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Finance in the South WestPaul Butler, Partner 22 February 2017
pkf-francisclark.co.uk
It’s been described as ‘speed dating with funders.’
Owners looking to expand their business – or people planning to start their own venture – are invited to the fifth annual Finance in the South West seminar.
Organised by chartered accountants and business advisers PKF Francis Clark, more than a dozen sources of grant, debt and equity funding as well as business support agencies will be taking part.
Places still available for ‘speed dating with funders’ event
pkf-francisclark.co.uk
• Follow us on twitter @pkfFrancisClark
• Tweet about this event using #FCFinanceSW
pkf-francisclark.co.uk
PKF Francis Clark
PKF Francis Clark offices
pkf-francisclark.co.uk
Presentations
And more… (24 presentations in total, covering “full range” of funding and business support options)
pkf-francisclark.co.uk
Warning mechanisms
One minute to go
pkf-francisclark.co.uk
Structure of morning
• Background, Equity, Debt and Business Support (8.30am to 10am)
• Heart of SW LEP• Banks: an overview• Equity and Grants• Growth Hub
• Coffee Break (10am to 10.25am)
• Funding, Business Support, Investment Ready and SME perspective (10.25am to 12noon)
• Start Up (trading for < 2 years) • or Established Business
• Lunch and Networking (12noon to 1pm)
Chris Garcia, Chief Executive
Update from the Local Enterprise
Partnership
The Heart of the South West LEP
Repositioning the Heart of the South West’s profile and reputation, nationally and globally. Connecting people, places, businesses and ideas to transform our economy, securing investment in infrastructure and skills to create
more jobs and enable rewarding careers.
Your LEP - one of 38 What the LEP is not:An agency of Government like RDA, designed as a delivery arm of central government, nor are we simply a funding body.
What the LEP is:A local platform for collaboration across public and private sectors, to achieve mutual economic aims and we
• Identify common priorities• Attract resources & investment• Make a difference to prosperity
Examples of what we support:• Funding bids to national Government e.g. Growth Deal• Influencing national Government strategy e.g. road and rail• Strategic partnerships e.g. with neighboring LEPs
Progress since our AGM in October
Growth Hub progressing
Partnering & influencing
Delivering £485m portfolio• 47 projects
• 172m Growth Deal 1&2 funding
• £22.5m Growing Places Fund
Influencing delivery of European Structural Funds
Securing Investment Managing & delivering
Environment
Rural Growth Network
Awaiting Growth Deal 3
Focus: achieving best practice transparency &
governance
Government’s Cities and Local Government team highlighted HotSW were ‘ transparent and informative beyond our remit’
New Nuclear
Devolution
Road & rail improvements
Enterprise Zones
Broadband
Housing
Careers
Brexit?
There’s a lot going on
Productivity Plan?
Industrial Strategy? Devolution?
1. Growing productivity / prosperity2. Competing for the resources to do this
Same outcomes!
Attracting investment
Who’s talking about a Great South West:
Who’s talking about a Great South West:A brand
supported by business (building
on the SW Growth Charter)
A brand across higher skills and
innovation providers
A brand supported by
Local Authorities and LEPs
THANK YOU &
www.heartofswlep.co.ukPlease register for our monthly Newsletter &
twitter at www.heartofswlep.co.uk/newsletters
@HeartofSWLEP
Banks - an overviewGeoff Harding, Deputy Agent, South West Agency
Exeter, 22nd February 2017
Outline
Resilience of the financial system
Credit conditions
Hurdle rates and interest rates
Results of the 2016 stress test
2016 stress test incorporated: • a synchronised UK and global
recession; • shocks to financial market prices;
and • a stress of misconduct costs.
More severe than stress tests ran in 2014 and 2015.
‘Hurdle’ was tougher, particularly for systemically important banks.
Peak-to-trough falls in nominal house prices in Bank of England stress-test scenarios and previous UK recessions(a)
UK banks have built their capital resilience over time
Sources: PRA regulatory returns, published accounts and Bank calculations.
Major UK banks’ capital ratios
13.5% RWA at Sept 2016,compared with internationally-agreed 4.5%
Some major UK banks continue to face the challenge of weak profitability
Reflects:• Costs related to past
misconduct• Weak profitability of UK
banks’ investment banking businesses as certain business lines have shrunk materially.
