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Early Stage Funding

.Presented by John Spindler CEO of

Capital Enterprise @ Imperial College 17th November 2012

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See Steve Blank, Four Steps to the Epiphany

Steve Blank- The Start-up Owners Manual

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Idea

Problem/ Space

Exploration

Design/ Prototype

Beta Test

Adapt/ PivotX2

Launch

Bootstrap- FFF

Innovation Awards

Start-up Loans

KickstarterSeedrs/ Crowdcube

SEIS Collective Funds

Super Angels/ Angel Groups

Early Stage VC’s

Start- Up Funding Roadmap.

“There is an opportunity gap when the scope for growing income at a very fast rate is

limited for those who have too little to invest , but expands dramatically for those who can invest a bit more.”- i.e. to win requires scale

Banjaree &Duflo- Poor Economics

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0 2 4 6 8 10 12 14 16

-20

-10

0

10

20

30

40

50Start-up Growth Pathway

Investment

Net

Inco

me

@capenterprise 6http://www.businessmodelgeneration.com/

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http://www.boardofinnovation.com/business-revenue-model-examples/

http://www.slideshare.net/AnnaPietka/e-commerce-new-business-models-14291829

Examples of the top 10 Business Models in 2011- 2012

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Runway Milestones are…?• How much/ little money is

needed to achieve the key milestones?

• Going to need a Budget, Cashflow forecast and “burn rate”

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Proving the Business Model Key Milestones

• Human Resources - Hiring key people that will make a huge impact on your organization (not just employees for workload purposes, but like a shit-hot marketing person, for example).

• Product – Minimum Viable Product- Beta Test- First Pivot-Full Launch- On-going iterations • Market – Market validation. As in, first customers, or first paying customers, etc • Funding – Maybe some money being committed to a round that the investor in question can lead or

participate in.

Other examples of milestones include*:• Proof that you can work together as a team, usually historical evidence• Proof that you can build something, i.e. working prototype• Proof that it’s useful to someone – first users and clients• Proof that you can talk to investors – every financing round, even small ones• Proof that you can talk to audiences – 100k users or 1M users or 10M users…• Proof that the initial team is able to attract talent –• Proof that ecosystem agrees with your ideas – bringing respected industry advisors partners on board• Proof that there is market – £1M annually/ Proof that the market is big! – £25M annually and beyond• Proof that you can manage your finances – cash-flow positive operation• Proof that you can scale – £10M annually within 3-5 years.

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Funding Options

Information:

• Capital Enterprise What’s On in London- www.capitalenterprise.org/whats-on • Start- up Britain - http://www.startupbritain.org • British Library- www.bl.uk/bipc • Bootlaw- http://bootlaw.com/ • HMRC Small Company Enterprise Centre- Source of advice and help

http://www.hmrc.gov.uk/manuals/vcmmanual/VCM10050.htm• HMRC R& D Tax Credits www.ucl.ac.uk/advances/advances-news/hmrc• HMRC Guide & Support- http://capitalenterprise.org/guide-to-rd-tax-credits • British Business Angel Association: www.bbaa.org.uk • Guide to Early Stage Investment: http://

www.paloalto.co.uk/about_us/Early_Stage_Investment_by_Alan_Gleeson.pdf• Start-ups on Air at Google Campus- https://

docs.google.com/spreadsheet/viewform?formkey=dEpuYlRFRFJ6SUVDdHVLRms3YmdBcmc6MQ• Hubventurelabs - http://hubwestminster.net/hubventurelabs

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Need less than £10K to start?

- Sources of Grants- www.j4b.co.uk - Competition funding £1000 issued to 10+ businesses per month- http://www.shell-livewire.org - Princes Trust http://www.princes-trust.org.uk/need_help/enterprise_programme.aspx - £1000- £10,000 Enterprise Loans for Under 25’s- www.startuploanslondon.co.uk or www.startuploans.com - New Enterprise Allowance Scheme – Check who delivers the scheme in London by e-mailing Capital Enterprise.- Community Development Finance Associations- http://www.cdfa.org.uk - Also check out North London Community Finance- ELSBC Access to Finance – Business Plan support for those looking to raise up to £10K• Soft loans for Creative Businesses- http://www.creativeindustryfinance.org.uk/

