Accelera(ng  and  Financing  London’s  Start-­‐ups  

.    John  Spindler  CEO  of  Capital  

Enterprise  

1  @capenterprise  

A  start-­‐up  is  not  a  Game!  

   “  A  start-­‐up  is  an  organisa(on  in  search  of  a  repeatable  and  scalable  business  model”  –  Eric  Ries-­‐  Author  of  the  Lean  Start-­‐up.    

@capenterprise   2  

Investable  start-­‐ups  are…different  •  Ambi(ous:  want  to  be  

worth  £20M+  minimum  in  3  years.  

•  “Game  Changing”  •  Build/leverage  new  

technology/  business  model  innova(ons  

•  Acquire  and  leverage  as  many  “Unfair  Advantages  as  possible”-­‐  team,  key  partners,  resources  etc  

•  Move  very  FAST  @capenterprise   3  

To  get  investment  need  to  change    Business  Models  

From  Gun  for  Hire  needs  to  become...  

    ..To  Products    built  at  “own  

risk”  ...  

@capenterprise   4  

Games  vs  Gamifica(on  

@capenterprise   5  

How  you  make  money  is  also  changing…  

29  Business  Models  

•  h`p://lsvp.com/2008/07/02/29-­‐business-­‐models-­‐for-­‐games/    

Most  Popular  are  

•  Retail  (Pay  upfront)  •  Freemium  (Ini(ally  free  un(l…)  •  Premium  (  Pay  for  extras)  •  Around  Game  Adver(sing  

(  Banners,  click  throughs  …)  •  In  Game  Adver(sing  (  adverts/  

product  placement  in  game..)  •  Subscrip(ons    •  Third  Party  sponsorship    

@capenterprise   6  

@capenterprise   7  

Idea  

Problem/  Space  

Explora(on  

Design/  Prototype  

Beta  Test  

Adapt/  PivotX2  

Launch  

Bootstrap-­‐  FFF  Finance  

InnovaGon  Awards  Start-­‐up  Loans  

Crowdfunding  i.e.  Kickstarter  

Seedrs/  Crowdcube/F6s  SEIS  -­‐  Business  Angels    

Super  Angels/  Angel  Groups  

Early  Stage  VC’s  

Tech  Start-­‐  Up    Funding  Road  map.    

MVP  Factories  

Hackathons/  Hatcheries/  Meet-­‐ups.  

Accelerators  (Early)  

Accelerators  (Late)  

@capenterprise   8  

1  Idea  Stage  

2  Commitment  Stage-­‐  Secure  Co-­‐Founders  

3  FFF  funding  round  –Build  &  Beta  Test  Minimum  Viable  Product  

4  Seed  Investment  Round  (Angels  +  Early  VC’s)  -­‐  Prove  Business  model  &  acquire  metrics  to  prove  scalability  

5    Series  A  Round  (Angels,  VC’s  &  Strategic  Investors)  –  Go  for  scale,  build  out  team,  technology-­‐    EXECUTE    

6    Exit    

(Average  7  years  and  aler  many  rounds)  –  Trade  Sale  or  IPO      ££££££££££££££  

How  Start-­‐Up  Funding  Works  ?-­‐    Why  100%  of  “Nothing”  is  worth  Less  than  10%  of  something  big  

“  An  Investable  Start-­‐up  Needs..      

•  Team,  Tech  &  resources  that  is  FIT  for  the  task  of  crea(ng  an  awesome  company  

•  Product  that  is  the  best  solu(on  FIT  for  the  target  customers  problems.  

•  Business  Model  that  is  FIT  to  be  scaled.    

 •  Smart  Ass  Team  

•  with  a  Kick  Ass  Product  

•  Disrup(ng  a  Big  Ass  Market  

(  Jeff  Clavier  3  Ass-­‐es  rule)    

+  Capital  Efficient  to  Scale.    

@capenterprise   9  

How!  

Advance  in  Stages…   ..using  the  Lean  Start-­‐up  Method  

@capenterprise   10  

Building  a  Smart  Ass  Team  

•  Hipster    (Designer)  

•  Hacker    (Developer)  

•  Hustler  (Distributor)    

@capenterprise   11  

Building  a  Kick  Ass  Product  

Change  behaviour....   ...create  a  habit...  

