1. Early Stage Funding
.
Presented by John Spindler CEO of
Capital Enterprise @ Imperial College
17th November 2012
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2. Steve Blank- The Start-up Owners Manual
See Steve Blank, Four Steps to the Epiphany
3. Start- Up Funding Roadmap.
Idea
Bootstrap- FFF
Problem/
Space
Exploration
Design/
Innovation Awards
Prototype
Start-up Loans
Seedrs/ Crowdcube Beta Test Kickstarter
Adapt/
PivotX2 SEIS Collective Funds
Super Angels/
Launch
Angel Groups
Early Stage VC’s
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4. “There is an opportunity gap when the scope
for growing income at a very fast rate is
limited for those who have too little to invest ,
but expands dramatically for those who can
invest a bit more.”- i.e. to win requires scale
Banjaree &Duflo- Poor Economics
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8. Runway Milestones are…?
• How much/ little money is
needed to achieve the key
milestones?
• Going to need a Budget, Cashflow
forecast and “burn rate”
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9. Proving the Business Model Key
Milestones
• Human Resources - Hiring key people that will make a huge impact on your organization (not just
employees for workload purposes, but like a shit-hot marketing person, for example).
• Product – Minimum Viable Product- Beta Test- First Pivot-Full Launch- On-going iterations
• Market – Market validation. As in, first customers, or first paying customers, etc
• Funding – Maybe some money being committed to a round that the investor in question can lead
or participate in.
Other examples of milestones include*:
• Proof that you can work together as a team, usually historical evidence
• Proof that you can build something, i.e. working prototype
• Proof that it’s useful to someone – first users and clients
• Proof that you can talk to investors – every financing round, even small ones
• Proof that you can talk to audiences – 100k users or 1M users or 10M users…
• Proof that the initial team is able to attract talent –
• Proof that ecosystem agrees with your ideas – bringing respected industry advisors partners on board
• Proof that there is market – £1M annually/ Proof that the market is big! – £25M annually and beyond
• Proof that you can manage your finances – cash-flow positive operation
• Proof that you can scale – £10M annually within 3-5 years.
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10. Funding Options
Information:
• Capital Enterprise What’s On in London- www.capitalenterprise.org/whats-on
• Start- up Britain - http://www.startupbritain.org
• British Library- www.bl.uk/bipc
• Bootlaw- http://bootlaw.com/
• HMRC Small Company Enterprise Centre- Source of advice and help
http://www.hmrc.gov.uk/manuals/vcmmanual/VCM10050.htm
• HMRC R& D Tax Credits www.ucl.ac.uk/advances/advances-news/hmrc
• HMRC Guide & Support- http://capitalenterprise.org/guide-to-rd-tax-credits
• British Business Angel Association: www.bbaa.org.uk
• Guide to Early Stage Investment:
http://www.paloalto.co.uk/about_us/Early_Stage_Investment_by_Alan_Gleeson.pdf
• Start-ups on Air at Google Campus-
https://docs.google.com/spreadsheet/viewform?formkey=dEpuYlRFRFJ6SUVDdHVLRms3YmdBcmc6MQ
• Hubventurelabs - http://hubwestminster.net/hubventurelabs
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11. Need less than £10K to start?
Grant-
www.j4b.co.uk
No Funds
New Enterprise
Unemployed?
Allowance Scheme
Need Less than
£10K to Launch a Self Fund
business Community
Development
Write a simple Finance Institution
Borrow Business Plan & 12
month cashflow
Bank
- Sources of Grants- www.j4b.co.uk
- Competition funding £1000 issued to 10+ businesses per month- http://www.shell-livewire.org
- Princes Trust http://www.princes-trust.org.uk/need_help/enterprise_programme.aspx
- £1000- £10,000 Enterprise Loans for Under 25’s- www.startuploanslondon.co.uk or www.startuploans.com
- New Enterprise Allowance Scheme – Check who delivers the scheme in London by e-mailing Capital Enterprise.
