Finance in Cornwall 2015 Segment 3

F
Finance in
Cornwall 2015
“71% of SMEs approach
only one provider of
finance”
Richard Wadman –
Corporate Finance
Director

www.francisclark.co.uk
Structure of morning
• Background, EU “calls” and the Banks (8:30am to 9:42am)
• LEP, Cornwall EU millions and “calls”
• Banks and SMEs
• Company presentation
• Grants, debt, equity and business support –
stratified by age of business (10:02 am to 11:22 am)
• Secured finance, alternative sources of finance,
business support (11.42 am to 1.00pm)
• State Aid
• Q&A one to one / Networking (1pm to 2pm)

Of general interest
• “Alternatives”, inc Crowdcube
• Secured Finance
• Grants – round up
• Business Support x 2
• Networking

RICHARD ECKLEY
InvestmentAnalyst

What are the benefits?
 New way to raise finance
 Global Investor Reach
 Cost effective
 Marketing effect
 Crowd feedback
 Expertise
 Financial return
 ‘Armchair Dragon’
 Support friends and family
 Participation
 Lower/spread risk
 Simple to invest

TOP INVESTOR
 #1 FOR SEED STAGE DEALS
BEAUHURSTREPORT– “MAKINGSENSE OFUK EQUITYINVESTMENT2014/15”
MARKET POSITION

RICHARD ECKLEY
Investment Analyst
richarde@crowdcube.com
linkedin.com/in/richardeckley
THANK YOU AND QUESTIONS
WWW.CROWDCUBE.COM

Secured Finance
Tristan Bourdeaux, Senior Business Manager
Finance in Cornwall 2015

The 3 C’s
• Serviceability - Can you cover the monthly repayments?
• Stake – Your contribution?
• Security

Serviceability
• Interest rates at an historic low
• Would the repayments be affordable
if rates were to increase?

Stake
• Typically any stake would be non-borrowed
funds
• The level of stake would be assessed inline
with perceived risk

Security
• Cash
• Stocks & Shares
• Enterprise Finance Guarantee Scheme
(EFG)
• Land / Property

Things to be aware of when providing
security to a bank…
• Solicitors Fees
• Bank Fees
• Remember to allow sufficient time for transaction
to take place
• Professional Valuation required

So why Secured Finance?
• Equity release is usually very quick to access
• Long term funding
• Relatively low cost finance

Grants – An
Overview
David Bullen – Corporate
Finance Senior Associate

Structure
• Context
• Live schemes
• Going Live Schemes
• Support

Context - Backdrop
• https://www.gov.uk/business-finance-support-finder
• 271 schemes (down from 742 schemes!)
• 154 schemes relating to agriculture
• Main sources of grants, include
• EU funds (ERDF and ESF)
• Regional Growth Fund
• City Deals
• Big Lottery
• Innovate UK (Technology Strategy Board)

Context – The sources
Regional Growth Fund
• Monies left behind on dissolution of RDA’s
• £2.4bn
• 2011 to 2015
• Applications > £1m
• Competitive process
• Round 6 closed 30 Sept 2014. Future?
• RGF funded schemes for SMEs
• Incl; ND+ UBI, PWGF1, PWGF 2, GGF+ and Assisted Asset
Purchase
• Less sector specific, criteria different for individual schemes

Grants– The Sources
EU
• Convergence: Cornwall 2007 to 2013
• EU (announced June 2013)
Cornwall: €592.9 million (£507 million) between 2014-2020
Devon and Somerset:118 million euros (£100 million).
• Eligibility?
• Process?

RGF
Individual applications (> £1m)
• Quality projects
• Generate private sector investment and
create sustainable jobs.
• The level of grant is subject to State Aid
rules
• Robust need for grant argument.
• Maximum grant intervention rate c 30%:
• Round 6 applications now being assessed.
• Some Francis Clark successes in previous
rounds and some being assessed now..