@capenterprise   12  

Building  a  Kick  Ass  Product  

Good  Product  design..  …makes  the  Funnel  Conversion  Metrics  work.    

@capenterprise   13  

Minimum  Viable  Product  (MVP):    Problem  –  Solu(on  FIT  

@capenterprise  

Market  Size  •  How  big  in  terms  of  

number  of  customers  and  value  of  sales  is  your  poten(al  available    market?  

•  How  big  is  the  immediate  addressable  market  your  start-­‐up  can  reach  in  the  next  12-­‐24  months?  

•  What  %  of  that  addressable  market  will  you  aim  to  capture?  

@capenterprise   15  

Sources  of  Start-­‐up  Help  for  Scale  Focused  Entrepreneurs  

InformaGon:      •  Capital  Enterprise;  www.capitalenterprise.org      •  Meet-­‐up  -­‐  h`p://www.meetup.com    •  Mobile  Academy-­‐  h`p://themobileacademy.org.uk/    •  Makers  Academy-­‐  h`p://www.makersacademy.com/    •  GoGowo-­‐  h`p://www.gocowo.com    •  Skills  Ma`er-­‐  h`p://skillsma`er.com/    •  Start-­‐  up  Britain  -­‐  h`p://www.startupbritain.org    •  Bri(sh  Library-­‐  www.bl.uk/bipc    •  Google  Campus-­‐  h`p://www.campuslondon.com    •  General  Assembly-­‐  h`ps://generalassemb.ly/loca(ons/london    •  Innova(on  Warehouse-­‐  h`p://www.theiw.org    •  IC  Tomorrow  -­‐  h`ps://connect.innovateuk.org/web/ictomorrow    •  UCL  Decide-­‐  h`ps://www.ucl.ac.uk/decide    •  Start-­‐up  Weekend-­‐  London-­‐  h`p://london.startupweekend.org/    •  Launch  48-­‐  h`p://launch48.com/    •  Mobile  Collec(ve  h`p://mobilecollec(ve.wordpress.com  •  3  Beards-­‐  h`p://www.3-­‐beards.com/    •  Tech  Hub-­‐  h`p://www.techhub.com/events/    •  Dreamstake-­‐  h`p://www.dreamstake.net/events    •  Capital  List  Get  Together-­‐  h`p://www.capitallistblog.co/our-­‐monthly-­‐monday-­‐get-­‐together/    

   

 @capenterprise   16  

Idea  to  Tech  Business-­‐  Three  Chasms.    

Proof  of  Concept/  Proof  of  Market?  

1.  Does  it  work?     2.  Does  anyone  care?  

@capenterprise   18  

Funding  Games  Development  &  Beta  TesGng  Grants  &  Awards  General  •  Technology  Strategy  Board  (  R&D  Funding)  -­‐  h`p://www.innovateuk.org  -­‐  

h`p://www.innovateuk.org/content/compe((on/grant-­‐for-­‐rd-­‐single-­‐business.ashx  •  Knowledge  Transfer  Networks-­‐  www.innovateuk.org    •  Abertay  Prototype  Fund  -­‐  h`p://prototypefund.abertay.ac.uk/    •  Skillset  -­‐  h`p://www.crea(veskillset.org/games/    •  IC  Tomorrow-­‐  h`ps://connect.innovateuk.org/web/ictomorrow    •  NESTA-­‐  h`p://www.nesta.org.uk/    •  London  European  Enterprise  Network-­‐  h`p://www.een-­‐london.co.uk    •  E  Funding  for  SME  R&D  -­‐    h`p://www.eurostars-­‐eureka.eu/what.do  •  EU  Funding  for  R&D  collabora(ons:  h`p://ec.europa.eu/research/par(cipants/portal/page/calls    •  Knowledge  Transfer  Partnerships  funding  support-­‐  

hap://www.ktponline.org.uk/ktp-­‐what-­‐will-­‐it-­‐cost-­‐my-­‐business    •  J4B-­‐  Portal  for  grant  finding  h`p://www.j4b.co.uk  

Game  CompeGGons  • h`p://www.daretobedigital.com/  • h`p://www.glasgow2014.com/press-­‐releases/digital-­‐game-­‐compe((on    

@capenterprise   19  

@capenterprise  

Need  less  than  £20K  to  get  to  Build  and  test  MVP?            

