Accelerate 2014 - Sheffield (www.acceleratesheffield.co.uk) What Objections? Provide Confidence Establish the Relevant Criteria Understand the Capital Differences Fundamental Capital Criterion and Social Mitigation Describe the Risk Forecast the Total Reward Improve the Opportunity Start-up Difficulties Attracting Investment

1. ACCELERATE 2
Challenge Event
Overcoming Investor Objection
Peter Garnham
25 March 2014

2. Considerations
• What Objections?
• Provide Confidence
• Establish the Relevant Criteria
• Understand the Capital Differences
• Fundamental Capital Criterion and Social Mitigation
• Describe the Risk
• Forecast the Total Reward
• Improve the Opportunity
• Start-up Difficulties
• Attracting Investment

3. What Objections?
• We don’t believe it!
• It doesn’t fit our criteria well enough!
• We have better opportunities for the use of our
capital!

4. Provide Confidence
• A Business Plan describes the future and how it will
come to pass
• The Plan contains some facts and usually a lot of
‘persuasion’
• Describes how it will meet the essential criteria as
part of the objectives
• The ‘business risk’ is that this view of the future will
not be fully achieved (fulfilment and sales)
• The reader will have their own level of experience
and review the Plan in that light

5. Establish the Relevant Criteria
• Each type of financial product and each supplier has
different criteria for its availability
• Products:
– Equity (investment)
– Debt (loans of some type)
– Grant (non-repayable or subject to conditions)
• Supplier:
– Self, family & friends, ‘Business Angels’, crowd funding
– Financial institutions, banks, venture capital funds
– Public sector (EU, UK govt,)
“He who pays the piper calls the tune”

6. Understand the Capital Differences
• Capital is a necessary asset to be used in your
business
• Different types of capital products are suited to
different stages of business development
• Stages:
– Idea, proof of concept (working up the plan)
– Start-up (ready to start making sales)
– Early stage (first 3 years of trading)
– Developing (usually profitable and growing)

7. Fundamental Capital Criterion
and Social Mitigation
Expected
Return %
Risk
0
Risk-free
Rate
Risk v Capital Return Required Reward
Capital Return
Social Return
X
Increase
Reduce

8. Describe the Risk
• Business Plan to describe the opportunity:
– Confirmation to yourself
– Convince relevant source of capital
– Show how the opportunity will meet the specific
criteria
• Provides confidence as to the level of risk
inherent in the business
• By ‘realistic’ assessment of the risk points and
providing credible mitigation (in the view of the
source of capital)

9. Forecast the Total Reward
• Create realistic sales forecasts
• Provide detailed financial projections
• Financial – where does your business sit on the line?
• Non-financial Social Impact
• The non-financial allows the financial to be below
the capital return line

10. Improve the Opportunity
• How much reward is required in competition with
other opportunities?
• Financial:
– Increase the price paid (% of equity given up, interest rate
and fees)
– Provide security
• Non-financial wider impact:
– Feel good factor
– Personal employment
– Third party employment
– Social benefit
– General economic development

11. Start –up Difficulties
• Business Plan provides a very uncertain (but
attractive) view of the future
• Little capital already in the business
• No trading history and little security

12. Attracting Investment
• Potential capital return:
– Innovative product
– Large and expanding market (but this is not the sales plan)
– Ability to defend market position once achieved (IP)
• Reduced risk:
– An experienced management team
– Management that has started a successful business before
– Experience was gained in the same industry
• Clearly defined and high social impact

13. Make good use of all the help
you can!