Published on February 20, 2014
Accelerating and Financing London’s Tech Sector Start-ups. . John Spindler CEO of Capital Enterprise @capenterprise 1
A start-up is… “ an organisation in search of a repeatable and scalable business model” – Eric Ries- Author of the Lean Start-up. @capenterprise 2
Scale focused start-ups are…different • Ambitious: want to be worth £20M+ minimum in 3 years. • Solve a big problem for potential customer in a “Game Changing ” way. • Build/leverage new technology/ business model innovations • Acquire and leverage as many “Unfair Advantages as possible”- team, key partners, resources etc • Move very FAST @capenterprise 3
“ An Investable Start-up Needs.. • Team, Tech & resources that is FIT for the task of creating an awesome company • Smart Ass Team • Product that is the best solution FIT for the target customers problems. • Disrupting a Big Ass Market • with a Kick Ass Product ( Jeff Clavier 3 Ass-es rule) • Business Model that is FIT to be scaled. + Capital Efficient to Scale. @capenterprise 4
How! Advance in Stages… ..using the Lean Start-up Method @capenterprise 5
Idea to Tech Business- Three Chasms.
Help in Forming & Exploring Ideas @capenterprise 7
Sources of Start-up Help for Tech Entrepreneurs Information: • • • • • • • • • • • • • • • • • • • • • Capital Enterprise; www.capitalenterprise.org Meet-up - http://www.meetup.com Mobile Academy- http://themobileacademy.org.uk/ Makers Academy- http://www.makersacademy.com/ GoGowo- http://www.gocowo.com Skills Matter- http://skillsmatter.com/ Start- up Britain - http://www.startupbritain.org British Library- www.bl.uk/bipc Google Campus- http://www.campuslondon.com General Assembly- https://generalassemb.ly/locations/london Innovation Warehouse- http://www.theiw.org IC Tomorrow - https://connect.innovateuk.org/web/ictomorrow UCL Decide- https://www.ucl.ac.uk/decide Start-up Weekend- London- http://london.startupweekend.org/ Launch 48- http://launch48.com/ Start-ups on Air at Google Campushttps://docs.google.com/spreadsheet/viewform?formkey=dEpuYlRFRFJ6SUVDdHVLRms3YmdBcmc6MQ Hubventurelabs - http://hubwestminster.net/hubventurelabs 3 Beards- http://www.3-beards.com/ Tech Hub- http://www.techhub.com/events/ Dreamstake- http://www.dreamstake.net/events Capital List Get Together- http://www.capitallistblog.co/our-monthly-monday-get-together/ @capenterprise 8
Forming Businesses.. ideas from??? @capenterprise 9
Developing the team & Product • Hipster (Designer) • Hacker (Developer) • Hustler (Distributor) @capenterprise 10
Minimum Viable Product (MVP): Problem – Solution FIT @capenterprise
Proof of Concept? Does it work? Does anyone care? @capenterprise 12
Funding Product Development & Beta Testing Grants & Awards General • • • • • • • • • 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 IC Tomorrow- https://connect.innovateuk.org/web/ictomorrow NESTA- http://www.nesta.org.uk/ 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-costmy-business J4B- Portal for grant finding http://www.j4b.co.uk 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/ @capenterprise 13
Crowdfunding (Reward) Crowd funding PlatformsReward 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 • www.indiegogo.com (USA) • www.peoplefund.it • www.sponsume.com • https://www.buzzbnk.org • www.pleasefund.us • www.wefund.com • www.pozible.com • www.crowdfunder.co.uk • http://spacehive.com • https://www.banktothefuture.com @capenterprise 14
Need less than £20K to get to Build and test MVP? Grantwww.j4b.co.uk No Funds Unemployed? Need Less than £10K to Launch a business New Enterprise Allowance Scheme Self Fund Borrow Write a simple Business Plan & 12 month cashflow Community Development Finance Institution Start-Up Loan • Bank 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- £20,000 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/ @capenterprise 15
Idea to Tech Business- Three Chasms.
Accelerators help by .. Offering early Stage Entrepreneurs… • Fellow Community of entrepreneurs & supporters • Runway support & funding (£15-£100K at standardised investment terms. ) ( 3-6 months on average) • Physical Space & Facilities • Mentors ( 1st Industry- 2nd Investors) • Help to Rapid Field Trail with users & customers. • Demo days- Introductions to Investors/ customers …so that they can test.. • Product- Assess Functional use/ improve design & UX • Market Reaction- interest/ usage/revenue - AARRR • Revenue/ profit Potentialpricing, market timing, LTV/CCA • Business Model- “To Pivot or Not To Pivot” • Investor reaction- interest and valuations • Team- ability to work together and deliver.