Persistently weak profitability diminishes banks’ future ability to rebuild capital following a shock.
UK banks’ profitability remains low
UK bank funding spreads have fallen slightly
Sources: Bank of England, Bloomberg, IHS Markit and Bank calculations.
The recent pickup in some measures of uncertainty was not accompanied by a sustained tightening in credit conditions
Sources: Bloomberg, Consensus Economics, Dow Jones Factiva, GfK (research on behalf of the European Commission), Thomson Reuters Datastream and Bank calculations
Lending growth has risen in recent years
Agents’ assessment of corporate credit availability(a)
From Agents’ Summary of Business Conditions 2016Q4
Corporate credit availability(a)(b)
Perceived availability and cost of credit for large and small firms
Sources: Deloitte CFO Survey, FSB Voice of Small Business Index, Bank calculations.
Obstacles to investment over the past five years(a)
Source: Bank of England Finance and Investment Decisions survey.
Rates of return on capital and cost of capital compared to survey measures
Source: Bank of England, ONS Profitability of UK companies and Bank of England Finance and Investment Decisions Survey.
Long-term interest rates have risen globally
Sources: Bloomberg and Bank calculations.
Market-implied paths for short-term interest rates have risen internationally
Sources: Bank of England, Bloomberg, European Central Bank (ECB) and Federal Reserve.
Banks - an overviewGeoff Harding, Deputy Agent, South West Agency
Exeter, 22nd February 2017
James Baughan
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RICHARD ECKLEYSenior Investment Analyst
Equity Crowdfunding
The Power of the Crowd
ANGELS
CROWD
WHY CROWDFUND?
Global Investor Reach Cost effective Marketing effect Crowd feedback Expertise Fair Terms
Financial return ‘Armchair Dragon’ Support friends and family Access exciting
investments Lower/spread risk Simple to invest
Under 25
25-34
35-44
45-54
55-64
65 or over
DIVERSE COMMUNITY
Gender split• 74% male, 26% female• 3% of angel network members are female• 4% of VC partners are female• 9% of AngelList members are female
£70,000Annual salary
42%Investment from high net worth &
sophisticated investors
Technology Marketing Financial Services Management
Consulting VC and Private
Equity
TOP JOBS TOP 5 investor employers
DEMOCRATISATION OF INVESTORS
The Evolution of Success
The Evolution of Success
The Evolution of Success
2011 2012 2013 2014 20150%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Percentage of Seed deals crowdfunded*
2011 2012 2013 2014 20150%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Percentage of Venture deals crowdfunded*
£212 MILLION +Successfully raised
2011 2012 2013 2014 2015£0
£10,000,000
£20,000,000
£30,000,000
£40,000,000
£50,000,000
£60,000,000
£70,000,000
2011 2012 2013 2014 20150
20
40
60
80
100
120
140
483Successful raises
£28,829,372
£66,096,144
£88,845,206
Stage of GrowthStart up Early stage Growth
41%
35%
24%
£1,000,000Largest single investment
£10,000,000Biggest deal
£440,242Average deal
£1,789Average investment
52%Pitch success rate
£4,387,087Average amount invested per month
348,000+Investor community
2011 2012 2013 2014 20150
20,000
40,000
60,000
80,000
100,000
120,000
WHAT NEXT
THANK YOURichard Eckley Senior Investment Analyst
@re_crowdcube
www.crowdcube.com
@crowdcube
Angel Network: MyVANRob Misslebrook
Introduction
• Mylor Ventures Angel Network (MyVAN)– Business Angels with a SW focus, members of the
UKBAA– Active Experienced investors with added value:
• Networks and sales connections• Technical• Bring their own disciplines
– Invest their own cash– Will often take a board or NED position
An integrated Approach
• Mylor Ventures Angel Network (MyVAN)and/or….
