Accelerating and Financing Londons Game Sector Start-ups. . John Spindler CEO of Capital Enterprise @capenterprise 1

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. @capenterprise 2

Investable start-ups aredifferent 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 @capenterprise 3

To get investment need to change Business Models From Gun for Hire needs to become... ..To Products built at own risk ... @capenterprise 4

Games vs Gamification @capenterprise 5

Tech Start- Up Funding Road map. Hackathons/ Hatcheries/ Meet-ups. Idea Bootstrap- FFF Finance Problem/ Space Exploration MVP Factories Start-up Loans Design/ Prototype Accelerators (Early) SEIS - Business Angels Super Angels/ Angel Groups Innovation Awards Crowdfunding i.e. Kickstarter Beta Test Adapt/ PivotX2 Seedrs/ Crowdcube/F6s Accelerators (Late) Launch Early Stage VCs @capenterprise 6

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 VCs) - Prove Business model & acquire metrics to prove scalability 5 Series A Round (Angels, VCs & 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 7

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 8

How! Advance in Stages ..using the Lean Start-up Method @capenterprise 9

Building a Smart Ass Team Hipster (Designer) Hacker (Developer) Hustler (Distributor) @capenterprise 10

Building a Kick Ass Product Change behaviour.... ...create a habit... @capenterprise 11

Building a Kick Ass Product Good Product design.. makes the Funnel Conversion Metrics work. @capenterprise 12

Minimum Viable Product (MVP): Problem Solution FIT @capenterprise

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/ @capenterprise 14

Idea to Tech Business- Three Chasms.

Proof of Concept? 1. Does it work? 2. Does anyone care? @capenterprise 16

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-costmy-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 @capenterprise 17

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/producersupport/development-video-games/#tab-3 @capenterprise 18

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 @capenterprise 19

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 25s- 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 20

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 21

Idea to Tech Business- Three Chasms.

Capitals Accelerator Programme Partners and CoInvestors 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 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 want businesses who..

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. 26

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 27

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 30

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 meetingand business angels are very normal. If you must use more than ten slides to explain your business, you probably dont 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 @capenterprise 31

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 ECFs Traditional Angel Syndicates Super Angels VCs Strategic Investors ( Corporate Venture) @capenterprise 32

Seed/ Early stage Investment Platforms Crowdfunders. www.crowdcube.com www.seedrs.com www.f6s.com Angel Platforms - www.angel.co - www.syndicateroom.com @capenterprise 33

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 34

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 @capenterprise 35

Active VCs in London. Big 5 Cool Cats Accel Partners: Stage agnostic, see their portfolio here. Profounders: Early and mid-stage, see their portfolio here. Balderton- Stage Agnostic- See there portfolio here Amadeus Capital: Early and mid-stage- just launched new fund. Index Ventures: Stage agnostic, see their portfolio here. 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 Wellington Partners: Stage Agnostic, see there portfolio here Octopus Ventures: Early to mid-stage, see their portfolio here. ECFs/ 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 Connect Ventures- Early stage and very cool. Hoxton Ventures New and focus on seed with next mobe to USA. MMC Ventures - Series A Fund- Co-Investment fund with Mayor of London @capenterprise 36

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 37

Active Corporate Players @capenterprise 38

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 39

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 Partnershttp://www.nokiagrowthpartners.com/ @capenterprise 40

If you want an introduction then send a slide deck Magdalena@capitallist.co @capenterprise 41