14 July 2012
UK as Europe’s innovation hub Setting up, running and funding your business
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Table of Contents
1. Setting up your business
• Tech Clusters
• Advantages offered by the UK
• Legal issues
2. Running your business
• Digital media
• Sales and marketing analysis
• Legal issues
3. Funding your business
• Company valuation
• Financial considerations
• Legal issues
• Fundraising strategy
• Investment incentives: SEIS, EIS
• Gearing up for Venture Capital
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SETTING UP YOUR BUSINESS
Tech clusters
Advantages offered by the UK
Legal issues
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• London Tech City (Silicon Roundabout) Mind Candy (Moshi Monsters)
Tweetdeck
Last.fm
• Silicon Fen (world class tech-hub in Cambridge) ARM ($7 billion valuation)
Advanced RISC Machines
• Silicon Glen (tech –hub in Scotland) Rockstar North (creators of GTA)
• Bristol ICERA
Setting up your business Tech clusters
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• The small business rate relief
• New immigration routes for entrepreneurs
Tier 1 Entrepreneur visa Applicant must either have access to £200,000 or to £ 50,000 + Conditions
Tier 1 Graduate Entrepreneur visa Does not apply if applicant is outside UK at time of application
• Small businesses get capital gains tax breaks for their first £10m of profit
• R&D tax credits of up to 200 per cent (increasing to 225 per cent in 2012)
• Access to UK Trade & Investment’s export services
Setting up your business Advantages offered by the UK
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• Intellectual property e.g. patents, copyright, trademarks and design rights
• IPR exploitation as a revenue stream
• Contracts and other agreements
• Legal structures for enterprise in UK
Unincorporated association
Limited Company
Limited Liability Partnership
Community Interest Company
Setting up your business Legal issues (1)
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RUNNING YOUR BUSINESS
Digital media
Sales and media analysis
Legal issues
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• Search engine optimisation
• Mobile and Social media:
• Online reputation management
• Viral Marketing
Running your business Digital media
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• Sales funnel
• The buying cycle: AIDA
• 4Ps: Product, Price, Place and Promotion
• Competition and risk analysis: SWOT & PESTLE
Running your business Sales and marketing analysis
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• Taxation
Corporation Tax
Capital Gains Tax
National Insurance
Income Tax
VAT
Running your business Legal issues (1)
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• Corporation Tax
Rate 2012 values
Small profits rate 20%
Small profits can be claimed by qualifying companies with profits at a rate not exceeding
₤300,000
Marginal relief lower limit ₤300,000
Marginal relief upper limit ₤1,500,000
Standard fraction 1/80
Main rate of corporation tax 25%
Special rate for unit trusts and open-ended investment companies
20%
Running your business Legal issues (2)
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• Capital Gains Tax
Rate 2012 values
Rates for individuals 18% / 28%
Rates for trustess and personal representatives 28%
Annual exempt amount for individuals and personal representatives
₤10,600
Annual exempt amount for most trustees ₤5,300
Rate on gains subject to Entrepreneurs’ Relief 10%
Capital Gains Entrepreneurs’ Relief 2011-2012 values
Entrepreneurs relief lifetime limit of gains ₤10,000,000
Running your business Legal issues (3)
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• National insurance contributions (1)
Employee and employer rates and thresholds £ per week unless stated
2012 values
Lower Earning Limits for class 1 NICs £102.00
Upper Earnings Limits for Employees’ Class 1 NICs
£817.00
Upper Accrual Point £770.00
Primary Threshold £139.00
Secondary Threshold £136.00
Running your business Legal issues (4)
Employee’s (Primary) Class 1 contribution rates 2012 values
2011 – 2012 weekly earnings from £139.01-£817.00 12%
2011 – 2012 weekly earnings above £817.00 2%
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• National insurance contributions (2)
Employee’s contracted out rebate 2012 values
For both salary-related (COSR) and money purchase (COMP) schemes between LEL & UAP
1.6%
Running your business Legal issues (5)
Married women’s (primary) Class 1 contribution rates
2012 values
2011 – 2012 weekly earnings from £139.01-£817.00 5.85%
2011 – 2012 weekly earnings above £817.00 2%
Employer’s (secondary) Class 1 contribution rates
2012 values