Your own cashFamily and FriendsCrowd (Crowdcube, Seedrs, Funding Circle)
and/or….Grants[VCs – EBITDA>£0.5m]
What Angels Look For:
• Businesses with– Strong Value propositions– Large markets– Intellectual Property– Credible Management
• Capital Efficient • Gross margin must cover HR• EIS/SEIS• Willingness to let Angels participate• [NED Register]
MyVAN ref Crowd & Grants
• Crowd (Fixed timeline)– Pump priming (MyVAN)– Detailed preparation– Alongside corporate/VC/PE
• Grants (Non dilutive)– When available– Reduce overall risk
What Angels Look for - Preparation
• Investment Readiness Toolkit– Templates
• IMs, Models, Presentations– Documents
• NDAs, Contracts, SH Agreements– Policies
• Procurement, Ethical, Environmental
• Its always a buyers market but good companies well prepared always get funded
Process - Delivery
• MyVAN– Apply at www.mylorventures.co.uk/angel-network/– Investment Readiness (1 – 2 months)– Summary Document– ‘yes/no’– Meetings/Skype– Agreement/Participation– Execution
• Crowd – note timeline benefits• Grants – non dilutive but ensure focus is maintained
Grants - overviewDavid Armstrong
pkf-francisclark.co.uk
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What follows
pkf-francisclark.co.uk
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European Programme 2014 - 2020
• Funding aligned to the European Structural & Investment Funds Strategy
• Brexit?
• Administered via around “calls”
• Revolving door
• http://www.heartofswlep.co.uk/news/european-structural-and-investment-funds-strategy
pkf-francisclark.co.uk
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Rural businesses
• Good news!
• Size, location, activity..
Definition
pkf-francisclark.co.uk
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RDPE Growth Programme
• £12.4m - rural jobs, increasing growth and productivity
• Three themes:
1. Business Development (including Farm Diversification).
2. Food Processing (includes drinks).
3. Rural Tourism Infrastructure
• Separate presentation
pkf-francisclark.co.uk
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LEADER
• Local Action Groups (LAGs)
• Rural businesses, communities, farmers, foresters and land managers.
• Cross over with RDPE eg farm diversification, rural tourism BUT at lower thresholds
• https://www.gov.uk/guidance/rural-development-programme-for-england-leader-funding
• Devon Renaissance
pkf-francisclark.co.uk
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European Maritime Fisheries Fund
• Investment in fishing vessels, portside infrastructure and aquaculture
• Sustainability, health & safety, innovation and adding value rather than capacity
• 50% grant rate
• Projects to 2018 – dependent upon Brexit
• https://www.gov.uk/guidance/european-maritime-and-fisheries-fund-emff-before-you-apply
pkf-francisclark.co.uk
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The Carbon Trust Green Business Fund
• Greener businesses
• Energy surveys and workshops
• Procurement support - energy efficient lighting, heating or refrigeration equipment
• Grant of £10,000
• Until 2019 OR when funds run out
• https://www.carbontrust.com/client-services/programmes/green-business-fund/
pkf-francisclark.co.uk
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SWMAS – Local Manufacturing Advisory Programme
• Range of tailored business support
• Capital grant of £2,000
• https://www.swmas.co.uk/business-support/local-manufacturing-advisory-programme
pkf-francisclark.co.uk
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Innovation / R&D
Innovate UK:
• Sector specific and open rounds
• www.gov.uk/government/organisations/innovate-uk
Horizon 2020 – SME Scheme:
• Similar to the Old SMART scheme
• http://ec.europa.eu/easme/en/sme-instrument-factsheets
R&D Tax Credits
pkf-francisclark.co.uk
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Keeping up to date
www.francisclark.co.uk/services/corporate-finance/grant-advisory/
one agency
Rural Development Programme forEngland - The Growth Programme
Grant Funding Opportunities
Angela Quinn, Area ManagerRural Payments Agency
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Purpose
• Grant funding available for rural businesses
• Application process and timescales
• Further information and support
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Background• RDPE Growth Programme provides funding for Projects in England which
creates jobs and growth in the rural economy.
• The Government has confirmed that it will guarantee funding for RDPE Growth Programme grants if these are agreed and signed before the UK’s departure from the EU subject to 2 conditions (1) VFM (2) Priorities
• £120 million is now available through three new national calls for projects. The calls have been developed in collaboration with Local Enterprise Partnerships (LEPs) and will be open to support:
Business development Food processing Rural tourism infrastructure.
• Of that £120 million, over £12 million is available for rural businesses whose projects are located in the Heart of the South West Local Enterprise Partnership (LEP) area.