Need Less than £10K to Launch a

business

No Funds

Grant- www.j4b.co.uk

Unemployed? New Enterprise Allowance Scheme

Self Fund

BorrowWrite a simple

Business Plan & 12 month cashflow

Community Development

Finance Institution

Bank

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Funding Product Development

Grants & Awards General• J4B- Portal for grant finding http://www.j4b.co.uk• Technology Strategy Board ( R&D Funding) - http://www.innovateuk.org -

http://www.innovateuk.org/content/competition/grant-for-rd-single-business.ashx• Knowledge Transfer Networks- www.innovateuk.org • London European Enterprise Network- http://www.een-london.co.uk • E Funding for SME R&D - http://www.eurostars-eureka.eu/what.do• EU Funding for R&D collaborations: http://ec.europa.eu/research/participants/portal/page/calls • Knowledge Transfer Partnerships funding support-

http://www.ktponline.org.uk/ktp-what-will-it-cost-my-business

Translation/ Follow on research funds. • www.rdfunding.org.uk/bulletin/queries/Search.asp?TheCloseMonth=July&TheYear=2011.• http://www.rcuk.ac.uk/kei/ktportal/Pages/Followon.aspx• https://ktn.innovateuk.org/web/145175/overview• http://www.ahrc.ac.uk/FundingOpportunities/Pages/BrowseOpportunitiesOld.aspx • http://www.ahrc.ac.uk/Pages/default.aspx • http://www.theculturecapitalexchange.co.uk/

Investors want ….?

Investors want to find..

1. Skilled and credible management team

2. BIG Market Opportunity- a big problem for a potential large set of customers that you can solve?

3. The Idea/ Prototype to be proven and market validated.

4. No Technical Risk5. Evidence that the Business Model is

both repeatable and scalable.6. Business Model ready to execute7. Road Map & Forecasts based on

proven assumptions8. Adequate financial returns ( 10X

within 3 years?)9. People they can trust/ work with10. A clear exit route- How will they claim

there reward?? @capenterprise 13

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Seed Enterprise Investment Scheme-SEIS is a tax break launched in April 2012 for UK tax payers to encourage them to buy shares in start-up companies registered in the UK The Facts: • SEIS investors can input £100,000 in a single tax year rising to a maximum £150,000 over two or

more tax years in to a single company• Investors cannot control the company receiving their capital• Investors pick up 50% tax relief in the tax year the investment is made, regardless of their

marginal rate.• In the 2012-13 tax year, tax payers can roll any chargeable gain in the tax year in to a SEIS with a

full capital gains tax exemption (another 28%)• The business must be a start-up company -registered in the UK within 2 years of claim. • The company must not employ more than 25 workers.• The company must have assets of less than £200,000.• The company has to trade in an approved sector – generally not in finance or investment, for

example, a property company raise capital as a SEIS.

SEIS is…… “a game changer”?

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My slide deck is…http://www.slideshare.net/slidesthatrock/how-to-pitch-a-vc-redesigned

Ten slides. Ten is the optimal number of slides in a PowerPoint presentation because a normal human being cannot comprehend more than ten concepts in a meeting—and business angels are very normal. If you must use more than ten slides to explain your business, you probably don’t have a business. The ten topics that an investors cares about are:

1. Summary and call to action/ what do you want?

2. Problem

3. Your solution

4. Business model

5. Underlying magic/technology

6. Marketing and sales

7. Competition

8. Team

9. Projections and milestones

10. Status and timeline

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Funding the RunwayAccelerators : Training & Mentoring programmes that provide fast-track to seed funding forScalable new businesses• Lean Start-up : - http://be.foundercentric.com/ • Start-Up Weekend: http://london.startupweekend.org • Launch 48: http://launch48.com• Tech Hub : http://www.techhub.com – Google Campus- http://www.campuslondon.com/ • FIG- http://www.findinvestgrow.com/ • Y-combinator- http://ycombinator.com/ • Tech Stars- http://www.techstars.com/ • Seed Camp: http://www.seedcamp.com ( Applications open)• Hackfwd: http://hackfwd.com • Emerge Venture Labs- http://www.theemergelab.org • Ignite 100- http://ignite100.com • BBC Worldwide Labs- http://www.bbcworldwide.com/digital/labs.aspx • Springboard- http://springboard.com/ - http://www.f6s.com/profile/1961#programs/ajax-application • Student Start-ups- http://studentupstarts.com • Accelerator Academy- http://acceleratoracademy.com • Fintech Innovation Labs- https://www.fintechinnovationlablondon.co.uk/about.html#4 • Wayra- http://wayra.org/en/wayra • Euclid Opportunities- ( Fin Tech Only) http://euclidopportunities.com/ • Nreduce- Virtual Y-Combinator- http://nreduce.com/ • Innovation Warehouse- http://www.theiw.org • Healthbox- http://www.healthboxaccelerator.com/ • Collider12- http://collider12.com/

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CrowdfundersCrowd funding Platforms- Reward based Crowdfunding platforms- will help you to raise funding to build a proto-type and market test a great idea or product.- Great for pre-selling cool tech hardware. • www.kickstarter.com (UK from the 31st October)• www.indiegogo.com (USA)• www.peoplefund.it• www.sponsume.com • www.pleasefund.us • www.wefund.com • www.pozible.com • www.crowdfunder.co.uk