RGF backed
Cornwall Marine Capital Fund – Round 2 is open now
• Grant funding £50k - £500k for Cornish/ SW based businesses operating in
the marine sector;
• Intervention rate 10%-40% depending on value for money, size of business
and direct jobs created (large businesses can receive no more than 30%);
• Eligible costs are capital investment into equipment (new and modernisation),
premises (building new, modernisation, fit out and bringing old businesses
back into use) and marine renewable technology development;
• Allocation of funds to projects within the programme will only be made once
proof of match funding has been seen.
• Start with an online EOI
• http://www.cornwallmarine.net/52/about-cornwall-marine-network-6/rgf-
201/major-new-funding-opportunity-for-cmn-members-376.html

Suite of funds - https://interact.innovateuk.org/
• Specifics:
• SMART – See later slide
• Innovation Vouchers (currently Round 11) – See later slide
• Agri-Tech Catalyst: Late & Early stage awards -
https://interact.innovateuk.org/competition-display-page/-
/asset_publisher/RqEt2AKmEBhi/content/agri-tech-catalyst-late-stage-
awards-round-4
• Many others (principally energy and feasibility study focused at
present but these change)
R&D
Innovate UK/TSB

Previously known as “Grant for R&D”
Science, Engineering and Technology: New Products and Services
Grant support for SMEs:
• Proof of market (9 months, £25k, 60%)
• Proof on concept (18 months, £100k, 60%)
• Development of prototype (2 years, £250k, 35% / 45%)
Competitive / Batch Applications
Smart v R&D Tax Credits - cannot have both for same project
R&D
SMART - https://interact.innovateuk.org/competition-display-page/-
/asset_publisher/RqEt2AKmEBhi/content/smart-2015-16

Grants of up to £5k
Theme:
• External expert to help business grow
• Specialist help
• Criteria:
• Starting or running UK micro or SME
• Not worked with expert before
• Needs to be a challenge
• Have not had a voucher before
R&D
Innovation Voucher - https://interact.innovateuk.org/competition-display-
page/-/asset_publisher/RqEt2AKmEBhi/content/innovation-vouchers-round-11

• Calls - http://www.heartofswlep.co.uk/news/european-structural-and-investment-funds-
strategy
• Details?
• Eligibility?
• Timeframe?
• To be continued….
ESIF

EAFRD
Rural Development Programme 2014-2020
• Environmental Stewardship - funding to farmers for environmental
land management. 87% of the total RPD (pillar 2) budget (£3.5billion) is
being allocated to this activity.
• Countryside Productivity Scheme – Being managed nationally. Has
£144million in total. The first round (£5m) has already launched and
includes support for activity that will improve productivity of primary
production, such as:
• Animal productivity, health and welfare
• Arable and horticultural productivity
• Forestry productivity
• Resource management

EAFRD
• LEADER funding - available from cSept 15 to:
• local businesses;
• Communities;
• Farmers;
• Foresters; and
• land managers.
Delivered through Local Action Groups (LAGs):
• 4 LAGs in Cornwall;
• awarded a total of £7.3million;
• Cover majority of the county (excl. CPR, Penryn and Saltash);
• Each LAG has a Local Development Strategy which sets out the local
priorities for investment;
• Grants from £2,500 to c£35,000 will be available but in certain cases
larger grants may be possible; and
• More information can be found on the Local Action in Cornwall website.

EAFRD
• Cornwall Growth Programme – Includes elements of ERDF, ESF and
EAFRD
Fund will have an allocation of £9.4 million which will align with the wider Cornwall &
Isles of Scilly Growth Programme. Support investments in activity such as:
• Agri-tech;
• Renewables and Energy Storage;
• Food Enterprise Zone Supply Chain Development Project;
• Investment Grants for businesses;
• Rural and Farm Tourism; and
• Rural Broadband (2017).
First ‘call’ for projects should be in June/July 2015 and will be for businesses looking to
‘add value to primary produce’.

Coming soon/later
• RGF backed - SWGF
• RGF backed - Innovation4Growth: Round 2
(http://www.innovation4growth.co.uk/)
• Further ESIF calls…

Grants
Factors contributing to a successful application…
1. Project
2. Eligibility
3. Robust Business Case
4. Business Plan (and Financial Projections)
5. Dialogue with fund holders
6. Understanding their requirements: strategic and operational
7. Need for grant
8. Patience/ Completeness
9. Understanding timelines
10. Match funding – seldom 100% intervention and seldom pay in
advance of defrayal

GetSet Business Support
Bespoke & Impartial 1:1 Advice

Investment Readiness

Finance Support

Marketing & Sales Support

Business Model Validation
GetSet KnowHow
Angel Investor Network

Equity Investment Advice

Mentoring Service

Non-Exec Director Network

KnowHow Board
What we do..