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Business Development Grants £2,784,740Who can apply? • Micro & Small rural businesses (and farmers who are diversify into non-
agricultural activity) are eligible to apply, and your project must be in a rural area of the LEP.
What are the grants for? • To help rural businesses grow and create more jobs. • Grant funding can help pay for (list of ineligible costs will be available in the
handbook): constructing or improving buildings buying new equipment and machinery
How much money can you apply for? • Grants can cover up to 40% of eligible costs of a project. The minimum
grant for the Heart of the South West LEP is £35,000 (minimum project size of £87,500) with State aid rules limit funding to €200,000, around £170,000
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Food Processing Grants £7,540,000Who can apply? • Any size Food and drink business can apply that processes agricultural and
horticultural products in rural or urban areas e.g. meat, milk, grain and root vegetables.
What are the grants for? • To help businesses grow and create new jobs. • Grant funding can help pay for (list of ineligible costs will be available in the
handbook): constructing or improving buildings buying new equipment and machinery
How much money can you apply for? • A minimum of £35,000• Intervention dependent on nature of activity, for example primary agricultural
production (annex 1) in and out of process could be eligible for up to 40%.
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Tourism Infrastructure Grants £2,088,555Who can apply? • If the project is commercial and will make a profit, only small businesses and
farmers who want to diversify can apply. • If the project won’t make a profit, a wide range of organisations can apply
(including public bodies and charities).
What are the grants for? • The grants will help fund the costs of capital expenditure on tourism
infrastructure. The aim is to support projects that will encourage more tourists to come, to stay longer and to spend more money in rural areas.
How much money can you apply for?• £35,000 minimum grant amount • Maximum grant rate for commercial projects will be 40%. Higher levels of
support available for semi-commercial (80%) and not-for-profit (100%) activity.
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Top Tips• Jobs & Growth – whole purpose of the Growth programme is to create jobs and
economic growth across rural areas, so tell us how your project will do this.
• Sell us your idea – explain clearly what your project does and how it will benefit the economy. It is a competitive process.
• Don’t ask for full amount if you don’t need it – we will assess your application on a competitive basis ensuring it represents value for money for the public purse. You should only apply for the amount you need to for the project to proceed.
• Show us what the grant funding means to your project – why is it critical you receive public money to enable it to happen.
• Do the market research – you have to be able to evidence that there is a real need/ demand for what you want to do.
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Further info
All information including EOI application is available on the www.gov.uk website input ‘Growth Programme’ or simply input ‘Growth Programme’ into Google search.
There is a handbook available for each of the 3 calls. Handbook includes:• who can apply• how and when to apply• which specific activities you can claim for (and which you can’t)• what grants are available in your area
• Please also contact the RPA if you would like to discuss your project/ would like any further advice: Rural Payments helpline : 03000 200 301 and/or
Email: GPEnquiries@rpa.gsi.gov.uk
Key Dates to Note:• EOI in by 31st January 2018• All projects must be delivered and claimed by December 2019
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David Hynd, Programme and Partnership Managerwww.heartofswgrowthhub.co.uk
Finance in the SW 2017
What is a ‘Growth Hub’ & Why?
• Growth Hubs are established within each Local Enterprise Partnership (LEP) area to address a policy drive for better connection between local and national business support and a simplified landscape.
• Heart of the South West Growth Hub is the first point of call for accessing local, regional and national business support initiatives.
• Delivered by our small team of Business Advisers supported by extensive knowledge resources and our dedicated website.
Key FactsFree service for any business based in Devon, Plymouth, Somerset or TorbayTo engage 4,200 businesses and introduce 840 businesses to funded support schemesHeart of the South West LEP’s main mechanism for engaging with businesses across
the area
The Productivity Challenge
Poor comparative skill levels
Labour market shortages Insufficient infrastructure and poor connectivity A lack of joined-up support for business Need for higher value industrial densities.
