Start up a business and change the world vs4

Welcome

“Start a Business And Change the
world???”.

www.capitalenterprise.org

Our Agenda

- Introduce you to new thinking of how to start a business

- Introduce you to the Lean Start-up principles including MVP

- Demonstrate how to use the Business Model Canvas

www.capitalenterprise.org 2

Start-up Growth Pathway
50

40

30

20
Income

10

0
0 2 4 6 8 10 12 14 16

-10

-20
Investment

Going Self-employed vs Starting a
Growth Business
Self Employed need Entrepreneurs need
• To turn a pre-acquired • A team
skill/know-how into a service • A large market opportunity.
• Portfolio (Evidence) • A WOW
• USP • Key Partners/ Early Evangelists.
• Easy access to customers (i.e. • A solution/ offer customers will
buy/use.
contacts./ networks)
• A “Market Validated Business
• Self-Confidence Model” that is both
• Basic business know-how repeatable, predictable and
• Low volume/ high margin scalable.
• Cashflow • Resources and Investment ££££
• ROC X 10 ?

“There is an opportunity gap when the scope
for growing income at a very fast rate is
limited for those who have too little to invest
, but expands dramatically for those who can
invest a bit more.”

Banjaree &Duflo- Poor Economics


What is A Start-Up?

“a start-up is an organization formed to search
for a repeatable and scalable business model”
- Steve Blank- “4 Steps to an Epiphany”

“an organization dedicated to creating
something new under conditions of extreme
uncertainty”- Eric Reis- “Lean Start-up”

Traditional Start-Up Model

Pre-Start Post- Start

Valley of Death- See
Get Idea Develop a Source Funding/ Launch if anyone will buy
Validation business plan Resources Business my product.
Have an Idea
Get Set-Up
Guidelines


New Start-up Model Attempts to Premature Scale is the
No 1 reason that ambitious
business start-ups fail.- Source Start-up
Genome.

See Steve Blank, Four Steps to the Epiphany

Customer Discovery
http://www.bus
inessmodelgene
ration.com/dow
nloads/value_pr
oposition_desig
ner_draft.pdf

9

Importance of FIT
Problem Solution

10

“In life a hypothesis that something
is superior to something else cannot
be scientifically proven but it can be
demonstrated”
Robert Hughes. RIP


Part 5

Still Need Money


Funding Runway
• How much/ little money is
needed to set-up the
business, get a MVP prototyped
& beta tested, launch the
business and get to breakeven or
next round of funding.

• Going to need a Budget/
Cashflow/P&L forecast….

13

Step1- Know the different types of
finance available
• Bootstrapping through Personal resources (time and money = sweat equity you are
investing)
• FFF- Family Friends & Fools – People who will give you funds with little questions asked
including reward based crowd funders such as Peoplefundit.
• Government Grants
• Customers and Suppliers- “Build slowly at low risk by obtain credit from suppliers and
growing business through profits from paying customers”
• Loan providers- “Increase business growth ambitions by increasing investment by
taking out debt”
– Banks ( Overdraft-unsecured and secured loans)
– Community Finance Institutions ( Soft/ unsecured loans for riskier ventures)
– Leasing Companies.
– Invoice lenders (Factoring, invoice discounting)
– New loan markets such as Market Invoice and Funding Circle.
• Investors-
– Private Investors- Business Angels such as Angel Capital
– Venture Capitalist
– Crowdcube
– Government Backed Investment Funds
Matching the right mix of sources to the right stage and type of finance is the key to
successful fundraising


Step 2- Match the funding need to purpose?


Information:

• Capital Enterprise What’s On in London- www.capitalenterprise.org/whats-on
• Business Link - www.businesslink.gov.uk
• Start- up Britain - http://www.startupbritain.org
• British Library- www.bl.uk/bipc
• HMRC Small Company Enterprise Centre- Source of advice and help
http://www.hmrc.gov.uk/manuals/vcmmanual/VCM10050.htm
• HMRC R& D Tax Credits www.ucl.ac.uk/advances/advances-news/hmrc
• HMRC Guide & Support- http://capitalenterprise.org/guide-to-rd-tax-credits
• British Business Angel Association: www.bbaa.org.uk
• Guide to Early Stage Investment:
http://www.paloalto.co.uk/about_us/Early_Stage_Investment_by_Alan_Gleeson.pdf

• Guide to 100 offers for start-ups – www.capitalenterprise.org

And if you have not checked them out please look at the latest schedule of advice and training events at :
www.ngfc.org.uk .


