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Accelerating and Financing London’s Game Sector Start-ups.

. John Spindler CEO of Capital

Enterprise

@capenterprise

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A start-up is not a Game!

“ A start-up is an organisation in search of a repeatable and scalable business model” – Eric Ries- Author of the Lean Start-up.

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Investable start-ups are…different• Ambitious: want to be worth

£20M+ minimum in 3 years.• “Game Changing”• Build/leverage new

technology/ business model innovations

• Acquire and leverage as many “Unfair Advantages as possible”- team, key partners, resources etc

• Move very FAST

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To get investment need to change Business Models

From Gun for Hire needs to become... ..To Products built at “own risk” ...

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Games vs Gamification

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Idea

Problem/ Space

Exploration

Design/ Prototype

Beta Test

Adapt/ PivotX2

Launch

Bootstrap- FFF Finance

Innovation AwardsStart-up Loans

Crowdfunding i.e. Kickstarter

Seedrs/ Crowdcube/F6sSEIS - Business Angels

Super Angels/ Angel Groups

Early Stage VC’s

Tech Start- Up Funding Road map.

MVP Factories

Hackathons/ Hatcheries/ Meet-ups.

Accelerators (Early)

Accelerators (Late)

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1Idea Stage

2 Commitment Stage- Secure Co-Founders

3FFF funding round –Build & Beta Test Minimum Viable Product

4Seed 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, technology- EXECUTE

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

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“ An Investable Start-up Needs..

• Team, Tech & resources that is FIT for the task of creating an awesome company

• Product that is the best solution FIT for the target customers problems.

• Business Model that is FIT to be scaled.

• Smart Ass Team

• with a Kick Ass Product

• Disrupting a Big Ass Market( Jeff Clavier 3 Ass-es rule)

+ Capital Efficient to Scale.

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How!

Advance in Stages… ..using the Lean Start-up Method

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Building a Smart Ass Team

• Hipster (Designer)

• Hacker (Developer)

• Hustler (Distributor)

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Building a Kick Ass Product

Change behaviour.... ...create a habit...

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Building a Kick Ass Product

Good Product design..…makes the Funnel Conversion Metrics work.

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Minimum Viable Product (MVP): Problem – Solution FIT

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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/ • Mobile Collective http://mobilecollective.wordpress.com• 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/

Idea to Tech Business- Three Chasms.

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Proof of Concept?

1. Does it work? 2. Does anyone care?

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Funding Games 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 • Abertay Prototype Fund - http://prototypefund.abertay.ac.uk/ • Skillset - http://www.creativeskillset.org/games/ • 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 • J4B- Portal for grant finding http://www.j4b.co.uk

Game Competitions•http://www.daretobedigital.com/•http://www.glasgow2014.com/press-releases/digital-game-competition

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EU Grant to Develop Video Games• Grant to Develop Video Games

• This brand new scheme aims to help independent, European companies to develop either a video game concept or project that has the potential to circulate within the European Union and beyond.

• What's available?• The total budget for the scheme in 2014 is estimated at €2.5 million. The non-repayable grants available depend on the type of support required

for your project: • Between €10,000 - €50,000 for concept development (up to a playable demo) • Between €10,000 - €150,000 for project development (up to a playable prototype – usually an alpha or beta version of the game) • The grant requested cannot exceed 50% of your total development budget. Support for concept development and project development cannot be

combined for the same video game.• Who can apply?• Applicant companies must:• Be established in one of the 33 countries participating in the MEDIA Sub-programme and be majority owned by nationals from those countries.• Own the majority of the rights to the project for which support is being sought.• Have produced a previous commercial video game that has been published since 1 January 2011. • Which projects are eligible?• Digital video games for any platform that are intended for commercial exploitation. The scheme aims to support projects with:• substantial interactivity and a narrative component (i.e. the ability to tell a story)• a high level of originality, innovation and creative value, which promote cultural diversity and enhance Europe's cultural identity and heritage

compared to existing mainstream works• a high level of commercial ambition and extensive cross-border potential able to reach European and international markets.• Deadline is 28th March and information on how to apply can be found at

http://www.mediadeskuk.eu/funding/media-sub-programme/producer-support/development-video-games/#tab-3

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EU Grants for building IT prototypes.

EU Grants for building IT prototypes.

• Call for Proposals: 01/03/2014• Support is available for a large number of early stage high risk SMEs in the ICT sector that has the ability to produce

innovative products or services that will disrupt, change, or even replace existing markets.• Implemented through the SME instrument, the Open Disruptive Innovation (ODI) Scheme provides support for small

businesses that are proposing innovative ICT products or services that apply a new set of rules and have the potential to disrupt existing markets.