-­‐  Sources  of  Grants-­‐  www.j4b.co.uk    -­‐  Compe((on  funding  £1000  issued  to  10+  businesses  per  month-­‐  h`p://www.shell-­‐livewire.org    -­‐  Princes  Trust  h`p://www.princes-­‐trust.org.uk/need_help/enterprise_programme.aspx    -­‐  £1000-­‐  £20,000  Enterprise  Loans  for  Under  25’s-­‐  www.startuploanslondon.co.uk  or  www.startuploans.com    -­‐  New  Enterprise  Allowance  Scheme  –  Check  who  delivers  the  scheme  in  London  by  e-­‐mailing  Capital  Enterprise.  -­‐  Community  Development  Finance  Associa(ons-­‐  h`p://www.cdfa.org.uk    -­‐  Also  check  out  North  London  Community  Finance  -­‐   ELSBC  Access  to  Finance  –  Business  Plan  support  for  those  looking  to  raise  up  to  £10K  •  Sol  loans  for  Crea(ve  Businesses-­‐    http://www.creativeindustryfinance.org.uk/

Need  Less  than  £10K  to  Launch  a  

business  

No  Funds  

Grant-­‐  www.j4b.co.uk  

Unemployed?   New  Enterprise  Allowance  Scheme  

Self  Fund  

Borrow  Write  a  simple  

Business  Plan  &  12  month  cashflow  

Community  Development  

Finance  Ins(tu(on  

Start-­‐Up  Loan   Bank  

20  

Crowdfunding  (Reward)  Crowd  funding  Plaforms-­‐    Reward  based  Crowdfunding  playorms-­‐  will  help  you  to  raise  funding  to  build  a  proto-­‐type  and  market  test  a  great  idea  or  product.-­‐  Great  for  pre-­‐selling  cool  tech  hardware.    •  www.kickstarter.com    •  www.indiegogo.com  (USA)  •  www.peoplefund.it  •  www.sponsume.com    •  h`ps://www.buzzbnk.org    •  www.pleasefund.us      •  www.wefund.com    •  www.pozible.com    •  www.crowdfunder.co.uk    •  h`p://spacehive.com    •  h`ps://www.banktothefuture.com    

   

  @capenterprise   21  

Idea  to  Tech  Business-­‐  Three  Chasms.    

Accelerators  help  by  ..  Offering  early  Stage  Entrepreneurs…  

•  Fellow  Community  of  entrepreneurs  &  supporters    

•  Runway  support  &  funding        (£15-­‐£100K  at  standardised  investment  terms.  )  

                   (  3-­‐6  months  on  average)  

•  Physical  Space  &  Facili(es  •  Mentors  (  1st    Industry-­‐  2nd  

Investors)  •  Help  to  Rapid  Field  Trail  with  

users  &  customers.  •  Demo  days-­‐  Introduc(ons  to  

Investors/  customers  

…so  that  they  can  test..    •  Product-­‐  Assess  FuncKonal  use/  

improve  design  &  UX  

•  Market  Reac(on-­‐  interest/  usage/revenue  -­‐  AARRR    

•  Revenue/  profit  Poten(al-­‐    pricing,  market  Kming,  LTV/CCA  

•  Business  Model-­‐  “To  Pivot  or  Not  To  Pivot”  

•  Investor  reac(on-­‐  interest  and  valuaKons  

•  Team-­‐  ability  to  work  together  and  deliver.    

