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Accelerating and Financing London’s Tech Sector Start-ups.
. John Spindler CEO of Capital
Enterprise
@capenterprise
@capenterprise 2
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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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
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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
Idea to Tech Business- Three Chasms.
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Help in Forming & Exploring Ideas
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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/ • 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/ • 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/
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Forming Businesses.. ideas from???
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Developing the team & Product
• Hipster (Designer)
• Hacker (Developer)
• Hustler (Distributor)
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Minimum Viable Product (MVP): Problem – Solution FIT
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Proof of Concept?
Does it work? Does anyone care?
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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-cost-my-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/
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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
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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
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 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 In London
http://www.f6s.com/
https://capitallist.co
@capenterprise
AcceleratorsAccelerators : Training & Mentoring programmes that provide fast-track to seed funding forScalable new businesses
1. Seed Camp: http://www.seedcamp.com 2. Tech Stars Europe -http://www.techstars.com/program/locations/london 3. Wayra- http://wayra.org/en/wayra 4. Microsoft Ventures - http://www.microsoft.com/en-in/accelerator/5. Start-Up Bootcamp ( 3 new accelerators including Fintech in London)- http://www.startupbootcamp.org 6. Emerge Venture Labs- ( Education TECH) http://www.theemergelab.org 7. Oxygen Accelerator ( Now in London) - http://www.oxygenaccelerator.com/ 8. BBC Worldwide Labs- http://www.bbcworldwide.com/digital/labs.aspx 9. Accelerator Academy ( Part-Time)- http://acceleratoracademy.com 10. Fintech Innovation Labs- https://www.fintechinnovationlablondon.co.uk 11. Entrepreneur First- http://www.entrepreneurfirst.org.uk 12. The Bakery ( Adtech) - http://thebakerylondon.com/#!/ 13. Healthbox- http://www.healthboxaccelerator.com/ 14. Level 39- http://level39.co ( More of an incubator)15. Idea London ( Cisco, DC Thompson and UCL) – www.idea-london.co.uk 16. IC Start-up- ( Imperial) http://www.icstartup.com 17. Bethnal Green Ventures ( Social Impact)- http://bethnalgreenventures.com/ 18. HUB Launchpad- (Social Impact)http://www.hublaunchpad.net/ 19. True Start- (Retail Tech) – http://www.truecapital.co.uk/truestart/ 20. Eco-Machines incubator (Hardware)- http://www.ecomachinesincubator.com
Capital’s Accelerator Programme Partners. www.f6s.com
Capital’s Accelerator Programme Partners and Co-Investors
Pre-Acceleration Support/ Incubation
Acceleration Support
Connections to Investors
Accelerators want businesses who..…
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Idea
Problem/ Space
Exploration
Design/ Prototype
Beta Test
Adapt/ PivotX2
Launch
Bootstrap- FFF
Innovation AwardsStart-up Loans
Crowdfunding i.e. Kickstarter
Seedrs/ Crowdcube/F6sSEIS
Super Angels/ Angel Groups
Early Stage VC’s
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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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.
@capenterprise
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 : [email protected]
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Airbnb pitch deck
http://www.businessinsider.com/airbnb-a-13-billion-dollar-startups-first-ever-pitch-deck-2011-9?0=sai#-
1
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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/ 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
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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.
• 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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If you want an introduction then send a slide deck
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