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Accelerating and financing London’s start ups


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Accelerating and financing London’s start ups

  1. 1.  Accelera(ng  and  Financing   London’s  Start-­‐ups   .    John  Spindler  CEO  of  Capital   Enterprise   1  @capenterprise  
  2. 2. 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  
  3. 3. 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  
  4. 4. To  get  investment  need  to  change     Business  Models   From  Gun  for  Hire  needs  to   become...       ..To  Products    built  at  “own   risk”  ...   @capenterprise   4  
  5. 5. Games  vs  Gamifica(on   @capenterprise   5  
  6. 6. 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  
  7. 7. @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)  
  8. 8. @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  
  9. 9. “  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  
  10. 10. How!   Advance  in  Stages…   ..using  the  Lean  Start-­‐up  Method   @capenterprise   10  
  11. 11. Building  a  Smart  Ass  Team   •  Hipster    (Designer)   •  Hacker    (Developer)   •  Hustler  (Distributor)     @capenterprise   11  
  12. 12. Building  a  Kick  Ass  Product   Change  behaviour....   ...create  a  habit...   @capenterprise   12  
  13. 13. Building  a  Kick  Ass  Product   Good  Product  design..   …makes  the  Funnel  Conversion   Metrics  work.     @capenterprise   13  
  14. 14. Minimum  Viable  Product  (MVP):     Problem  –  Solu(on  FIT   @capenterprise  
  15. 15. 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  
  16. 16. 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  
  17. 17. Idea  to  Tech  Business-­‐  Three  Chasms.    
  18. 18. Proof  of  Concept/  Proof  of  Market?   1.  Does  it  work?     2.  Does  anyone  care?   @capenterprise   18  
  19. 19. 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  
  20. 20. @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  
  21. 21. 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  
  22. 22. Idea  to  Tech  Business-­‐  Three  Chasms.    
  23. 23. 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.    
  24. 24. Capital’s  Accelerator   Programme  Partners  and  Co-­‐ Investors  in  London   Pre-­‐AcceleraGon  Support/   IncubaGon   AcceleraGon  Support   ConnecGons  to  Investors  
  25. 25. Accelerators  want  businesses  who..…  
  26. 26. Investment  Essen(als   @capenterprise   26   Round Amount Purpose Valuation   Guideline   (London) Source Pre-­‐  Seed Under  50K Assemble  Team/  Build   MVP Zero Own  Money/  FFF/   Crowdfunding/  TSB Seed Under  £250K                                 (SEIS  £150K) Beta  Test-­‐  Launch  into   Beachhead  Market £450-­‐£750K               (Pre  Money) Angels/   Crowdfunders/  TSB Super  Seed £250K-­‐£1m Proof  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.  
  27. 27. @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  
  28. 28. Think  like  an  Angel!   Why  Do  Angels  Invest?   Where  to  find  them?   www.capitallist.co    #capenterprise  
  29. 29. 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  
  30. 30. Capital  List  –     The  Minimum  Viable  Introducer     “  Showcasing  and  connecKng   Entrepreneurs  to  champions  and   investors”   beta.capitallist.co     @capenterprise   30  
  31. 31. 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    
  32. 32. 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/  
  33. 33. 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  
  34. 34.   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  
  35. 35. 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  
  36. 36. 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  
  37. 37. 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  
  38. 38. 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  
  39. 39. Ac(ve  Corporate  Players       @capenterprise   39      
  40. 40. 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  
  41. 41. 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. 42. 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/