accelerating and financing london’s start ups
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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” ...
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Games vs Gamifica(on
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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
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@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)
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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.
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How!
Advance in Stages… ..using the Lean Start-‐up Method
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Building a Smart Ass Team
• Hipster (Designer)
• Hacker (Developer)
• Hustler (Distributor)
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Building a Kick Ass Product
Change behaviour.... ...create a habit...
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Building a Kick Ass Product
Good Product design.. …makes the Funnel Conversion Metrics work.
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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?
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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/
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Idea to Tech Business-‐ Three Chasms.
Proof of Concept/ Proof of Market?
1. Does it work? 2. Does anyone care?
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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
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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
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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
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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”?
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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
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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)
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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
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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.
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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
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Ac(ve Corporate Players
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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/
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