Accelerators In London http://www.f6s.com/ https://capitallist.co
Accelerators Accelerators : Training & Mentoring programmes that provide fast-track to seed funding for Scalable new businesses 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Seed Camp: http://www.seedcamp.com Tech Stars Europe -http://www.techstars.com/program/locations/london Wayra- http://wayra.org/en/wayra Microsoft Ventures - http://www.microsoft.com/en-in/accelerator/ Start-Up Bootcamp ( 3 new accelerators including Fintech in London)- http://www.startupbootcamp.org Emerge Venture Labs- ( Education TECH) http://www.theemergelab.org Oxygen Accelerator ( Now in London) - http://www.oxygenaccelerator.com/ BBC Worldwide Labs- http://www.bbcworldwide.com/digital/labs.aspx Accelerator Academy ( Part-Time)- http://acceleratoracademy.com Fintech Innovation Labs- https://www.fintechinnovationlablondon.co.uk Entrepreneur First- http://www.entrepreneurfirst.org.uk The Bakery ( Adtech) - http://thebakerylondon.com/#!/ Healthbox- http://www.healthboxaccelerator.com/ Level 39- http://level39.co ( More of an incubator) Idea London ( Cisco, DC Thompson and UCL) – www.idea-london.co.uk IC Start-up- ( Imperial) http://www.icstartup.com Bethnal Green Ventures ( Social Impact)- http://bethnalgreenventures.com/ HUB Launchpad- (Social Impact)http://www.hublaunchpad.net/ True Start- (Retail Tech) – http://www.truecapital.co.uk/truestart/ Eco-Machines incubator (Hardware)- http://www.ecomachinesincubator.com Capital’s Accelerator Programme Partners. www.f6s.com @capenterprise
Capital’s Accelerator Programme Partners and CoInvestors Pre-Acceleration Support/ Incubation Acceleration Support Connections to Investors
Accelerators want businesses who..…
Start- Up Funding road –map. Hackathons/ Hatcheries/ Meet-ups. Idea Bootstrap- FFF Problem/ Space Exploration MVP Factories Start-up Loans Design/ Prototype Accelerators (Early) SEIS Super Angels/ Angel Groups Innovation Awards Crowdfunding i.e. Kickstarter Beta Test Adapt/ PivotX2 Seedrs/ Crowdcube/F6s Accelerators (Late) Launch Early Stage VC’s @capenterprise 22
4 3 1 Idea Stage 2 Commitment Stage- Secure Co-Founders FFF funding round –Build & Beta Test Minimum Viable Product Seed Investment Round (Angels + Early VC’s) - Prove Business model & acquire metrics to prove scalability 5 Series A Round (Angels, VC’s & Strategic Investors) – Go for scale, build out team, technologyEXECUTE 6 Exit (Average 7 years and after many rounds) – Trade Sale or IPO ££££££££££££££ How Start-Up Funding Works ?Why 100% of “Nothing” is worth Less than 10% of something big @capenterprise 23
Investment Essentials Round Pre- Seed Seed Amount Purpose Under 50K Under £250K (SEIS £150K) Assemble Team/ Build MVP Beta Test- Launch into Beachhead Market Super Seed £250K-£1m Series A (Small) £1m- £5M Valuation Guideline (London) Zero £450-£750K (Pre Money) Proof of Market & Scalability £1-£3m Scale - Build out Team/ Technology and Expand Marketing £3-20m @capenterprise Source Own Money/ FFF/ Crowdfunding/ TSB Angels/ Crowdfunders/ TSB Seed VC's/ Angel Syndicates/ CoInvestment Funds/ Family Offices VC's/ Corporate Venture Firms/ Family Offices. 24
SEIS is…… “a game changer”? Seed Enterprise Investment Scheme-SEIS is a tax break launched in 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 2013-14 tax year, tax payers can roll 50% of a chargeable gain in the tax year in to a SEIS with a full capital gains tax exemption (another 14%) 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. @capenterprise 25
Think like an Angel! Why Do Angels Invest? Where to find them? www.capitallist.co #capenterprise
Key to being s Successful Business Angel? • Good Reputation – “Track Record” • Great Source – “Having good introducers” • Good Selection – “ Sticking to what you know” • Adding Value- “ Offering more than money to increase the chance of success” • Ability to Follow on Successes/ Walk Away from Failures. • Getting Value – “Getting a Good deal at all stages” www.capitallist.co #capenterprise