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Seed Funders (SEIS)1. http://www.boundarycapital.com2. http://fundingalpha.co.uk 3. http://www.dfjesprit.com 4. http://www.lbangels.co.uk 5. http://www.ascensionmedia.com 6. http://www.ingeniousmedia.co.uk 7. http://www.findinvestgrow.com 8. http://www.oxfordtechnology.com 9. http://jensonseedeis.com

Crowd SEIS funders. - www.crowdcube.com - www.seedrs.com

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Business AngelsAngel Investment - £100-500K Seed Investment

• NESTA - www.nesta.org.uk/investments • British Business Angel Association- www.bbaa.org.uk • Capital 4 Enterprise- http://www.capitalforenterprise.gov.uk/portfolio • Angel Co-Fund- http://www.angelcofund.co.uk/

Seed/ Early stage Investment Platforms:

- www.crowdcube.com - www.seedrs.com

Capital Enterprise top 10 Angel Network in London1. London Business Angels: http://www.lbangels.co.uk 2. Oxford Early Investments- http://www.oxei.co.uk/about.php3. Envestors- www.envestors.co.uk4. Finance South East- www.thefsegroup.com5. Angels Den- www.angelsden.com6. Venture Director- www.venturedirector.com- www.boundarycapital.com 7. Start-up Funding Club- http://www.startupfundingclub.com/ 8. E100- London Business School - http://

www.london.edu/facultyandresearch/subjectareas/strategyandentrepreneurship/enterprise100.html 9. #1 seed- www.number1seed.co.uk 10. Ascension Ventures- http://www.ascensionmedia.com/ascension-ventures.php

For an alternative list check out- http://www.designcity.co.uk/angelnews/edition_94.htm#article1

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Early Stage VC’s & Super AngelsAccel Partners: Stage agnostic, see their portfolio here.

Anthemis Investment- Stage Agnostic, see portfolio here

Balderton- Stage Agnostic- See there portfolio here

Eden Ventures- Early- mid stage – see there portfolio here

Index Ventures: Stage agnostic, see their portfolio here.

Passion Capital: Early Stage, see their portfolio here.

Delta Partners: Early to mid-stage, see their portfolio here.

Atomico: Stage agnostic, see their portfolio here.

Profounders: Early and mid-stage, see their portfolio here.

AIB Seed Capital Fund: Managed by two funds which invest under-€250k and over-€250k, see their portfolio here.

• ACT: Early to mid-stage, see their portfolio here.

• Bloom Equity: Early to mid-stage angel syndicate, see their portfolio here.

• DFJ Esprit: Early to mid-stage, see their portfolio here.

• Charlotte St: Early to Mid Stage, see there portfolio here

• Dawn Capital: Early to mid-stage, see their portfolio here.

• Notion Capital – • Doughty Hanson- Stage Agnostic, see portfolio here

• Seraphim Capital – Early-mid stage see there portfolio here.

• Kernel Capital: Early stage, see their portfolio here.

• Octopus Ventures: Early to mid-stage, see their portfolio here.

• Hoxton Ventures ; Early stage with disruptive tech.

• EC1 Capital: Early stage, see their portfolio here

• Connect Ventures- Early stage and very New.

• Pen Tech Ventures- Early Stage to mid- See portfolio Here

Alternatively you can check out Crunch Base / Angel List http://www.crunchbase.com/financial-organizations

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Active London Angels…

• http://bamlondon.blogspot.co.uk/p/angels_16.html

• https://angel.co/

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Specialist FundsWomen

- Stargate Capital- Trapezia- http://www.stargatecapital.co.uk/trapezia_1.aspx- FSE- Incito- http://thefsegroup.com/investors/business-angels/incito-ventures/- Aspire Fund - http://www.capitalforenterprise.gov.uk/files/Aspire%20Information%20Leaflet%20(v%202)%20Flyer%20brochure.pdf

Green- Bridges Sustainable Fund- http://www.bridgesventures.com/sustainable-growth-funds - Ingenious Media- Cleantech Fund http://

www.ingeniousmedia.co.uk/investments/investment-opportunities/clean-energy - Carbon Trust- http://www.carbontrust.com/about-us/our-investments - Low Carbon Accelerator- http://www.lowcarbonaccelerator.com - CT Investment Partners- http://www.ctip.co.uk - Wellington Partners- http://www.wellington-partners.com/wp/index.html

Social- Big Society Capital- http://www.bigsocietycapital.com - Sources of Social Finance- http://www.bigsocietycapital.com/finding-the-right-investment - Bridges Venture Fund http://www.bridgesventures.com/social-entrepreneurs-fund - Big Issue Investment- http://www.bigissueinvest.com - Social Finance- http://www.socialfinance.org.uk - Social Investment Fund- http://www.thesocialinvestmentbusiness.org

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Q &A

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The End

www.capitalenterprise.org