Capital’s  Accelerator  Programme  Partners  and  Co-­‐Investors  in  London  

Pre-­‐AcceleraGon  Support/  IncubaGon  

AcceleraGon  Support  

ConnecGons  to  Investors  

Accelerators  want  businesses  who..…  

Investment  Essen(als  

@capenterprise   26  

Round Amount PurposeValuation  Guideline  (London)

Source

Pre-­‐  Seed Under  50KAssemble  Team/  Build  MVP Zero

Own  Money/  FFF/  Crowdfunding/  TSB

SeedUnder  £250K                                (SEIS  £150K)

Beta  Test-­‐  Launch  into  Beachhead  Market

£450-­‐£750K              (Pre  Money)

Angels/  Crowdfunders/  TSB

Super  Seed £250K-­‐£1mProof  of  Market  &  Scalability £1-­‐£3m  

Seed  VC's/  Angel  Syndicates/  Co-­‐Investment  Funds/  Family  Offices

Series  A  (Small) £1m-­‐  £5M

Scale  -­‐  Build  out  Team/  Technology  and  Expand  Marketing £3-­‐20m

VC's/  Corporate  Venture  Firms/  Family  Offices.  

@capenterprise  

Seed  Enterprise  Investment  Scheme-­‐SEIS  is  a  tax  break  launched  in  2012  for  UK  tax  payers  to  encourage  them  to  buy  shares  in  start-­‐up  companies  registered  in  the  UK    The  Facts:    •  SEIS  investors  can  input  £100,000  in  a  single  tax  year  rising  to  a  maximum  £150,000  over  two  

or  more  tax  years  in  to  a  single  company  •  Investors  cannot  control  the  company  receiving  their  capital  •  Investors  pick  up  50%  tax  relief  in  the  tax  year  the  investment  is  made,  regardless  of  their  

marginal  rate.  •  In  the  2013-­‐14  tax  year,  tax  payers  can  roll  50%  of  a  chargeable  gain  in  the  tax  year  in  to  a  

SEIS  with  a  full  capital  gains  tax  exemp(on  (another  14%)  •  The  business  must  be  a  start-­‐up  company  -­‐registered  in  the  UK  within  2  years  of  claim.    •  The  company  must  not  employ  more  than  25  workers.  •  The  company  must  have  assets  of  less  than  £200,000.  •  The  company  has  to  trade  in  an  approved  sector  –  generally  not  in  finance  or  investment,  for  

example,  a  property  company  raise  capital  as  a  SEIS.    

SEIS  is……  “a  game  changer”?    

27  

Think  like  an  Angel!  

Why  Do  Angels  Invest?   Where  to  find  them?  

www.capitallist.co    #capenterprise  

Key  to  being  s  Successful    Business  Angel?  

•  Good  Reputa(on  –  “Track  Record”  

•  Great  Source  –  “Having  good  introducers”  

•  Good  Selec(on  –  “  S(cking  to  what  you  know”  

•  Adding  Value-­‐  “  Offering  more  than  money  to  increase  the  chance  of  success”  

•  Ability  to  Follow  on  Successes/  Walk  Away  from  Failures.    

•  Ge{ng  Value  –  “Ge]ng  a  Good  deal  at  all  stages”  

@capenterprise  

Capital  List  –    The  Minimum  Viable  Introducer    

“  Showcasing  and  connecKng  Entrepreneurs  to  champions  and  

investors”  beta.capitallist.co    

@capenterprise   30  

31  

Ten  slides.  Ten  is  the  optimal  number  of  slides  in  a  PowerPoint  presentation  because  a  normal  human  being  cannot  comprehend  more  than  ten  concepts  in  a  meeting—and  business  angels  are  very  normal.  If  you  must  use  more  than  ten  slides  to  explain  your  business,  you  probably  don’t  have  a  business.  The  ten  topics  that  an  investors  cares  about  are:  

1. Summary  and  call  to  action/  what  do  you  want?    

2. Problem  

3. Your  solution  

4. Business  model  

5. Underlying  magic/technology  

6. Marketing  and  sales  

7. Competition  

8. Team  

9. Projections  and  milestones  

10. Status  and  timeline  

 @capenterprise  

Pitch  deck  for  investors  h`p://www.slideshare.net/slidesthatrock/how-­‐to-­‐pitch-­‐a-­‐vc-­‐redesigned    

Book  to  come  and  see  Capital  List  for  pitch  reviews,  advice  on  investment  

opportuni(es  and  poten(al  introduc(ons  to  investors.  

