funds
Own Money, Friends & Family

11. Pitching and Follow Up
• “Valuing start ups is a crap shoot”
• Find the right investor for your proposal
• Blindingly good pitch - 15 minutes
– Don’t underestimate the value of a simple story well told
– Really compelling value proposition
• Validation, validation, validation
• Traction in the market - Sales
• Establish and be ready to handle objections and doubts
• Seek to control time line for a decision

12. Risk Capital Sources
• Finance Wales
• SEIS and EIS Funds – Dragon SEIS Fund, ICE Angels
• UK Steel Enterprise
• Wesley Clover
• Westbridge Capital
• Xenos business angel network
• EADS Foundation
• Hafren Ventures
• BVCA – www.bvca.co.uk

13. Grant Characteristics
Grant Funding is characterised by:
– Need to achieve non financial outputs.
– Tend to be paid retrospectively.
– Clawback if grant not used correctly.
This means grant givers are interested primarily in:
– Is the project eligible?
– Balance of funding?
– “Additionality” test?
– Will it achieve the non financial outputs?
– Will it generate positive (or negative!) publicity?
– Do we have budget available?

14. Grant Types

15. Grant Sources
UK
• NESTA
• Technology Strategy Board
• WRAP
• Carbon Trust
• National Lottery
• Social Investment Business
• Private foundations

16. Grant Sources
Wales
• Welsh Government
• WG Smart Cymru
• KTP and Go Wales
• Jobs Growth Wales
• Local Authorities including:
– Local Investment Fund (LIF)
– Rural Development Plans
– ICT grants

17. The right funding for the
right purpose
Borrowing Equity Grants
Working capital Yes Maybe No
Assets Yes Yes Yes
Losses No Yes Yes

18. Q&A?

19. Using someone else’s money is
a privilege not a right – treat it
with respect