• The SME Instrument works in three separate but complementary phases. This call refers to the deadlines for Phase 1, which covers the assessment of technical feasibility and market potential of new ideas. The project will be supported through a lump sum of 50 000 EUR and the typical duration should be 6 months.

• Objectives of the ODI scheme• Nurture promising innovative and disruptive ideas• Support prototyping, validation, and demonstration in real world conditions• Help with commercialisation and market uptake• Deadlines for application• First round: 18/06/2014 at 17:00pm (CET)• Second round: 24/09/14 at 17:00pm (CET)• Third round: 17/12/14 at 17:00pm (CET)• Access to the call• Access to the call is available through the Participant Portal on the Horizon 2020 website

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Need less than £20K to get to Build and test MVP?

- 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/

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

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Crowdfunding (Reward)Crowd 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

Idea to Tech Business- Three Chasms.

Capital’s Accelerator Programme Partners and Co-Investors in London

Pre-Acceleration Support/ Incubation

Acceleration Support

Connections to Investors

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..…

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Investment Essentials

Round Amount PurposeValuation Guideline (London)

Source

Pre- Seed Under 50KAssemble Team/ Build MVP Zero

Own Money/ FFF/ Crowdfunding/ TSB

SeedUnder £250K (SEIS £150K)

Beta Test- Launch into Beachhead Market

£450-£750K (Pre Money)

Angels/ Crowdfunders/ TSB

Super Seed £250K-£1mProof of Market & Scalability £1-£3m

Seed VC's/ Angel Syndicates/ Co-Investment Funds/ Family Offi ces

Series A (Small) £1m- £5M

Scale - Build out Team/ Technology and Expand Marketing £3-20m

VC's/ Corporate Venture Firms/ Family Offi ces.

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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.

SEIS is…… “a game changer”?

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www.capitallist.co #capenterprise

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”

Capital List – The Minimum Viable Introducer

“ Showcasing and connecting Entrepreneurs to champions and

investors”beta.capitallist.co

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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

Send to : magdalena@capitallist.co

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7 Types of Early Stage Investors in London Market

1. Crowdfunders/ Platforms2. Tax Relieve Seeking SEIS/EIS Funds3. Government Backed ECF’s4. Traditional Angel Syndicates5. Super Angels6. VC’s 7. Strategic Investors ( Corporate Venture)

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Seed/ Early stage Investment Platforms

Crowdfunders.www.crowdcube.com www.seedrs.comwww.f6s.com

Angel Platforms- www.angel.co - www.syndicateroom.com

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Syndicates.

Top SEIS Funding Syndicates1. Jenson Solutions-

www.jensonsolutions.com 2. Ingenious Media-

www.ingeniousmedia.co.uk 3. Ascension Ventures-

http://www.ascensionmedia.com/ascension-ventures.php

4. Start-up Funding Club- http://www.startupfundingclub.com/

5. Ascot SEIS – www.ascotwm.com

Top Traditional Angel Syndicates

1. London Business Angels: 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

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Super Seed Investors

• Playfair Capital- http://playfaircapital.com • Angel Pad http://angellab.co.uk/ • 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

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Active VC’s in London. Big 5• Accel Partners: Stage agnostic, see their

portfolio here.

• Balderton- Stage Agnostic- See there portfolio here

• Index Ventures: Stage agnostic, see their portfolio here.

• Wellington Partners: Stage Agnostic, see there portfolio here

• Octopus Ventures: Early to 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

• Longwall – Oxford Based – Science backed Start-ups focus

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

•

Cool Cats• Profounders: Early and mid-stage, see their

portfolio here.

• Amadeus Capital: Early and mid-stage- just launched new fund.

• Forward Group- Early stage investor.

• Piton Capital: Early and mid-stage specialize in market places.

• 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

• M8 Capital : Mobile Specialists, see their portfolio here

• 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.

• Hoxton Ventures – New and focus on seed with next mobe to USA.

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Specialist FundsSocial/ 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/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

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Active Corporate Players

Courtesy of Stuart McKnight at www.ascendant.co.uk

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UK Investment State of Play 2013

Deals Under £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.

Deals Over £0.5m

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Games Investors• London Venture Partners - http://www.londonvp.com/ • DN Capital - http://dncapital.com/ • Initial Capital - http://www.initialcapital.com • White Star Capital - http://whitestarvc.com/ • Playfair Capital - http://playfaircapital.com • Profounders- http://www.profounderscapital.com • Connect Ventures- http://connectventures.co.uk • Balderton- http://www.balderton.com • Index- http://www.indexventures.com • Nokia Growth Partners- http://www.nokiagrowthpartners.com/

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If you want an introduction then send a slide deck

Magdalena@capitallist.co