Angel funding - Susan Banfield, BAFI

1. Susan Banfield – Associate Partner, BAFI
Business Angels Finance International LLP
T: 01789 228014
M: 07941 136477
e: susan.banfield@bafi.co
Web: www.businessangelfinance.co.uk
Finance for Innovation
Crowd Funding
and Angel
Finance for Your
Great Idea…

2. Finance for Innovation
Today’s Agenda:
• Sources of funding and investment for Innovation
• What do you really need?
• Where do you go for help?
• What should I do? The pros and cons
• The investment and funding timeline
• How to get ready for investment
• What do you need to do to succeed?
• How to avoid the pitfalls!
And then some parting thoughts…..….s…

3. Finance for Innovation
It can feel like you are looking for a miracle!

4. Finance for Innovation
Your Sources of Investment:
• Family and Friends Funding
• Grants
• Matched Funding
• Banks
• Crowd Funding
• Angel Finance
• Venture Capital
• Public Listing
What’s right for you?

5. CapitalRequirement
Pre Seed : Seed : Start Up: Early Growth : Sustained Growth
3Fs
Loans, Grants
&
Crowdfunding
Venture
Capitalists
Public Listing
“The Debt &
Equity Gap - BAFI”
The UK Market - “Finance Ladder”
Finance for Innovation
www.businessangelfinance.co.uk

6. Finance for Innovation
Where can you go to for help?
• Your Accountant?
• Your Bank?
• A Business Mentor?
• An Innovation / Incubation Centre?
• The Internet?
• Fundraising Experts?
• Crowd Funding Platforms?
• Private Investors?
• Business Angels?
They will all want a business plan.

7. Finance for Innovation
How to get ready for investment…
• Start early enough
• Understand your various options
• Get help!
• Make sure you have an up to date business
plan and cash flow forecast, and…
• That you have all the right things in place:
• Shareholders’ agreements
• Directors up to date
• Insurances, etc.

8. Finance for Innovation
The 5 questions all Investors want the
answers to…
• How much investment is required?
• What is it needed for?
• Who are you and why should I invest in you?
• What percentage of your business am I
buying (for equity investors)?
• When will they get their investment back …
(& how much?!)
These apply to all funders!

9. The Investment Timeline…
-3 to 0 Month 1 Month 2 Month 3+
Planning
Docs
Promotion
Dialogue
Negotiation
Agreement
Due Diligence
Legal
Completion
Finance for Innovation
www.businessangelfinance.co.uk
Please give yourself enough time!

10. Finance for Innovation
What do you really need…
To fund your idea?
• Is Crowdfunding the right thing for you?
• Or do you need Angel Finance Debt and / or
Equity?
• Most businesses do not understand debt
• There are a lot of funding sources out there
• Most businesses don’t have the time or resources
to find the right finance for their business
How investment ready are you?

11. Finance for Innovation
What should I do? The pros and cons:
Grants & matched funding:
• Lots of stuff out there, but…
• You have to hunt for them, or get help
• Not going to work for everyone
• Understand what is funded and how to apply
• Pros – matched funding is helpful, grants can
contribute to overall costs or small projects
• Cons – lots of hunting and paperwork
• So – make sure it’s what will help and it does not
constrict you too much

12. Finance for Innovation
What should I do?
The pros and cons:
Crowdfunding:
• The latest buzz
• But do most businesses understand how to use it?
• Comes in all forms,
loans/debt/equity/donations/rewards
• Pros – great for smaller raises – it gives access to
capital. Can be free if it fails
• Cons – Not going to work for everyone – ideally you
need to be high-tech, innovative and social

13. Finance for Innovation
Case Study 1 …
Crowd funding – Food sector
Yau Sauces
• Established Product line – supplied to Harrods
• Expansion planned through Multiples (eg Ocado)
• Need £140k to invest in equipment
• Debt funding through Crowd Platforms
• Security? PGs – Serviceability test?
How investment ready are you?

14. Finance for Innovation
What should I do? The pros and cons:
Angel Investment Debt & Equity Investment:
• You need to be serious about the process
• On top of your business plan & cashflow
• Often the default is equity, but consider debt too as
it can be less costly and blended solutions can work
• If the banks can’t play then Angel Investment can
be a great help
• Pros – the right money for serious businesses
• Cons – you need to be prepared to pay for the right
support

15. Finance for Innovation
Case Study 2 …
Equity Investment
• Established business and good management team
• Expansion and growth strategy evident in BP
• £100K Equity investment for 30% shares
• Projections indicate Investor returns of 3x in 3
years
How investment ready are you?

16. Finance for Innovation
What do you need to do to succeed?
• Get the right team around you
• Understand your numbers
• Think about who you want to invest
• Get the right advice
• Be clear about your options
• Put a “proper” business plan together
Be clear about who the right investors are and
what they need to know about you.

17. Finance for Innovation
How to avoid pitfalls…
• Research your options
• Build in enough time and choices so
you don’t have to go with the only option
• Not everyone gets money – how resilient are
you and what’s your ‘Plan B’?
• Make sure your business is credible to
investors – answer the 5 questions:
• Build your team and expertise
• Be clear on what the money is for
• Be clear on the exit strategy for the money

18. Finance for Innovation
Some parting thoughts…
• You need a good proposition, and most
importantly….
• To reassure your investor that their money is safe
and they will get it back.
Susan Banfield – Associate Partner, BAFI
Business Angels Finance International LLP
T: 01789 228014
M: 07941 136477
e: susan.banfield@bafi.co
Web: www.businessangelfinance.co.uk