Finance in Cornwall (Session 3) - April 2018
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• Presentations from sources of grant, debt and equity funding, as well as business support agencies operating in the region • The presentations will be short and sharp giving the delegate a basis for an assessment of which funding stream/funder matches their requirements • To have a targeted session depending on your business needs – with a session focussed on start-up/early stage businesses
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Finance in Cornwall (Session 3) - April 2018
- 1. 1 Richard Wadman, Corporate Finance Director Finance in Cornwall 2018
- 2. Structure of the morning – after coffee • Meet the alternative Funders (10.20 am to 11.05am) • Crowd – Equity • Peer to Peer • Debt – “the market” • Grants and Business Support (11.15 am to 12 noon) • Start Up, Established and Growing (12.10 pm to 1pm) • Banks overview • Private Equity • Cornish Company • Lunch and Networking (1pm to 2pm) (10 minute breaks at 11:05am and 12 noon. NOT Coffee breaks!)
- 5. ANGELS
- 6. CROWD
- 10. WHY CROWDFUND? Global Investor Reach Cost effective Marketing effect Crowd feedback Expertise Fair Terms Financial return ‘Armchair Dragon’ Support friends and family Access exciting investments Lower/spread risk Simple to invest
- 14. Under 25 25-34 35-44 45-54 55-64 65 or over DIVERSE COMMUNITY Gender split • 74% male, 26% female • 3% of angel network members are female • 4% of VC partners are female • 9% of AngelList members are female
- 15. £70,000 Annual salary 42% Investment from high net worth & sophisticated investors Technology Marketing Financial Services Management Consulting VC and Private Equity TOP JOBS TOP 5 £ £ £ investor employers
- 17. The Evolution of Success
- 18. The Evolution of Success
- 19. The Evolution of Success
- 20. £404 MILLION +Successfully raised £0 £20,000,000 £40,000,000 £60,000,000 £80,000,000 £100,000,000 £120,000,000 £140,000,000 2011 2012 2013 2014 2015 2016 2017
- 22. £15,306,110 £39,479,630 £44,303,188 Stage of Growth Start up Early stage Growth 41% 35% 24%
- 23. 501,000+Investor community 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 2011 2012 2013 2014 2015 2016 2017
- 24. £1,000,000 Largest single investment £ £10,000,000 Biggest deal £651,471 Average raise £1,789 Average investment 52% Pitch success rate £10,736,120 Average amount invested per month
- 25. Crowdfunding is for growth businesses in any sector – easier for consumer facing but B2B has good chances of success Secure an army of investor advocates and awareness as well as funds Success rate of 52% vs 25% outside of crowdfunding Sprint not a marathon - typically 3 months end-to-end vs 10 months outside of equity crowdfunding
- 26. THANK YOU Mark Tyler Head of Legal www.crowdcube.com mark.tyler@crowdcube.com
- 27. Stephen Yearwood Funding Circle Francis Clark – April 2018
- 28. 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2010 2011 2012 2013 2014 2015 2016 2017 FundingCircleannualorigination(£m) Group Annual Originations (£m) The leading global lending platform for small businesses 28 October 2013 Launch in the US October 2015 Launch in Germany & Netherlands January 2018 • £4bn in lending through platform • 40,000+ small businesses supported • 100,000+ jobs created August 2010 Launch in the UK Francis Clark | Finance in Cornwall Funding Circle
- 29. Funding Circle compared to the banking system 29 Lack of dedicated resources to cater to small businesses High regulatory capital requirements Heavy regulatory agenda absorbing internal resources Not equipped to handle small transactions efficiently SMEs’ contribution to national economy 50%of GDP 60%of private sector employment Francis Clark | Finance in Cornwall Funding Circle Source: Bank of England
- 30. Source: Funding Circle 1. Upfront borrower origination fee: 1.5-6%, contingent on loan term and risk band 2. Ongoing servicing fee: 1% p.a. on the outstanding balance of performing loans 30 Funding Circle efficiently connects supply and demand Francis Clark | Finance in Cornwall Funding Circle
- 31. *Personal Guarantee required 31 Fast, flexible and affordable finance for small businesses Unsecured loans from £5k to £350k* Finance for almost any purpose Rates from 3.00% per year Loan terms from 6 months to 5 years No early repayment fees Decision typically in 24 hours Features Benefits Francis Clark | Finance in Cornwall Funding Circle
- 32. 32 Quick application process in four easy steps 1. Instant quote 2. Online application 3. Decision4. Funds transfer Francis Clark | Finance in Cornwall Funding Circle
- 33. Positive feedback and demonstrable impact on the economy 33 Reasons Borrowers Choose Funding Circle 3% 4% 4% 6% 7% 7% 11% 28% 31% • Net lending between July and Dec 2017 was larger than 30 of the UK’s biggest high street banks • For every £1 lent through the platform, £2 is added to the economy • Turnover increased by an average of 17% for 61% of borrowers • Profit increased by an average of 15% for 47% of borrowers Francis Clark | Finance in Cornwall Funding Circle Source: Bank of England, Cebr analysis, Funding Circle
