Setting Up, Running and Funding your Business in the UK
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14 July 2012 UK as Europe’s innovation hub Setting up, running and funding your business
Transcript of Setting Up, Running and Funding your Business in the UK
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
