1

Incubating, Accelerating and Financing London’s Tech Sector Start-ups.

.Presented by John Spindler CEO of

Capital Enterprise

@capenterprise

@capenterprise 2

Scale focused start-ups are…different

• Ambitious: want to be worth £10M+ minimum in 3-5 years.

• Solve a big problem for potential customer in a “Game Changing / disruptive” new way.

• Introduce new technology/ business model innovations

• Smart Team & Key Partners buy -in.• Ability to adapt and change as they

develop.• At some stage will need investment• Expectation of success is “radically

uncertain”

See Steve Blank, Four Steps to the Epiphany

Steve Blank- The Start-up Owners Manual

Scale Focused Start-ups need to progress by stages…

@capenterprise 4

Go Lean to prove concept and market

“Lean Start-up is about reducing market risk by working out how to fail

fast”

@capenterprise 5

Lean Canvas Model

Idea to Tech Business- Three Chasms.

@capenterprise 7

Idea

Problem/ Space

Exploration

Design/ Prototype

Beta Test

Adapt/ PivotX2

Launch

Bootstrap- FFF

Innovation AwardsStart-up Loans

Crowdfunding i.e. Kickstarter

Seedrs/ CrowdcubeSEIS

Super Angels/ Angel Groups

Early Stage VC’s

Start- Up Funding road –map.

MVP Factories

Hackathons/ Hatcheries/ Meet-ups.

Accelerators

Accelerators

@capenterprise 8

Forming & Exploring Ideas

@capenterprise 9

Forming Businesses.. ideas from???

@capenterprise 10

Developing the team & the tech

• Hipster (Designer)

• Hacker (Developer)

• Hustler (Distributor)

@capenterprise 11

Sources of Start-up Help for Tech Entrepreneurs

Information:

• Capital Enterprise What’s On in London- www.capitalenterprise.org/whats-on • Meet-up - http://www.meetup.com • Mobile Academy- http://themobileacademy.org.uk/ • Makers Academy- http://www.makersacademy.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 Campus- https://

docs.google.com/spreadsheet/viewform?formkey=dEpuYlRFRFJ6SUVDdHVLRms3YmdBcmc6MQ• Hubventurelabs - http://hubwestminster.net/hubventurelabs • 3 Beards- http://www.3-beards.com/ • Founders Fit- http://foundersfit.com/

@capenterprise 12

Prototyping

@capenterprise 13

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 • 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-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/

@capenterprise 14

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 • 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

Seed/ Early stage Investment Platforms:

www.crowdcube.com www.seedrs.com

@capenterprise 15

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- £15,000 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

Start-Up Loan Bank

@capenterprise 16

Incubation – Virtual or Real

Idea to Tech Business- Three Chasms.

Accelerators In London

http://www.f6s.com/

https://capitallist.co

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 Potential- pricing, 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 want businesses who..…

@capenterprise 21

AcceleratorsAccelerators : 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 • Tech Stars Europe -Springboard- http://springboard.com/ http://www.techstars.com/program/locations/london/ • 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 • Innotribe- ( Fin Tech Only) http://euclidopportunities.com/ • The Bakery - http://thebakerylondon.com/#!/ • Innovation Warehouse- http://www.theiw.org • Healthbox- http://www.healthboxaccelerator.com/ • Collider12- http://collider12.com/

Check out – www.f6s.com and http://www.seed-db.com/accelerators

@capenterprise 22

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 – MVP- Beta- 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

@capenterprise 23

Metrics

• AARRR• Customer Acquisition

Costs VS Life Time Value• Retention/ Churn• Referral/ Viral

Coefficient• Revenue

http://blog.kissmetrics.com/9-metrics/

http://guidetostartupmetrics.eventbrite.com/#

@capenterprise 24

Investment Essentials

Type Amount Purpose Source SeeSeed Under £50K Proof Of Conept FFF

Crowdfundingwww.crowdcube.com www.seedrs.com

Seed £50K-£500K Launch to "Beachhead" Angels/ Seed Investors

Note Average valuation for a pre-revenue company in London is between £350-£600K

Super Seed £500-£2mLaunch to "Beachhead" + Build scalability

Syndicates of Investors

Not as common in the UK as US

Series A (Small) £1m-3M Scale

VC's/ Family Trust/ Supper Angels

Traditionally where UK investor money enters the market

@capenterprise

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”?

25

@capenterprise 26

…A potentially “Scalable” businesses will …

• Solve a relevant Problem for a Large Addressable Market.

• Have a Credible Founders Team.

• Have a Semi-Proven Business Model.

• Large Returns on initial capital- i.e. Capital Efficient to scale.

Seed Investors want …. Winners!

Investors want to find..

1. Skilled and credible management team2. 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. Metrics9. Adequate financial returns ( 10X within

3 years?)10. People they can trust/ work with11. A clear exit route- How will they claim

there reward?? @capenterprise 27

@capenterprise 28

Send a slide deck and get introducedhttp://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

@capenterprise 29

Business AngelsPublic Supported Co-Investment Schemes

• NESTA - www.nesta.org.uk/investments • Capital 4 Enterprise- http://www.capitalforenterprise.gov.uk/portfolio • Angel Co-Fund- http://www.angelcofund.co.uk / • Mayor Of London Co-Investment Fund- http://www.mmcventures.com / • Enterprise Capital Fund- http://www.capitalforenterprise.gov.uk/ecfp

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

@capenterprise 30

Active London Angels…

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

• https://angel.co/

31

Early Stage VC’s & Investors Accel 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.

Imperial Innovations: Restricted entry requirements but the largest Series investor in the UK in 2012-13 , 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.

• MMC - Series A Fund- Co-Investment fund with Mayor of London

• Notion Capital – SAAS and Cloud specialist- 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.

• M8 Capital : Mobile Specialists, see their portfolio here

• Episode1: Early Stage Software Companies

• Arts Alliance: Minimum investment £500K in Media related tech- see portfolio here

• EC1 Capital: Early stage, see their portfolio here

• Connect Ventures- Early stage and very cool.

• Ballpark Ventures – Early stage Super Angel investors

• 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 @capenterprise

@capenterprise 32

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- MEWE360: £1m fund set up by Ingenious Media - 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

@capenterprise 33

UK Mobile Investments 2012• Mytaxi £8.3M• Hailo £31.4M• Mobile Travel Technologies £3.2M• Net60Six £500k• AirSense Wireless NA• StylistPick £11M• MymCart £475K• MobileReport NA• Astute Labs NA• Chupamobile NA• Parcel Genie NA• Knowledge Transmission NA• Blink Booking £2.5M• Albagaia £240K• eWowBooks £100K• Serious Parody £770K• Quipper £2.3M• Mindshapes £4M• TreatTicket NA• Adaptis Solutions NA• Lifecake NA

• Highgate Labs NA• Somo NA• Playdemic NA• The Mobank Group £2.25M• SkyDox £20M• Huddle £16m• iNeed £50k• Capablue NA• Kabbee £3.25M• REALRIDER £285K• Wilcocks & Associates NA• Busuu £5M• MobiCart £300k• Fanatix £750K• HowDo NA• Proteo 200k• SlickFlick 100k• Outplay Entertainment £2.6M• LoveThis 1.25m• YPlan £1.1m• Unifyo NA• RouteMonkey 500K• Paperless Receipts 1M• ERN £1.5M

• Total deals 45, total amount invested (disclosed) £120.910M

@capenterprise 34

Q &A

@capenterprise 35

If you want an introduction then send me a slide deck

www.capitalenterprise.orgjohn@capitalenterprise.org