 

32  @capenterprise  

h`p://www.capitallistblog.co/startups/meet-­‐capital-­‐list/  

7  Types  of  Early  Stage  Investors  in  London  Market    

1.  Crowdfunders/  Playorms  2.  Tax  Relieve  Seeking  SEIS/EIS  Funds  3.  Government  Backed  ECF’s  4.  Tradi(onal  Angel  Syndicates  5.  Super  Angels  6.  VC’s      7.  Strategic  Investors  (  Corporate  Venture)    

@capenterprise   33  

 Seed/  Early  stage  Investment    Playorms  

 Crowdfunders.  www.crowdcube.com      www.seedrs.com  www.f6s.com  www.crowdbank.com            Angel  Plaforms  -­‐  www.angel.co    -­‐  www.syndicateroom.com       @capenterprise   34  

Syndicates.    

Top  SEIS  Funding  Syndicates  1.  Jenson  Solu(ons-­‐  

www.jensonsolu(ons.com    2.  Ingenious  Media-­‐  

www.ingeniousmedia.co.uk    3.  Ascension  Ventures-­‐  

h`p://www.ascensionmedia.com/ascension-­‐ventures.php    

4.  Start-­‐up  Funding  Club-­‐  h`p://www.startupfundingclub.com/    

5.  Ascot  SEIS  –  www.ascotwm.com      

Top  TradiGonal  Angel  Syndicates  

1.  London  Business  Angels:  h`p://www.lbangels.co.uk/    

2.  E100  (LBS)    3.  Oxford  Angels:  

h`p://www.oxei.co.uk    

4.  Cambridge:  h`p://cambridgeangels.com    

5.  Envestors-­‐  www.envestors.co.uk  6.     Angels  Den-­‐  www.angelsden.com  

 @capenterprise   35  

Super  Seed  Investors  

•  Playfair  Capital-­‐  h`p://playfaircapital.com    •  Angel  Pad  h`p://angellab.co.uk/    •  Kima  Ventures-­‐  h`p://www.kimaventures.com    •  Boundary  Capital  -­‐  www.boundarycapital.com    •  Venerex    (  Fashion  Tech-­‐  see  Capital  List)    •  Jam  Jar  Investments-­‐  h`p://jamjarinvestments.com    •  No  1  Seed  -­‐  www.number1seed.co.uk    •  Warner  Yard  Associates  -­‐  h`p://www.warneryard.com/    

•  Angel  List  –  www.angel.co    @capenterprise   36  

Ac(ve  VC’s  in  London.    Big  5  •  Accel Partners: Stage agnostic, see their portfolio here.        

•  Balderton-­‐  Stage  Agnostic-­‐  See  there  portfolio  here  

•  Index Ventures: Stage agnostic, see their portfolio here.

•  Wellington Partners: Stage Agnostic, see there portfolio here        

•  Octopus Ventures: Early to mid-stage, see their portfolio here.    

ECF’s/  Public  funded.    

•  Notion Capital – SAAS and Cloud specialist- See portfolio here •  Passion Capital: Early Stage, see their portfolio here.    

•  Episode1:  Early  Stage  Software  Companies  

•  Longwall  –  Oxford  Based  –  Science  backed  Start-­‐ups  focus    

•   MMC Ventures - Series A Fund- Co-Investment fund with Mayor of London

•       

 

 

Cool  Cats  •  Profounders: Early and mid-stage, see their portfolio here.    

•  Amadeus  Capital:  Early and mid-stage- just launched new fund.

•  Forward Group- Early stage investor.  

•  Piton Capital: Early and mid-stage specialize in market places.

•  DN Capital : Early and mid-stage, see their portfolio here  

•  DFJ Esprit: Early to mid-stage, see their portfolio here.        •  Spark Ventures : Stage  Agnostic-­‐  See  there  portfolio  here  

•  M8  Capital  :  Mobile  Specialists,  see  their  portfolio  here  

•  Arts  Alliance:    Minimum  investment  £500K  in  Media  related  tech-­‐  see  portfolio  here  

 •  EC1 Capital: Early stage, see their portfolio here

•  Connect  Ventures-­‐  Early  stage  and  very  cool.  