2011 – 2012 weekly earnings from £136.00 13.8%
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• National insurance contributions (3)
Running your business Legal issues (6)
Employer’s contracted out rebate 2012 values
Employer’s contracted out rebate – salary related schemes (COSR) between LEL and UAP
3.7%
Employer’s contracted out rebate – money purchase schemes (COSR) between LEL and UAP
1.4%
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• Income tax
Income tax band Income tax rate on
non-savings income Income tax rate on savings
Income tax rate on dividends
£0 - £2,560 Starting rate for savings
Not available 10% Not applicable – see basic rate band
£0 - £35,000 Basic rate
20% 20% 10%
£35,001 - £150,000 Higher rate
40% 40% 32.5%
Over £150,000 Additional rate
50% 50% 42.5%
Running your business Legal issues (7)
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• VAT (1)
Paid quarterly if annual turnover exceeds £73,000
Can be claimed back on some goods/services e.g. office supplies, vehicle servicing, fuel
Running your business Legal issues (8)
Category VAT rate
Exempt supplies: education, finance, insurance, and the services of doctors and dentists
0%
Food (but not restaurant or takeaway meals), children’s shoes and clothing, prescriptions, books and newspapers, new house sales and prescriptions
0%
Reduced rate: includes fuel and power used in homes and by charities
5%
Standard rate: goods not falling in the above 20%
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• VAT (2) – Optional flat rate scheme
Allows businesses with up to £187,500 turnover to make a flat-rate calculation for VAT payments based on turnover, rather than having to record the VAT of every sale and purchase
The flat rate varies by sector e.g. 2% for retailing food, confectionery, tobacco, newspapers or children's clothing
11.5% for labour-only building or construction services, Computer and IT consultancy or data processing, lawyer or legal services, computer repair services, management consultancy, lawyers & legal services
Running your business Legal issues (9)
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FUNDING YOUR BUSINESS
Company valuation
Financial considerations
Legal issues
Fundraising strategy
Investment incentives: SEIS, EIS
Gearing up for venture capital
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• What is my company worth?
• Equity: how much should I give away?
• Capital injections: how do they affect my company valuation?
• What do investors look for?
Funding your business Company valuation
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• Sources of finance (debt and equity): 3 Fs: Family, Friends, Fools
Banks, Angels and VCs
Crowd Funding: crowdcube
Incubators : Google Campus, Imperial Innovations, Springboard, The Difference Engine, Techhub, General Assembly
Government Agencies: Technology Strategy Board, KTP
• Financial instruments that need to be understood
• Forecasts and accounting
• Exit Routes i.e. the Investor’s Perspective e.g. MBO, IPO, Sale
Funding your business Financial considerations (1)
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• Proof of Concept/Market
• Structure the team
• Choose Investment Strategy
• Investment Documents
• Negotiation
• Transaction
Funding your business Fundraising strategy
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• Seed Enterprise Investment Scheme (SEIS)
50% Income Tax relief on ₤100,000 limit
Capital Gains Tax exemption upon share sale
Balance sheet gross assets ≤ £200,000
• Enterprise Investment Scheme (EIS)
30% Income Tax relief on ₤1m limit
Capital Gains Tax exemption upon share sale
Balance sheet gross assets ≤ £15m before & £16m after investment
Funding your business Investment incentives
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• Golden rules and common misconceptions
• The investment process including key points and time scales
• Deal structuring: entrepreneur/investors point of view
• Post-investment focus
Funding your business Gearing up for venture capital
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• Services offered to entrepreneurs by Amoo
Investment readiness
Financial control
Management consulting
IP-Skim™
• Events organised or sponsored by Amoo
Amoo Booster Series Meet VCs, Patent Attorneys and fellow entrepreneurs
place4BRICs Holds events with Amoo to explore topical themes within the start-up community
Summary
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Managing Director
Nzube Ufodike
Investment Director
Alexey Buditskiy
Supported by
Amoo Venture Capital Advisory Suite 84, 77 Beak Street
London W1F 9DB
+44 7 830 143 489 www.amoo.co.uk
[email protected] www.twitter.com/amootweets