Download - Options4 finance Robin Jackson

The Innovation Centre, University of Exeter, Exeter EX4 4RN

[email protected] - 01392 262300

© 2013 Peninsula Innovations Ltd All Rights Reserved, Peninsula Innovations Ltd.

Registered in England under No 06022710

Options 4 Finance

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Agenda

• Intros

– Robin Jackson, Director, Innovation Centre

– Ben de Cruz, Partner HWCA

• Housekeeping

• Aims

– Information to be best placed to secure finance when needed





Who are you?

• Start-up

– Track record

– Industry Knowledge

– Market acceptance

• Growth

– New or Existing Markets

– Current performance





How Much?

• Know how much you need

• Know what you are going to use it for

• Prepare a Business Plan

• Prepare financial forecasts





Your Investment?

• Risk – How much are you taking?

– You need to be “all in”

• Personal Investment

– If you’ve got it, use it

• Sweat Equity

– Difficult to assign value to

• Accounting to record personal investment





External Funding

• Don’t do it!

– Bootstrap

– Find your first customer

– Build Value

• Cash is King

• Accounting for profitability





Horses for Courses

• Know what you want the money for

– Differentiate between “start up costs” and “working capital”

– Very clear in business plan

• Know what type of finance suits your needs

– Target the appropriate source





The 3 Fs

• Friends, Family & Fools!

• Loan or investment

• Carries a Social Risk

• Always use contracts – not just handshakes!

• Structuring family loans





Grants

• Not always as good as they sound!

– Almost always matched

– Often lengthy applications

• Technology Strategy Board products

– Smart Awards

– Innovation Vouchers

• UKTI for export support

• Regional variations





Loans

• Must be repaid!

• Start-up Loans

– 18 – 30, average ~ £2.5K

• Funding Circle

– Crowd-sourced business loans

• Personal Loans or Credit cards - expensive

• Borrowing with confidence





Banks

• Don’t ignore them!

• Does your bank understand your business?

– Talk regularly to your bank contact

• Do you understand your bank’s business?

– How do they de-risk their business?

– How are their products designed to be used?



© 2013Peninsula Innovations Ltd All Rights Reserved, Peninsula Innovations Ltd.


Bank Products I

• Overdraft

– Liked by businesses, less so by banks

– Used to deal with cash flow variations, not purchases

• Invoice Financing

– Confidential

– Grows with the business



© 2013Peninsula Innovations Ltd All Rights Reserved, Peninsula Innovations Ltd.


Bank Products II

• Loan

– Secured

– Enable growth, rather than start-up

• Enterprise Finance Guarantee

– Developed to support loans where security is not available

– Same requirements as a loan

– Higher interest





Bank Products III

• Asset Finance

– Suitable for Plant, IT etc

– Better fit than normal loan

• Mezzanine

– High Growth Capital loan

– Finance for 3 – 7 years, no equity





Private Equity

• Investors require an exit – 3- 5 years, 5x

• Looking for something unique• You are placing a value on your business

– The more you achieve before investment, the higher the value

– Demonstrate increasing value

• Understand the rights of shareholders and what you are giving away

• Valuing your business





Crowd Funding

• Project or Equity

• Crowdcube – up to £150K or £250 in special circumstances

• Not a shortcut– Same requirements as any other source

• Get the ball rolling– Promote your pitch

• People still invest in people – even online

• Forecasting high growth





Angels

• An individual

• Offer experience as well as funds

– Sometimes want NED role

• Rarely a quick process

• Requires negotiation

• Consider phased draw downs

• Preparing for Due Diligence





Venture Capital

• A business

• > £1M

• Larger scale

• Board involvement

• Very High Growth

Download - Options4 finance Robin Jackson

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