Productivity is c80% of UK average(based on GVA per job filled, 2013)
Business support confusion
Heart of the SW Growth Hub
A single point of access for businesses supportIntroduce you to grants, advice, eventsExtensive knowledge resources and a dedicated website
Growth Hub is…• Free, impartial business enquiry service• Advisers on hand to talk to you• Workshops with delivery partners• Factsheets on business topics• Dedicated business support website
Heart of the SW Growth Hub
A few headline statistics…Top sectors engagingo Manufacturing 18%o Professional services 16%o Wholesale & retail 10%
87% are established businesses13% are pre-starts
98%+ of businesses engaged are SMEs41% are sole traders
85% of businesses engaged have <10 employees (includes sole traders)
Trends in business support schemes
Heart of the SW Growth Hub
Over 1,600 business engaged since our launch in March 2016We have introduced 300+ businesses to specific schemes to meet their needsOur website shows all business schemes & lists free or subsidised events96% of respondents gave a rating of Very likely or Likely to recommend
Growth Hub is…• Making referrals to over 40
business support schemes• Signposting to over 190 sources
of support and guidance
Partner Briefing Pack
Partnership Working
For Stakeholders & Scheme Providers Partner Section on the Growth Hub website
http://www.heartofswgrowthhub.co.uk/partners/ Monthly Growth Hub Briefings
For Scheme Providers Complete a Business Support Provider registration form Tell us about services, workshops & events
For Commercial Providers – Free, Supplier Database Free directory of local businesses that offer advice, support and B2B services http://www.heartofswgrowthhub.co.uk/supplier-database/
Support & Grants to Grow My Business
New Schemes to look out for… coming soon ERDF Brokerage Service - face to face advice & Action Plan
- Growth Programme (modules for specific advice)
ERDF Social Enterprise Support - tailored support for social enterprises
ERDF Start-Up Support – workshops, advice and support for start-up businesses
(Actual scheme names & details to be confirmed)
Defra Growth Programme – RDPE Grants• Grants funded by the European Agricultural Fund for Rural Development
(EAFRD).• For (1)Rural Business Development (2)Tourism Infrastructure (3)Food Processing• Grants of up to 40% of project cost• Primarily for capital expenditure (e.g. equipment)
Success Story – Sweet Cumin
Adviser Laura Daniel worked to understand the business needs 1 to 1 business advice provided via our Growth Support ServiceIntroduced to Local manufacturing Advisory Programme
“It’s easy to get overwhelmed by all the business advice and support out there. The Growth Hub offers free support, and because it’s impartial it can help me concentrate on the right
support for me and my business.”
Bini Ludlow – Sweet Cumin• Cookery school teaching Indian and traditional
Gujarati cooking• Diversified into frozen prepared meals• Contacted us for help to expand the business
nationally
Get In Touch, Stay Updated
Telephone 03456 047 047
Email info@heartofswgrowthhub.co.uk
Website www.heartofswgrowthhub.co.uk
David.Hynd@heartofswgrowthhub.co.uk
Finance in the South WestPaul Butler, Partner 22 February 2017
pkf-francisclark.co.uk
Overview
- Always appear to be debt and equity financing options available
- Grant funding is often a possibility that is overlooked
- Discuss future plans with your advisors
pkf-francisclark.co.uk
Overview
“Finance and support for your business”• https://www.gov.uk/business-finance-support-finder
• ICAEW identified 362 lending institutions in the UK
• Opportunities• Mainstream banks• Debt alternatives• Equity sources• Grant funding• Tax reliefs
Break (25 mins)Best Mate Suite
Session 2 start time 10.25am• Iddesleigh Gallery - Upstairs
(< 2 years trading)
• Denman Suite
(Established businesses)
(c) copyright PKF Francis Clark, 2017
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PKF Francis Clark is a trading name of Francis Clark LLP. Francis Clark LLP is a limited liability partnership, registered in England and Wales with registered number OC349116. The registered office is Sigma House, Oak View Close, Edginswell Park, Torquay TQ2 7FF where a list of members is available for inspection and at www.pkf-francisclark.co.uk. The term ‘Partner’ is used to refer to a member of Francis Clark LLP or to an employee. Registered to carry on audit work in the UK and Ireland, regulated for a range of investment business activities and licensed to carry out reserved legal activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England and Wales. Partners acting as insolvency practitioners are licensed in the UK by the Institute of Chartered Accountants in England and Wales. A partner appointed as Administrator or Administrative Receiver acts only as agent of the insolvent entity and without personal liability. Francis Clark LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
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