Money makes the world go around– but how do you get it?

David BottPrincipal Fellow at WMG

(recovering Director of Innovation Programmes atthe Technology Strategy Board)

Types of Money

• Payment– from customers

• Debt– from banks

• Equity– from Angels and Venture Capitalists

• Grants– from Government and Agencies

• “Soft Loans”– from Government

The rules of successful fundraising

1. Know your potential funder

2. Try not to ask for money cold

3. Understand their processes

4. Tell a story – clearly

5. Listen to the feedback

Applying these guidelines to

Banks

The 5 Steps

• Check what sort of company they tend to fund– they often publish their intentions, or you can listen to

other companies at events

• Schmooze them beforehand– Most banks have active business groups with people

paid to find good investments – talk to them

• Read their literature– And ask if you don’t understand

• Make sure they understand your business plan– write it in plain language

• A rejected application may not be the end!

Applying these guidelines to

Angels and Venture Capitalists

The (first 3 of) 5 Steps

• Look at their track record

– Use BBAA and BVCA to identify targets

– See who they have they funded in the past

– See where they are in their fund cycle

• Build a relationship with them

– Check if they can help you grow

• Talk to others who have been funded by them

– Each of them use variations of process

The (other) 5 steps

• As well as making sure they understand yourproduct and business plan, make sure theyknow how they will get their money back!

• The deal is a negotiation, the happier they arethe better the deal you get!

Applying these guidelines to

or

Step 1

Driving Innovation

A brief history…• The original DTI Innovation Unit and advisory

“Technology Strategy Board” was set up in 2004

• It was spun out of government as a “non-departmental public body” in July 2007,relocated to Swindon and staffed with peoplefrom business

• Since then it’s budget has increased from £250mto £440m a year – and it’s going up more in2015/16

Driving Innovation

What is the problem they are addressing?

• Business investment is too low and too late• Technical and financial risks need to be mitigated• The time for financial return is too long for many players

• Innovation disrupts value chains and business models• New partnerships are required to build new supply chains• Investment and innovation is required at multiple points

• Longer term trends are not visible to all players• Impact and opportunities from emerging technologies & policies

• Innovation infrastructure is complex and inefficient• Fragmented and difficult to navigate

• Government does not make best use of its levers• Procurement, regulation, standardisation, fiscal incentives

Driving Innovation

What are they doing about it?

• Accelerating the journey between concept andcommercialisation

– Understand the business journey and accelerate it

– Provide a coherent package of support – matched to needs

– Specific SME package – but recognise role of larger companies

– Promote knowledge exchange

• Connecting the innovation landscape

• Turning government action into business opportunity

• Investing in priority areas based on potential

• Continuously improving our capability

Driving Innovation

What are their Criteria?

• Market– What is the current and projected size, how fast is it growing, who are

the competition?

• Capability– Does the UK have a strong research base in the area, the skills, the

business capacity?

• Timing– Is the cost curve balanced by the value curve?

• Additionality– Why should the taxpayer support this project?

Driving Innovation

Driving Innovation

Concept Commercialisation

Mentoring

Networks

Connections

£

DevelopmentEvaluation Validation

Driving Innovation

Concept Commercialisation

Mentoring

Networks

Connections

£

Driving Innovation

Where the money goes

Driving Innovation

• They do not have enough money to satisfy the needs of allcompanies

• Their processes are thought by some to be too bureaucratic – butthey need to be accountable for their use of taxpayers money

• They need to make the process take companies on adevelopmental journey

• Assessment, even with 5 assessors, tends to be more subjectivethat anyone would like

• Feedback on why proposals are not successful needs to be morecoordinated and useful

• Not everyone knows they are here to help them

What have they learned?

Step 2

Before the competitions

• Within the broad areas, Technologists consultwidely and publish a “strategy” – a roadmapfor the area

• This determines which competitions are run!

• The strategies are brought together in theannual Delivery Plan, published at thebeginning of the financial year

Preparation is important

• Participate in the strategy development, helpbuild the roadmaps and make sure yourunderstanding of needs and capabilities isincorporated

• Engage with the relevant Technologist(s)

• Join _connect, the relevant part(s) of theKnowledge Transfer Network and go toInnovate

Step 3

How the process works

• Single stage competitions (Smart, Feasibility)– Answer 10 questions (that cover the criteria and capability

to deliver)

• Two stage competitions (Collaborative Research andDevelopment)– Expression of Interest triages ideas down to twice funding

– Main stage uses same 10 questions

• Focussed Area competitions (LaunchPads, Missions)– 2 minute video

– Normal second stage

Assessment

• There are normally 3-5 assessors, drawn frompool

– Responsive mode competitions can suffer fromassessors who may not fully understand area, soget judged “blind”

– Thematic competitions use assessors who knowabout area – because they are involved – so thereis possible of gaming

– Not all feedback is useful

Answer the questions!

1. What is the business opportunity that thisproject addresses?

2. What is the size and nature of the marketopportunity that this project might open up?

6. What is innovative about this project8. Does the applicant have the right skills and

experience and access to facilities to deliver theidentified benefits?

10.How does financial support from the TechnologyStrategy Board add value?

All the questions!

3. How will the results of the project be exploited?4. What economic opportunities will this project help

bring about to those outside of the business and overwhat timescale? What about social andenvironmental benefits?

5. How will the project be managed and what technicalapproach will be adopted?

7. What are the risks (technical, commercial andenvironmental) to project success? What is theproject’s risk management strategy?

9. Please explain the financial commitment required forthe project.

Step 4

Tell a story

• The questions are meant to build a case forsupport, so make sure the answers do!

• Make it clear and keep it simple

• Check consistency of numbers

• Make it flow – keep the assessor interested

• Don’t use jargon or area specific acronyms –anything that might cause the assessor to stopand think loses you points

Step 5

Feedback

• “There is no evidence this project will work”– For a Feasibility Studies proposal!

• “The market data presented are at a level which is notreally relevant to the project”

• “The description of the market is very clear and well-supported”– For the same project!

• “The application does not present a sufficiently detailedexplanation of the financial situation which makes it unableto tackle the project using its own funds”

• “This is a clear and convincing explanation of why TSBsupport is needed for this project to go ahead”– For the same project!

Picking up the pieces

• The overall funding rate is about 30% onThematic and 20% on Responsive – so thereare a lot of disappointed people out there

• I used to meet a lot of the people who hadbeen unsuccessful – but who had good storiesto tell

• When we looked, it was usually because theyhadn’t explained their ideas clearly enoughand/or answered the questions!

Getting a grant from Innovate UK

• If you’re an academic – recognise thatInnovate UK is not a research council and isnot there to fund “research” ideas

• If you're a business with an early stage idea –start with the market and how the ideaaddresses a need

• If you're a business with a late stage idea –make the point that the idea will not progresswithout support

For everyone

• Make sure your plan will work for everyone involved

– You get the money you need and they get what they want!

• Realise they are all interconnected

– Often getting a government grant will make it easier to getAngel or Bank funding

• Tell the story of your plan, start with the customersand their needs, explain how you will satisfy themand end with how the money comes back to yourfunder!!

The other valley of death!

The rules of successful fundraising

1. Know your potential funder

2. Try not to ask for money cold

3. Understand their processes

4. Tell a story – clearly

5. Listen to the feedback

e: d.c.bott@warwick.ac.uk

m: +44 7802 788435tw: @david_bottli: http://www.linkedin.com/pub/david-bott/29/77/65ask: davidbott3w: http://www.davidbott.com