•  Hoxton  Ventures  –  New  and  focus  on  seed  with  next  mobe  to  USA.    

   

@capenterprise   37  

Specialist  Funds    

Social/  Tech  for  Good  -­‐  NESTA  -­‐  www.nesta.org.uk/investments      -­‐  Unltd  –  www.ubltd.org.uk    -­‐  Big  Society  Capital-­‐  h`p://www.bigsocietycapital.com    -­‐  Sources  of  Social  Finance-­‐  h`p://www.bigsocietycapital.com/finding-­‐the-­‐right-­‐investment    -­‐  Bridges  Venture  Fund    h`p://www.bridgesventures.com/social-­‐entrepreneurs-­‐fund    -­‐  Big  Issue  Investment-­‐  h`p://www.bigissueinvest.com    -­‐  Social  Finance-­‐  h`p://www.socialfinance.org.uk    -­‐  Social  Investment  Fund-­‐  h`p://www.thesocialinvestmentbusiness.org    Women    -­‐  Stargate  Capital-­‐  Trapezia-­‐    h`p://www.stargatecapital.co.uk/trapezia_1.aspx  -­‐  FSE-­‐  Incito-­‐  h`p://thefsegroup.com/investors/business-­‐angels/incito-­‐ventures/  -­‐  Aspire  Fund  -­‐    h`p://www.capitalforenterprise.gov.uk/files/Aspire%20Informa(on%20Leaflet%20(v%202)%20Flyer%20brochure.pdf      Green  -­‐  Bridges  Sustainable  Fund-­‐  h`p://www.bridgesventures.com/sustainable-­‐growth-­‐funds    -­‐  Ingenious  Media-­‐  Cleantech  Fund    

h`p://www.ingeniousmedia.co.uk/investments/investment-­‐opportuni(es/clean-­‐energy    -­‐  Carbon  Trust-­‐  h`p://www.carbontrust.com/about-­‐us/our-­‐investments    -­‐  Low  Carbon  Accelerator-­‐  h`p://www.lowcarbonaccelerator.com    -­‐  CT  Investment  Partners-­‐  h`p://www.c(p.co.uk    -­‐  Wellington  Partners-­‐  h`p://www.wellington-­‐partners.com/wp/index.html        

@capenterprise   38  

Ac(ve  Corporate  Players      

@capenterprise   39  

   

UK  Investment  State  of  Play  2013  

Deals  Under  £0.5M  

•  SEIS  Deals  £6-­‐7m  per  month  -­‐  82  Deals  -­‐  £72K  Average  

•  EIS  &  SEIS  -­‐  £600M  in  New  Companies  in    2012-­‐13.    

-­‐    EsKmated  1,116  New  Companies  received  investments.        

Deals  Over  £0.5m  

Courtesy  of  Stuart  McKnight  at  www.ascendant.co.uk   40  

Games  Investors  •  London  Venture  Partners  -­‐  h`p://www.londonvp.com/    •  DN  Capital  -­‐  h`p://dncapital.com/    •  Ini(al  Capital  -­‐  h`p://www.ini(alcapital.com    •  White  Star  Capital  -­‐  h`p://whitestarvc.com/    •  Playfair  Capital  -­‐  h`p://playfaircapital.com    •  Profounders-­‐  h`p://www.profounderscapital.com    •  Connect  Ventures-­‐  h`p://connectventures.co.uk    •  Balderton-­‐  h`p://www.balderton.com    •  Index-­‐  h`p://www.indexventures.com    •  Nokia  Growth  Partners-­‐  h`p://www.nokiagrowthpartners.com/    

@capenterprise   41  

42  @capenterprise  

Book  to  come  and  see  Capital  List  for  pitch  reviews,  advice  on  investment  opportuni(es  and  poten(al  introduc(ons  to  investors.  

 

h`p://www.capitallistblog.co/startups/meet-­‐capital-­‐list/