s.banfield, bafi funding for innovation (angel networks)

Susan Banfield – Associate Partner, BAFIBusiness Angels Finance International LLP

T: 01789 228014M: 07941 136477

e: [email protected]: www.businessangelfinance.co.uk

Finance for Innovation

Crowd Fundingand Angel

Finance for YourGreat Idea…


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…


It can feel like you are looking for a miracle!


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?

Cap

ital

Req

uir

emen

t

Pre Seed : Seed : Start Up: Early Growth : Sustained Growth

3Fs

Loans, Grants&

Crowdfunding

VentureCapitalists

Public Listing

“The Debt &Equity Gap - BAFI”

The UK Market - “Finance Ladder”


www.businessangelfinance.co.uk


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.


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.


The 5 questions all Investors want theanswers 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!

The Investment Timeline…

-3 to 0 Month 1 Month 2 Month 3+

Planning

Docs

Promotion

Dialogue

Negotiation

Agreement

Due Diligence

LegalCompletion


www.businessangelfinance.co.uk

Please give yourself enough time!


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?


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


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


Case Study 1 …Crowd funding – Food sectorYau 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?



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


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



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 andwhat they need to know about you.

Finance for InnovationHow 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


Some parting thoughts…

• You need a good proposition, and mostimportantly….

• To reassure your investor that their money is safeand they will get it back.

Susan Banfield – Associate Partner, BAFIBusiness Angels Finance International LLP

T: 01789 228014M: 07941 136477

e: [email protected]: www.businessangelfinance.co.uk

s.banfield, bafi funding for innovation (angel networks)

Business

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pros matched funding

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investment timeline

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