Overcoming investor objection - Peter Garnham (Accelerate 2014 - Sheffield)

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Information about Overcoming investor objection - Peter Garnham (Accelerate 2014 - Sheffield)
Business

Published on April 8, 2014

Author: ChristopherHill4

Source: slideshare.net

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Accelerate 2014 - Sheffield (www.acceleratesheffield.co.uk)

What Objections?
Provide Confidence
Establish the Relevant Criteria
Understand the Capital Differences
Fundamental Capital Criterion and Social Mitigation
Describe the Risk
Forecast the Total Reward
Improve the Opportunity
Start-up Difficulties
Attracting Investment

ACCELERATE 2 Challenge Event Overcoming Investor Objection Peter Garnham 25 March 2014

Considerations • What Objections? • Provide Confidence • Establish the Relevant Criteria • Understand the Capital Differences • Fundamental Capital Criterion and Social Mitigation • Describe the Risk • Forecast the Total Reward • Improve the Opportunity • Start-up Difficulties • Attracting Investment

What Objections? • We don’t believe it! • It doesn’t fit our criteria well enough! • We have better opportunities for the use of our capital!

Provide Confidence • A Business Plan describes the future and how it will come to pass • The Plan contains some facts and usually a lot of ‘persuasion’ • Describes how it will meet the essential criteria as part of the objectives • The ‘business risk’ is that this view of the future will not be fully achieved (fulfilment and sales) • The reader will have their own level of experience and review the Plan in that light

Establish the Relevant Criteria • Each type of financial product and each supplier has different criteria for its availability • Products: – Equity (investment) – Debt (loans of some type) – Grant (non-repayable or subject to conditions) • Supplier: – Self, family & friends, ‘Business Angels’, crowd funding – Financial institutions, banks, venture capital funds – Public sector (EU, UK govt,) “He who pays the piper calls the tune”

Understand the Capital Differences • Capital is a necessary asset to be used in your business • Different types of capital products are suited to different stages of business development • Stages: – Idea, proof of concept (working up the plan) – Start-up (ready to start making sales) – Early stage (first 3 years of trading) – Developing (usually profitable and growing)

Fundamental Capital Criterion and Social Mitigation Expected Return % Risk 0 Risk-free Rate Risk v Capital Return Required Reward Capital Return Social Return X Increase Reduce

Describe the Risk • Business Plan to describe the opportunity: – Confirmation to yourself – Convince relevant source of capital – Show how the opportunity will meet the specific criteria • Provides confidence as to the level of risk inherent in the business • By ‘realistic’ assessment of the risk points and providing credible mitigation (in the view of the source of capital)

Forecast the Total Reward • Create realistic sales forecasts • Provide detailed financial projections • Financial – where does your business sit on the line? • Non-financial Social Impact • The non-financial allows the financial to be below the capital return line

Improve the Opportunity • How much reward is required in competition with other opportunities? • Financial: – Increase the price paid (% of equity given up, interest rate and fees) – Provide security • Non-financial wider impact: – Feel good factor – Personal employment – Third party employment – Social benefit – General economic development

Start –up Difficulties • Business Plan provides a very uncertain (but attractive) view of the future • Little capital already in the business • No trading history and little security

Attracting Investment • Potential capital return: – Innovative product – Large and expanding market (but this is not the sales plan) – Ability to defend market position once achieved (IP) • Reduced risk: – An experienced management team – Management that has started a successful business before – Experience was gained in the same industry • Clearly defined and high social impact

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