SMEs – Funding through Transition presentation by Paul Taberner to the Realising Growth Potential of New Businesses Event. 01.06.2015 WBS@theShard

1. SMEs – Funding through Transition
Paul Taberner
Enterprise Ventures
1ST JUNE 2015

2. Enterprise Ventures
.
• 30 years in operation
• £160m funds under management
• £100m invested in 4 years into 774 transactions
• £30m invested in 2014 into 220 transactions
• £170m raised since 2003

3. Enterprise Ventures
.
• Wholly owned by its management team - empathy
• Hugely experienced investors and lenders – seen it all
• Team of 32 people (20 FCA threshold competent)
• Manchester, Liverpool, Preston and Barnsley offices
• CDFA member

4. Our investments
.
2011 2012 2013 2014
Amount Invested (£) 19,391,179 24,150,485 29,877,627 29,929,126
No of transactions (No) 177 167 212 218
Average Transaction (£) 109,555 144,614 140,392 137,290

5. Our clients
.

6. Paul Taberner ACIB
• Investment Director, 33 years in SME Banking and Finance
• 15 years Barclays Bank, Management Development Programme, UK and overseas
• Corporate Manager, then 8 years with Barclays Ventures
• Joined EV in 2005 as Investment Director, Equity
• Responsible for EV’s Loans activity

7. What to we mean by SME
• £38m turnover, sub 250 employees
• Vast majority “S”, some aspire to “M”, but not many
• Lifestyle v Growth – which has greatest impact?
• Role of the Public Sector?

8. Who funds what?
• Finance based on past performance – not ideal if growing or recovering
• BANKS
• “Future Certain”
• ALTERNATIVE and ASSET BASED LENDERS – costly
• “Future uncertain”
• EQUITY – not really - 99% of applicants fail

9. Funding Stages – Start Up
• Bootstrap, redundancy, savings, family
• Debt based on personal assets, not corporate performance
• Little financial discipline
• Stakeholders passive, no security or scrutiny
• Up to 5 people, owner multi tasks
• Economic impact limited, but……….
• Stay and become “lifestyle” or……………

10. Funding Stages – Growth
• Personal wealth/security exhausted
• Limited corporate security, track record and still small, sub 25 employees
• Need external funding, stock debtors etc.
• Unless high growth equity unrealistic, but have potential
• Mainstream debt funding – “The Funding Gap”
• Management, delegation – new skills
• Financial disciplines
• Stop here……………..financial impact of getting it wrong is significant

11. Funding Stages – Maturing
• 25 employees
• Management structure
• Finance function, stakeholder management
• Management Information, Forecasts – Bankers get a warm glow
• Glow heightened by SECURITY
• Track Record is the real tipping point (remember, Bankers look backwards)
• Public Sector job done, but Access to Finance is the problem post 2008

12. Why bother?
• “Small Businesses become Big Businesses” - rarely
• Employ
• Contribute
• Need help or finance, often both
• If you endorse Public Sector intervention, then must facilitate (not deliver) both
• Ultimate goal must be to achieve maturity of scale, and eliminate the dependency