• The Cornwall College Group are acknowledged by AAT as one of the top four
providers in the country.
• National Apprenticeship Award winners two years in a row.
• 92.68% completion rate of apprentices.
• Grants available for apprentices up to £1,500*
• Over 80 different types of apprenticeships including:
• Business Admin
• ICDT
• Sales
• NEW apprenticeships starting September 2015 including Marketing
(including Marketing and Social Media), Law and Project Management (using
Agile in Businesses)
*subject to eligibility

“Undertaking an accounting apprenticeship is an
ideal opportunity to study for a recognised
qualification (AAT) whilst learning on-the-job and
being paid. We have a long term recruitment plan
which identifies and recruits the best student talent,
incentivises them with the quality of work they will
enjoy and with the prospect of first class training.”
Melody Tuffnell, Human Resources Manager,
Francis Clark LLP

EU state aid in Cornwall
Marc Shrimpling
May 2015

DO I NEED TO THINK ABOUT STATE AID?

STATE AID – THE RATIONALE
• To prevent governments from unjustifiably protecting local or national industries from
fair competition
“State aid control comes from the need to maintain a level playing field for all
undertakings active in the Single European Market”
• Positive benefits of State aid – if invested prudently
• Targeted use of public funding can help deliver important macro-economic
objectives: (i) green energy; (ii) thriving SMEs; (iii) incentives to innovate and
engage in R&D; (iv) supporting disadvantaged sectors, regions and groups “…
investing in the right projects in the right places at the right time”

KEY LEGAL IMPLICATIONS OF STATE AID
• Unlawful State aid must be repaid (with interest)
• Third parties may seek injunctive relief and/or damages from the UK courts
• Risk of investigation:
• reputational damage
• diversion of management time
• potential exclusion from public procurements

OPTIONS FOR MANAGING STATE AID
‘State aid’?
De Minimis?
GBER?
Existing scheme?
Specific sectors?
6. Notify?

TWO PRACTICAL TIPS
1. Always think “State aid” early
• A five-minute call can prevent weeks of travelling down dead ends
• The earlier we think about State aid, the more options stay on the table
• Identifying opportunities beyond the regional aid / de minimis aid tramlines
2. Don’t assume that awarding bodies know best
• Leipzig-Halle – paradigm situation of public bodies becoming over-cautious
• At some point, the onus will be on aid recipients to self-assess
• Can we get a more favourable/robust view from another source?

Business Growth Service
Finance in Cornwall
Business Growth Manager: Neil Jeffery
Mobile: 07436098674
Email: Neil.jeffery@growthaccelerator.com
May 2015

47 | Privileged & Confidential – for internal use only | Version 1 | March 2015
Definition of Eligibility
As has been the case under the previous contracts, organisations need to
meet the following criteria to join the service:
*Please reference the ops manual for further details.
2
Fewer than 250
FTEs
(PAYE)
No more than
25% ownership
if the collective total
of the corporate
group exceeds SME
criteria*
Under £40m
turnover
(or less than £34m
on balance sheet)*
Registered in the
UK and based in
England
(restrictions apply
for sole traders)

www.gaininbusiness.com
Universities and Business:
helping you to innovate
Plymouth University and the Growth Acceleration
& Investment Network (“GAIN”)
Mark Smith

Business engagement - the challenge to
Universities from the Government
“ Universities have an extraordinary
potential to enhance economic
growth…from local SME support and
supply chain creation to primary
technology leadership and breakthrough
invention ”
“ Universities should assume an
explicit responsibility for facilitating
economic growth ”

Plymouth University & the economy of
Cornwall
provide opportunities for our students, staff and the
communities we serve through economic
development, social inclusion, community
outreach and strategic partnerships
build and sustain connections with local, national
and international partners to enrich our academic
experience and research
raise aspiration amongst those groups under-
represented in higher education, and so increase
their participation

Pre-incorporation
Plymouth
• IP guidance
• Organisational Needs
Analysis
Brokerage
Falmouth & Bristol
• Falmouth Marine
School
•Bristol Composite
Gateway (ERDF)
• Demonstrator produced
Incorporation
Plymouth
• New enterprise created
• IP agreement with FMS
• New product
Phantom Sports Boats – A Collaborative
Case Study