- Community Development Finance Associations- http://www.cdfa.org.uk - Also check out North London Community Finance
- ELSBC Access to Finance – Business Plan support for those looking to raise up to £10K
• Soft loans for Creative Businesses- http://www.creativeindustryfinance.org.uk/
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12. Funding Product Development
Grants & Awards General
• J4B- Portal for grant finding http://www.j4b.co.uk
• Technology Strategy Board ( R&D Funding) - http://www.innovateuk.org -
http://www.innovateuk.org/content/competition/grant-for-rd-single-business.ashx
• Knowledge Transfer Networks- www.innovateuk.org
• London European Enterprise Network- http://www.een-london.co.uk
• E Funding for SME R&D - http://www.eurostars-eureka.eu/what.do
• EU Funding for R&D collaborations: http://ec.europa.eu/research/participants/portal/page/calls
• Knowledge Transfer Partnerships funding support- http://www.ktponline.org.uk/ktp-what-will-it-cost-
my-business
Translation/ Follow on research funds.
• www.rdfunding.org.uk/bulletin/queries/Search.asp?TheCloseMonth=July&TheYear=2011.
• http://www.rcuk.ac.uk/kei/ktportal/Pages/Followon.aspx
• https://ktn.innovateuk.org/web/145175/overview
• http://www.ahrc.ac.uk/FundingOpportunities/Pages/BrowseOpportunitiesOld.aspx
• http://www.ahrc.ac.uk/Pages/default.aspx
• http://www.theculturecapitalexchange.co.uk/
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13. Investors want ….?
1. Skilled and credible management
team
Investors want to find.. 2. BIG Market Opportunity- a big
problem for a potential large set of
customers that you can solve?
3. The Idea/ Prototype to be proven
and market validated.
4. No Technical Risk
5. Evidence that the Business Model is
both repeatable and scalable.
6. Business Model ready to execute
7. Road Map & Forecasts based on
proven assumptions
8. Adequate financial returns ( 10X
within 3 years?)
9. People they can trust/ work with
10. A clear exit route- How will they
claim there reward??
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14. SEIS is…… “a game changer”?
Seed Enterprise Investment Scheme-SEIS is a tax break launched in April 2012 for UK
tax payers to encourage them to buy shares in start-up companies registered in the
UK
The Facts:
• SEIS investors can input £100,000 in a single tax year rising to a maximum £150,000 over two
or more tax years in to a single company
• Investors cannot control the company receiving their capital
• Investors pick up 50% tax relief in the tax year the investment is made, regardless of their
marginal rate.
• In the 2012-13 tax year, tax payers can roll any chargeable gain in the tax year in to a SEIS
with a full capital gains tax exemption (another 28%)
• The business must be a start-up company -registered in the UK within 2 years of claim.
• The company must not employ more than 25 workers.
• The company must have assets of less than £200,000.
• The company has to trade in an approved sector – generally not in finance or investment, for
example, a property company raise capital as a SEIS.
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15. My slide deck is…
http://www.slideshare.net/slidesthatrock/how-to-pitch-a-vc-redesigned
Ten slides. Ten is the optimal number of slides in a PowerPoint
presentation because a normal human being cannot comprehend
more than ten concepts in a meeting—and business angels are very
normal. If you must use more than ten slides to explain your
business, you probably don’t have a business. The ten topics that an
investors cares about are:
1. Summary and call to action/ what do you want?
2. Problem
3. Your solution
4. Business model
5. Underlying magic/technology
6. Marketing and sales
7. Competition
8. Team
9. Projections and milestones
10. Status and timeline
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17. Crowdfunders
Crowd funding Platforms-
Reward based Crowdfunding platforms- will help you to raise funding to build a proto-type and market test a
great idea or product.- Great for pre-selling cool tech hardware.