Capital List – The Minimum Viable Introducer “ Showcasing and connecting Entrepreneurs to champions and investors” beta.capitallist.co @capenterprise 28
Send a slide deck and get introduced 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 Send to : email@example.com @capenterprise 29
Airbnb pitch deck http://www.businessinsider.com/airbnb-a-13billion-dollar-startups-first-ever-pitch-deck2011-9?0=sai#-1 @capenterprise 30
7 Types of Early Stage Investors in London Market 1. 2. 3. 4. 5. 6. 7. Crowdfunders/ Platforms Tax Relieve Seeking SEIS/EIS Funds Government Backed ECF’s Traditional Angel Syndicates Super Angels VC’s Strategic Investors ( Corporate Venture) @capenterprise 31
Seed/ Early stage Investment Platforms Crowdfunders. www.crowdcube.com www.seedrs.com www.f6s.com Angel Platforms - www.angel.co - www.syndicateroom.com @capenterprise 32
Syndicates. Top SEIS Funding Syndicates Top Traditional Angel Syndicates 1. 1. London Business Angels: 2. 3. 4. 5. Jenson Solutionswww.jensonsolutions.com Ingenious Mediawww.ingeniousmedia.co.uk Ascension Ventureshttp://www.ascensionmedia. com/ascension-ventures.php Start-up Funding Clubhttp://www.startupfundingcl ub.com/ Ascot SEIS – www.ascotwm.com http://www.lbangels.co.uk/ 2. E100 (LBS) 3. Oxford Angels: http://www.oxei.co.uk 4. Cambridge: http://cambridgeangels.com 5. Envestors- www.envestors.co.uk 6. Angels Den- www.angelsden.com @capenterprise 33
Super Seed Investors • Playfair Capital- http://playfaircapital.com • Angel Pad/ Avonmore http://www.avonmoredevelopments.com/ • Kima Ventures- http://www.kimaventures.com • Boundary Capital - www.boundarycapital.com • Venerex ( Fashion Tech- see Capital List) • Jam Jar Investments- http://jamjarinvestments.com • No 1 Seed - www.number1seed.co.uk • Warner Yard Associates - http://www.warneryard.com/ • Angel List – www.angel.co @capenterprise 34
Active VC’s in London. Cool Cats Big 5 • Accel Partners: Stage agnostic, see their portfolio here. • Balderton- Stage Agnostic- See there portfolio here • • DN Capital : Early and mid-stage, see their portfolio here • DFJ Esprit: Early to mid-stage, see their portfolio here. • Spark Ventures : Stage Agnostic- See there portfolio here • Octopus Ventures: Early to mid-stage, see their portfolio here. Piton Capital: Early and mid-stage specialize in market places. M8 Capital : Mobile Specialists, see their portfolio here Wellington Partners: Stage Agnostic, see there portfolio here • Amadeus Capital: Early and mid-stage- just launched new fund. Index Ventures: Stage agnostic, see their portfolio here. • Profounders: Early and mid-stage, see their portfolio here. • • • ECF’s/ Public funded. • Notion Capital – SAAS and Cloud specialist- See portfolio here • Passion Capital: Early Stage, see their portfolio here. • Episode1: Early Stage Software Companies • Arts Alliance: Minimum investment £500K in Media related tech- see portfolio here • Longwall – Oxford Based – Science backed Start-ups focus • EC1 Capital: Early stage, see their portfolio here • MMC Ventures - Series A Fund- Co-Investment fund with Mayor of London • Connect Ventures- Early stage and very cool. • Hoxton Ventures – New and focus on seed with next mobe to USA. • @capenterprise 35
Specialist Funds Social/ Tech for Good NESTA - www.nesta.org.uk/investments Unltd – www.ubltd.org.uk 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 Women - 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/investmentopportunities/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 @capenterprise 36
Active Corporate Players @capenterprise 37
UK Investment State of Play 2013 Deals Under £0.5M Deals Over £0.5m • SEIS Deals £5-6m per month - 82 Deals - £72K Average • EIS & SEIS - £600M in New Companies in 2012-13. - Estimated 1,116 New Companies received investments. Courtesy of Stuart McKnight at www.ascendant.co.uk 38
If you want an introduction then send a slide deck Magdalena@capitallist.co @capenterprise 39
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