GAIN Finance
Grant programmes
Crowdfunding
Investor readiness
GAIN Talent
Employability
gateway
KTPs
Internships
GAIN Innovation
Science Park
Innovation Centres
Formation Zones
Helping foster Innovation through Finance,
Facilities and Talent

Business Engagement Service
A free phone / e-mail based light
touch diagnostic, signposting and
referral service for any business
0800 073 2020

...people first, success follows
Presentation by GES Ltd.
May 12th 2015
Stephen Jones
Commercial Director

Goonhilly Earth Station - Opportunity

GES Ltd as a Funding Proposition
* GES negotiated a short term lease commencing 2011 for proof of
concept
* In parallel GES negotiated a three year Option to purchase 999 year
lease hold at fixed price
• GES used this time to start building a diverse revenue stream with
‘anchor’ commercial contracts.
* Min £1.8m sought to secure long term title and initial cashflow built
on ‘base case’ projections. (Upside sales pipeline not included)
* Potential key UK Space Sector infrastructure with experienced
Management Team.
* Significant Underlying Security….

Space Science Park – as Security
• 160 acres of the world’s first and most famous satellite ground
station.
• Iconic large (3 x c30m) antenna and multi medium size antennas
• Existing functional, key accessed buildings
• 24/7 on-site manned security, extensive site CCTV. (CNI)
• Major diverse fibre-optic connectivity to London, Africa (via Europe),
USA and Asia
• On site Back Up power generation plant (CNI)
• Renewable energy generation potential.

Models of Funding Considered:
In order to create options, the GES Team made direct and
also supported approaches to institutions to assess :
 Asset backed commercial loans
 Grant funding
 Equity Release
 A mixture of the above
Ultimately a deal was secured ahead of the January 2014 deadline…
…. and the business arrived at the start line

As new owners of the site…..
• Significant Capital spend on infrastructure to
support growth plans
• Key employees identified and secured
• Major Framework Contracts negotiated with the
largest Global Satellite Operators
• Significantly increased Revenue in the first year.
• Secured £m Grant Funding to support site
development.

The Forward Plan – several coherent activities:
1) Space Communications Gateway using Antennas
– Deep Space Communications & Fundamental Space Science (includes Radio Astronomy).
- Additional Satellite communications activity.
- Low Earth Orbit (LEO) tracking
- Missions Control capability (primary & back up)
- Goonhilly acts as a UK communications gateway to Space.
2) New public “Space Outreach Centre”
− Space & Science promotion to inspire future generations
− UK & Regional Space sector capability promotion to ‘000’s p.a.
− Provide STEM Inspiration & encourage increased uptake
− Showcase an inspiring operational environment & raise youth education & employment aspirations
3) An open Innovation Centre / Site redevelopments
– Practical & operational environment
– Facilitates knowledge transfer between Industry & Universities. Multi University engagement beneficial
– Data Centre capability on site & other redevelopment potential
4) Practical & Innovative CPD & Training
– Using Goonhilly facilities, address identified industry skill gaps & encourage skills transfer

Thoughts on the Journey to Date
 The availability of Finance is an easier conversation with contracts
in place
 Continue researching multi streams of funding to create options
 Add resources/employees in line with building a sustainable
business
 No is sometimes no, but often its because of the wrong question
 Perseverance and Resilience comes from conviction in your business
and is powerful weapon.

F
Finance in the
Cornwall 2015
“71% of SMEs approach
only one provider of
finance”
Richard Wadman –
Corporate Finance
Director

Summary
• Some uncertainties and “some things
are a changing” but…
• SMEs – the country and county
needs you
• Cornwall a great place to do business
• Some great businesses in Cornwall
• Funding and support – options
• Thank you

Presentations and other participants..
And more… (30 presentations in total, covering “full range” of funding and business support options)

But before you go…
http://www.francisclark.co.uk/
news-views/blog/

The ROC 5K 2015
Thursday 11th June 2015
5.30 for 6.30pm start
Lemon Quay in Truro
www.roc-uk.org/ROC5K2015
Twitter: @roc_uk #ROC5K Facebook: ROC 5K 2015

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Finance in Cornwall 2015 Segment 3

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Finance in Cornwall 2015 Segment 3

Editor's Notes