• www.kickstarter.com (UK from the 31st October)
• www.indiegogo.com (USA)
• www.peoplefund.it
• www.sponsume.com
• www.pleasefund.us
• www.wefund.com
• www.pozible.com
• www.crowdfunder.co.uk
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19. Business Angels
Angel Investment - £100-500K Seed Investment
• NESTA - www.nesta.org.uk/investments
• British Business Angel Association- www.bbaa.org.uk
• Capital 4 Enterprise- http://www.capitalforenterprise.gov.uk/portfolio
• Angel Co-Fund- http://www.angelcofund.co.uk/
Seed/ Early stage Investment Platforms:
- www.crowdcube.com
- www.seedrs.com
Capital Enterprise top 10 Angel Network in London
1. London Business Angels: http://www.lbangels.co.uk
2. Oxford Early Investments- http://www.oxei.co.uk/about.php
3. Envestors- www.envestors.co.uk
4. Finance South East- www.thefsegroup.com
5. Angels Den- www.angelsden.com
6. Venture Director- www.venturedirector.com- www.boundarycapital.com
7. Start-up Funding Club- http://www.startupfundingclub.com/
8. E100- London Business School -
http://www.london.edu/facultyandresearch/subjectareas/strategyandentrepreneurship/enterprise100.html
9. #1 seed- www.number1seed.co.uk
10. Ascension Ventures- http://www.ascensionmedia.com/ascension-ventures.php
For an alternative list check out- http://www.designcity.co.uk/angelnews/edition_94.htm#article1
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20. Early Stage VC’s & Super Angels
Accel Partners: Stage agnostic, see their portfolio here. • ACT: Early to mid-stage, see their portfolio here.
• Bloom Equity: Early to mid-stage angel syndicate, see
Anthemis Investment- Stage Agnostic, see portfolio here their portfolio here.
• DFJ Esprit: Early to mid-stage, see their portfolio here.
Balderton- Stage Agnostic- See there portfolio here
• Charlotte St: Early to Mid Stage, see there portfolio here
Eden Ventures- Early- mid stage – see there portfolio here • Dawn Capital: Early to mid-stage, see their portfolio
here.
Index Ventures: Stage agnostic, see their portfolio here. • Notion Capital –
• Doughty Hanson- Stage Agnostic, see portfolio here
Passion Capital: Early Stage, see their portfolio here. • Seraphim Capital – Early-mid stage see there
portfolio here.
Delta Partners: Early to mid-stage, see their portfolio • Kernel Capital: Early stage, see their portfolio here.
here.
• Octopus Ventures: Early to mid-stage, see their portfolio
here.
Atomico: Stage agnostic, see their portfolio here.
• Hoxton Ventures ; Early stage with disruptive tech.
Profounders: Early and mid-stage, see their portfolio • EC1 Capital: Early stage, see their portfolio here
here.
• Connect Ventures- Early stage and very New.
AIB Seed Capital Fund: Managed by two funds which • Pen Tech Ventures- Early Stage to mid- See portfolio Here
invest under-€250k and over-€250k, see their
portfolio here. Alternatively you can check out Crunch Base / Angel List
http://www.crunchbase.com/financial-organizations
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21. Active London Angels…
• http://bamlondon.blogs
pot.co.uk/p/angels_16.
html
• https://angel.co/
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22. Specialist Funds
Women
- Stargate Capital- Trapezia- http://www.stargatecapital.co.uk/trapezia_1.aspx
- FSE- Incito- http://thefsegroup.com/investors/business-angels/incito-ventures/
- Aspire Fund - http://www.capitalforenterprise.gov.uk/files/Aspire%20Information%20Leaflet%20(v%202)%20Flyer%20brochure.pdf
Green
- Bridges Sustainable Fund- http://www.bridgesventures.com/sustainable-growth-funds
- Ingenious Media- Cleantech Fund http://www.ingeniousmedia.co.uk/investments/investment-
opportunities/clean-energy
- Carbon Trust- http://www.carbontrust.com/about-us/our-investments
- Low Carbon Accelerator- http://www.lowcarbonaccelerator.com
- CT Investment Partners- http://www.ctip.co.uk
- Wellington Partners- http://www.wellington-partners.com/wp/index.html
Social
- Big Society Capital- http://www.bigsocietycapital.com
- Sources of Social Finance- http://www.bigsocietycapital.com/finding-the-right-investment
- Bridges Venture Fund http://www.bridgesventures.com/social-entrepreneurs-fund
- Big Issue Investment- http://www.bigissueinvest.com
- Social Finance- http://www.socialfinance.org.uk
- Social Investment Fund- http://www.thesocialinvestmentbusiness.org
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