- 34. 34 Average Loan Size c.£60k Average Turnover c.£800k Average # Years Trading c.13 years Average Interest Rate 9.7% Average Maturity 49 months Security Unsecured/secured, with personal guarantee Bramley and Gage borrowed £25k through Funding Circle The Bath franchise of Neal's Yard Remedies borrowed £100k through Funding Circle Teasdale Motorcycles borrowed £167k through Funding Circle Typical Funding Circle borrowers Francis Clark | Finance in Cornwall Funding Circle Source: Funding Circle
- 35. 35 Attractive product Customer experience Global presence Tech & data analytics Our vision: $100 billion in lending and 3 million new jobs created a year through the platform globally Our four pillars of growth Francis Clark | Finance in Cornwall Funding Circle
- 36. Thank you Stephen Yearwood Business Development Manager t: 0208 046 1869 m: 0771 847 9959 e: stephen.yearwood@fundingcircle.com a: 71 Queen Victoria Street, London, EC4V 4AY 36 Francis Clark | Finance in Cornwall Funding Circle
- 37. Giles Cross Chief Executive Officer
- 41. What we offer British businesses *If you have all the relevant documents ready, and there are no complications. Your property against which the loan is secured could be at risk if you don’t meet payments. • Borrow £50,000 to £5m or more • Interest-only repayments • Decision within 24-72 hours* • Fixed or flexible loans, 6 months to 5 years • Secured against land or property
- 42. Who we are The Local Lending Movement: Helping to build and sustain socially and financially successful local and rural communities across the UK. Essential to Britain’s pre-and post-Brexit success.
- 45. Michael Cass
- 46. Lenders on our platform include. . .Smarter funding searches with capitalise.com
- 47. 2017 was a great year for us
- 48. Lenders on our platform include. . . 360 + lenders in the UK alone
- 52. Term loans and working capital facilities CAPITALISE CASE STUDY Scenario: High-interest loan refinance, with additional working capital Amount: £80,000 Business sector: Retail Challenge: • Several short-term, high interest loans • Ate into cash-flow & profit margins Result: • Two competitive term loan quotes • Elongated repayment terms to lower monthly payments • Lower rate and lower APR • Ability to pay facility off early w/ no charge • A happy client! Scenarios • Growth • Working capital • Debt refinance • Tax bill • Asset purchase • Acquisition • Stock purchase • Supplier payment • Payroll • Refurbishment • & more!
- 53. Debtor backed funding Great for businesses with… • Large, corporate clients with long payment terms • Large number of debtors outstanding, evenly spread • Businesses operating B2B who have high day-to-day operating costs • Businesses with light fixed assets • & more! CAPITALISE CASE STUDY Scenario: Large oil & gas business with contractual disputes and large looming tax bill needed working capital and refinance of their banking facility. Amount: £4,000,000 Challenge: • Contractual disputes in arbitration • Large tax bill looming • Bank not looking to support • Difficult to fund debt due to the above Result: • £4m facility agreed to fund business working capital & refi bank facility • Facility structured as term debt, backed against debtor book
- 54. Asset finance Assets you can fund… • Plant • Machinery • Motor vehicles • Property • Office furniture • Office/shop ‘fit out’ • Software • Hardware • Intellectual Property • IT equipment • Kitchen equipment • Brewing equipment • & more! CAPITALISE CASE STUDY Scenario: Group of manufacturing business looks to refinance their business’ assets to raise money for acquisition and general restructuring. Amount: £1,000,000 Challenge: • Many different types of assets • Different lenders with finance outstanding • Complex structure with several different charges necessary Result: • £1m facility, secured over assets and property, refinancing all asset-based lending in the business • 60 month repayment profile
- 55. Property CAPITALISE CASE STUDY Scenario: Diversifying care home business, looking to buy a boutique hotel to refurbish & develop in the SW Amount: £1,000,000 Challenge: • Find a lender with strong pricing and no exit fee willing to lend at a fairly high LTV (Loan To Value) • Demonstrate viability of project & business plan Result: • Quick turnaround £1m bridging loan in time for seller’s deadline & a happy client! CAPITALISE CASE STUDY Scenario: Trading business in the healthcare space looking to exercise purchase option on their office Amount: £135,000 Challenge: • On the small end for commercial mortgages, client required 75% LTV • High LTV and low enough rate needed the right lender Result: • A challenger bank was able to get comfortable with the property and the business’ affordability • & of course – a happy client
- 56. 7x more likely as a PKF Francis Clark client!
