Fast Company 2 intro seminar 8 Dec 2010

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










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










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










Fast Company 2

Fast Company 2 - Team



















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










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!










Fast Company 2

Sources of funding

• Friends and Family

• ‘Soft’ loans

• Banks

• Business angels

• Venture capital










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










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










Debt Basics

– Conventional Bank Loan

– Loans from 3Fs

– Convertible Loan

– Enterprise Finance Guarantee (EFG)

– Types of Collateral










– 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?










– 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











– 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)











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










Fast Company 2

Debt

Q&A










Sources of Equity Investment• Sweat equity

• 3 Fs

• HNWI/ Business angels

• Venture capital

• Corporates

• Mix of above, plus debt (in some cases)










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










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










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)










Fast Company 2

Equity

Q&A










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










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

http://www.visionandmedia.co.uk/










What you should do next

• Speak to the team

• Reviews Dec/Jan

• Invitation to participate early January 2011

• On line registration










Thank You

Fast Company 2 intro seminar 8 Dec 2010

Documents

Transcript of Fast Company 2 intro seminar 8 Dec 2010