fast company 2 intro seminar 8 dec 2010
DESCRIPTION
TRANSCRIPT
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Welcome to Fast Company 2Introduction Seminar
#fcp2
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Agenda
2.15 Introductions
2.30 Presentation | Debt and Q & A
3.00 Coffee break
3.30 Presentation | Equity and Q & A
4.00 About Fast Company 2
4.15 Final Q &A
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Welcome to Fast Company 2
• The Fast Company team
• Why are we all here?
• What is in the programme this afternoon
• Fast Company 2 programme details
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Fast Company 2 - Team
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Why Are We All Here ?
• Good companies can unnecessarily fail to raise funding
• Equity investment is a highly competitive environment
• Bank lending continues to be still fragile
• Business owners often don't have recent understanding, abilities or contacts to successfully raise funds
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
This Afternoon You Get...
• An overview of funding types and their pros and cons
• Fundraising process insights for both debt and equity
• An overview of the current funding landscape
• What the programme is all about and what it can do for you
• Opportunities to ask questions!
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Sources of funding
• Friends and Family
• ‘Soft’ loans
• Banks
• Business angels
• Venture capital
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Bank Debt
Seed VC
Seed VC
£10k
£100k
£1m
R&D Grant
Business Angel
Friends & Family
Govt secured debt
Venture Capital
Idea Research Development Commercialisation
Funding Required
Development Stage
>£1m
Funding Types by Stage
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Debt vs EquityISSUE DEBT - FINANCE EQUITY - INVESTMENT
Repayment
Risk
Security
Added Value
Ownership
Timing
Scheduled from outset Only on successful exit
Relatively quick - criteria often standard
Relatively long – Decisions can take 6 - 9 months (+)
Low - Mitigated with security / collateral
High – Potential for high return
In form of personal or business collateral
Little if any, some ‘protection’ potential in Shareholders' Agreement
Unlikely, maybe financial Likely at most levels, contact base can be highly valuable for business and exit
None Varied – Influential until exit
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Debt Basics
– Conventional Bank Loan
– Loans from 3Fs
– Convertible Loan
– Enterprise Finance Guarantee (EFG)
– Types of Collateral
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
– Key considerations• Amount Vs Collateral• Interest: more risk = more interest• Current Climate• Need for Collateral• Based on balance sheet (so Assets / Liabilities) and
P&L of the past• Need to build up confidence
What Do Banks Want and Need?
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
– Ability to repay to a profile• Borrowing + Interest + Term• Long Term: Asset Financing• Short Term: Operating loan / Working Capital
– Don't breach covenants (charges or loan recall)• Principal and interest must be repaid according to
schedule agreed• Cash flow requirements
What Do Banks Want and Need?
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
– How they read a business plan
– Get the numbers right – often a weak point
– Need more robust proposition than in previous years (good for your business anyway)
What Do Banks Want and Need?
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Debt Summary– No interference
– Obligation is to repay the loan + interest
– Tax benefits
– If business fails you still have to repay loan + interest
– If bankrupt lenders will have first claim on collateral
– Interest rates vary depending on economy, your business & personal history
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Debt
Q&A
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Sources of Equity Investment• Sweat equity
• 3 Fs
• HNWI/ Business angels
• Venture capital
• Corporates
• Mix of above, plus debt (in some cases)
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Equity Investors View
GOOD NOT GOOD
Team
Service/product/IP
Market Opportunity
IP/Trademarks Ownership
Business Position
Potential Risks
Route to Exit
Commitment, varied team, previous experience
Other projects.... Lack of the ‘Likes’
Highly , efficiently scalable, crystal clear need
Perceived benefits not real or significant for big return
Obviously growing, filling a real gap
Already crowded, no competition
Can protect position when valid Easy to copy and exploit
Proven revenue business model, strong ‘growth’ trends
Unproven product/service, few users, no growth metrics
Obvious range of likely acquirers, activity in the sector
Few identifiable acquirers, owners not wanting to sell
Recognised, planned for Unprepared, unrecognised etc
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Investor Types - Angels vs VCsHNWI / Angels Venture Capital
Typical Deal
Sector Specialism
Incentive to Invest
View on Team
Information and Data
Equity
Stage
£10k - £500K will syndicate £500k+ will co-invest
Usually invest in what they know Sector specialist funds and fund managers
Highly varied. Vanity, something to do, portfolio diversity etc
It’s their job, FSA regulated, returns
May only invest once, then be diluted
Will expect to invest more than once, may hold % or increase
More relationship biased, can add real value
Track record key, lighter touch but still one of the team...
Succinct plan and financials, can help with this
Expect plan to be concise with detailed, substantiated financials
From plan to early revenues and on
Usually later stage to provide for acceleration of proven model
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Raising Equity• Business plan, financial forecasts and investor presentation
• Network, network, network (and keep networking...)
• Find investors that are actually investing
• Secure term sheets, negotiate, get external advice
• Understand their processes
• Due diligence
• Timing (crucial)
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Fast Company 2
Equity
Q&A
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
About Fast Company 2• Help you with up-to-date knowledge and firsthand
experience to prepare for growth finance
• Diverse range of chalk-and-talk, interactive and varied external speaker sessions
• Access to contacts in finance that are looking to lend/invest
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
About Fast Company 2
• Each stage by invitation only – apply through www.visionandmedia.co.uk
• Debt Workshop 26th Jan 2011
• Equity Workshops 27th Jan, Feb 2nd, pitching Feb 16th
• Wrap up / networking event February 16th
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
What you should do next
• Speak to the team
• Reviews Dec/Jan
• Invitation to participate early January 2011
• On line registration
PRE - POST INVESTMENT SUPPORTCo-Investment Networks
Deal SourcingExit management
DEAL SOURCINGRegional networksMarketing the Fund
Specialist Sector Advice / Analysis
FUND MANAGEMENTOperations
PRIME CONTRACTORCo-Investment Networks
FSA Compliance & Back Office
The NWBF Digital & Creative Fund
Contractual relationshipsTHE CONSORTIUM
Thank You