- 58. 58 Richard Wadman, Corporate Finance Director Finance in Cornwall 2018
- 59. Break Not a coffee break Not a Q&A or networking session – unless you have a short question, requiring a short answer, for the person next to you… Resume in 10 minutes!
- 60. Structure of the morning – next up • Grants and Business Support (11.15 am to 12 noon) • Start Up, Established and Growing (12.10 pm to 1pm) • Banks overview • Alternative Finance • Private Equity • Cornish Company • Lunch and Networking (1pm to 2pm) (10 minute breaks at 11:05am and 12 noon. NOT Coffee breaks!)
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Notas do Editor
- Morning Crowdcube is Europe’s leading equity crowdfunding platform designed to make it easy for businesses to raise investment from anyone, and for anyone to invest in exciting growing companies. Equity crowdfunding uses technology to raise investment – usually seed or growth capital, from a wide range of people Crowdfunding depends on…
- We believe in the power of the crowd & in the democratisation of investment. Equity Crowdfunding fundamentally serves to allow any business to raise investment from anyone, and for anyone to invest in any business. The principle of crowdfunding is that lots of people can contribute small amounts of money –
- Not that different to angel investment – instead of insisting on a minimum level of investment and ending up with a handful of backers,
- Crowdfunding allows anyone to invest from as little as £10 – this means the businesses potentially ends up with dozens of investors – an army of advocates and advisors - all vested in their success. This means founders can source investment easily from angels, personal & professional networks, their customer base, friends and family – anyone, from nearly anywhere in the world – through one platform – I think the record for one company is investment from 90 countries.
- Before we get into the who’s the what’s the why’s of equity crowdfunding, let’s take a look at the market - This is for all equity investment in non-listed UK companies rather than just crowdfunding. When I was here last year, it was on the back of a fairly disappointing 2016 for private equity investment– and that was for a variety of macro reasons including Brexit. 2017 has been big, and that’s primarily been down to a handful of big raises – in 2017 there were 29 deals of £50m or greater - 4 times the norm. That said, when we strip out those outliers, average deal size is up the up, which is a trend we’ve seen in equity crowdfunding, and deal volume increased by about 5% - in short, there’s more money around for a similar number of businesses looking to raise. Market share of crowdfunding across finance life cycle continued to increase – crowdfunding at growth-stage increased by 10% - continued trend of crowdfunding moving out of ‘alternative finance’ and firmly into the mainstream
- In terms of where we’ve seen funding come from – the institutions recovered some of their appetite last year – anecdotally we’ve heard it was easier last year to raise funds to raise than in prior years. You’ll see that crowdfunding is in 2nd place for number of deals completed – contrast that to where the industry was in 2013
- In terms of Geography, London remains dominant - over half of all PE deals in the UK went to London-based companies, but the south west saw the biggest growth at 50%. As a platform, we saw this trend in both
- Why do People Use Crowdfunding: Two sides of the coin – we’re lucky that we see both sides For Entrepreneurs – Gives you global investor reach, and it’s cost effective – both in terms of expenses and time. Average investment round we hear is around 10 months. With us. from application to cash in the bank – it should be a little over 3 months More than that – the marketing effect remains key – on average businesses that raise money through crowdfunding will see a 3-fold increase in sales through the heightened awareness. Terms – absolutely key – entrepreneurs are more likely to secure founder-friendly terms and a fair valuation. For investors – ease of access to venture stage investment – before crowdfunding, this was the preserve of hnw’s – now ANYONE can access. Investors tell us that as well as financial returns (and we have seen returns), they want to back great british businesses that interest them – over 25% are interested in helping in an advisory capacity. It’s also pretty efficient in terms of accessing deal flow
- How it works – more than anything this is an exercise in awareness raising – if entrepreneurs go out with the objective of connecting as positively as possible, with as many people as possible, they can’t lose. This take the form of traditional networking as well as email, social media, digital advertising, can take the form of print/outdoor media as well. Like all platforms – we provide an online ‘pitch page’ – the shop window. which allows you to present information through a video, text and images
- Text & images – explaining what you do, why you’re awesome, who’s behind it Documents – financial forecasts, full business plan
- There’s also a forum – both for updates broadcast by the founding team, and discussions. This is all about creating dialogue. In this respect, crowdfunding is a little different to other methods of fundraising – this is public. Trial by crowd. This means that if someone asks a tough question – how did you arrive at your valuation is a common one – and their answer is poor, the crowd will let them know. In this campaign – updates included product development updates, press coverage, significant investors. Investors wanted to know some of the detail of how it’s being designed, how it will work, how IP will be owned in future, legal and regulatory restrictions for the future. Similarly, entrepreneurs who communicate openly and effectively are handsomely rewarded. You can also see share types – this is one of the mechanisms we use to make it easy for entrepreneurs to manage a large number of investors (a common concern) – typically larger investors are offered ordinary shares with voting and pre-emption rights, whilst smaller investors take a more passive share class with equal rights to proceeds on exit or dividends. Ultimately, whatever class, investors through equity crowdfunding are typically best described as quietly helpful- as long as they receive updates, they probably won’t get in touch unless they can help. Crowdfunding is fundamentally an exercise in awareness raising, and that awareness can be tied into other activity – Just park were hiring and had 2000 job applications in a week whilst live, compared to around 100 in the month prior. Many businesses receive 3 times the number of commercial enquiries than normal during their round Typically – 3 months start to end Like most fundraising activity, it takes time and effort, but a lot of entrepreneurs, particularly those who have raised before through other means, compare it to a sprint rather than a marathon – efficient use of time and resources, delivering cash, marketing, awareness, an army of brand advocates and valuable expertise and introductions. All starts with a simple application on our website We have inhouse lawyers to call upon where necessary – both structuring and due diligence , Work with you on marketing planning – networks and investors, help Write your pitch and create your video We’ll make due diligence as easy as possible, We work with you on finalising paperwork and agreements, issue share certs and EIS certs Investor Relations Portal
- To businesses looking at using equity crowdfunding – big question – who do I get? One of the big draws historically to institutional and Angel money was the status of the investor, or the doors they could open, the guidance they could provide. Crowdfunding is no different. They’re a diverse age range – certainly more diverse than you’d typically see in traditional early-stage investment – over 60 % of investors are under the age of 44 We also see a more diverse gender split – typically 5-10% of angels and VCs are female, in crowdfunding, it’s around 26%
- They’re serious people – the crowd have had a bad rap over the years some even described them as ‘dumb money’– we know they’re smart, well paid, well educated, and work for respectable firms. A recent study by LSE shows that they make economically rational decisions – akin to institutional money. They’re also experienced – around 50% of investors have held the title of CEO, founder or director at some point.
- Split of how our crowd is made up – as expected – far more everyday investors, but HNWs invest more And a much better gender split – still not 50/50 – should be noted historically, female founders have a tougher time raising investment – in equity crowdfunding (at least on our platform), it’s easier – normal success rate around 55%, female-led businesses nearer 85%.
- In terms of the types of business that have successfully used crowdfunding – we’re sector agnostic, though the easier to understand and the more exciting the business, the easier it is to crowdfund – fundamentally, there needs to be a crowd that might be interested in investing, and there needs to be a way of getting to them. This means that historically businesses in Food & Beverage & technology have tended to do well consumer facing, but b2b businesses that can explain themselves (with our help have raised successfully too) – recently we saw Hurree which is a marketing automation app successfully raise, as well as Rentivo which create software for travel agents and holiday home rentals. Eden project raised 1.5m in a matter of hours
- GripIt – backed by Deborah Meaden and the most successful Dragon’s Den Business - £2m in 5 days. It’s a plasterboard fixing!
- Victor Mobility raised nearly ¾ of a million to continue development of their new mobility device which allows users to move around at eye level - founded by Phil Eaglesham – former Royal Marine
- We’ve raised a lot of money
- For over 600 companies
- Companies at varying stages of Growth – historically we sav maybe 20% of funds being raised into growth stage companies, in the last 12 months we’ve seen a rebalance – more mature businesses are turning to the crowd
- Who invests via Crowdfunding – well there’s a lot of them – currently, over 500k in our community And It’s growing – nearly 150k joined Crowdcube last year – we assume a similar growth rate across the industry
- I won’t go through all this data but I will point out that the largest single investment was made at 10 minutes to midnight, from a mobile phone. We raise anything from £20k to £10m Average amount through the platform last quarter was over £10m per month
- Thank you, love to talk to you afterwards if you’d like to know more I’d now like to introduce XXX of Francis Clark
- We are the leading global lending platform for small businesses Present in 4 different countries 80%+ YOY revenue growth GLOBAL NUMBERS Our platform has issued more than £4bn in unsecured loans, £3bn+ in the UK alone. 40,000+ small businesses supported 100,000+ jobs created ~$325m equity capital raised to date including Index Ventures, Accel Partners, DST, Temasek, Blackrock, Sands Capital and Baillie Gifford
- Bank process up to 4 months in the UK SMEs sit between corporate and retail Total bank loans outstanding to SMEs has fallen by £24bn between 2011 and 2017
- Check your eligibility in 30 seconds online Apply online in just 10 minutes Get a final decision typically in 24 hours Funds in your account within 5 days
- We approve a new loan every 6 minutes In Q3 and Q4 2017, net lending through the UK platform was larger than 30 of the UK’s biggest high street banks for the first time according to Bank of England data
- Typical Funding Circle borrowers are well-established creditworthy businesses