Need less than £10K to start?

Grant-
www.j4b.co.uk
No Funds
New Enterprise
Unemployed?
Allowance Scheme
Need Less than
£10K to Launch a Self Fund
business Community
Development
Write a simple Finance Institution
Borrow Business Plan & 12
month cashflow
Bank

- Sources of Grants- www.j4b.co.uk
- Competition funding £1000 issued to 10+ businesses per month- http://www.shell-livewire.org
- Princes Trust http://www.princes-trust.org.uk/need_help/enterprise_programme.aspx
- £2500 Enterprise Loans for Under 25’s- http://www.startuploans.co.uk/
- New Enterprise Allowance Scheme – Check who delivers the scheme in London by e-mailing Capital Enterprise.
- Community Development Finance Associations- http://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
• Soft loans for Creative Businesses- http://www.creativeindustryfinance.org.uk/


You can’t a business loan from a bank because?

Banks only make a margin on loans of between 2-7% -so they can only afford very low default rates and
this means they will not lend to a business or entrepreneur that is deemed “risky”. And you are deemed
an unacceptable risk if:
1. You have a bad credit history
2. Failure rate in you business sector is high
3. You have no confirmed customer invoices- no evidence of sales = no evidence you can re-pay the
loan
4. The business has no trading history – difficult to get a loan unless been trading for over 6 months
5. You are unable to offer security to cover the bank if the business fails.
6. Your customers are overseas –so there is a risk they cannot be legally forced to pay for goods
ordered.
7. What you want to do with the borrowed money is widely regarded as having a poor success rate
e.g. Research and developing a new product and especially marketing.

Banks like RBS are the best source of relatively cheap loans for trading
businesses.


Where do NGFC Figure 1. 4 Steps to developing a high
growth business. ( Source HBR)
members fit


Funding Product Development: Tech
Grants & Awards General
• J4B- Portal for grant finding http://www.j4b.co.uk
• Technology Strategy Board ( R&D Funding) - http://www.innovateuk.org -
http://www.innovateuk.org/content/competition/grant-for-rd-single-business.ashx
• Knowledge Transfer Networks- www.innovateuk.org
• London European Enterprise Network- http://www.een-london.co.uk
• E Funding for SME R&D - http://www.eurostars-eureka.eu/what.do
• EU Funding for R&D collaborations: http://ec.europa.eu/research/participants/portal/page/calls
• Knowledge Transfer Partnerships funding support- http://www.ktponline.org.uk/ktp-what-will-it-cost-
my-business
Translation/ Follow on research funds.
• www.rdfunding.org.uk/bulletin/queries/Search.asp?TheCloseMonth=July&TheYear=2011.
• http://www.rcuk.ac.uk/kei/ktportal/Pages/Followon.aspx
• https://ktn.innovateuk.org/web/145175/overview
• http://www.ahrc.ac.uk/FundingOpportunities/Pages/BrowseOpportunitiesOld.aspx
• http://www.ahrc.ac.uk/Pages/default.aspx
• http://www.theculturecapitalexchange.co.uk/


Funding the Runway
Accelerators : Training & Mentoring programmes that provide fast-track to seed funding for
Scalable new businesses
• Lean Camp : http://leanca.mp - http://be.foundercentric.com/
• Start-Up Weekend: http://london.startupweekend.org
• Launch 48: http://launch48.com
• Tech Hub : http://www.techhub.com – Google Campus- http://www.campuslondon.com/
• FIG- http://www.findinvestgrow.com/
• Y-combinator- http://ycombinator.com/
• Tech Stars- http://www.techstars.com/
• Seed Camp: http://www.seedcamp.com
• Hackfwd: http://hackfwd.com
• Emerge Venture Labs- http://www.theemergelab.org
• Ignite 100- http://ignite100.com
• BBC Worldwide Labs- http://www.bbcworldwide.com/digital/labs.aspx
• Springboard- http://springboard.com/ - http://www.f6s.com/profile/1961#programs/ajax-application
• Student Start-ups- http://studentupstarts.com
• Accelerator Academy- http://acceleratoracademy.com
• Wayra- http://wayra.org/en/wayra
• Euclid Opportunities- ( Fin Tech Only) http://euclidopportunities.com/
• Innovation Warehouse- http://www.theiw.org
• Hubventurelabs - http://hubwestminster.net/hubventurelabs
• Green Accelerator- http://bertiinvestments.com/berti-green-accelerator/
• Healthbox- http://www.healthboxaccelerator.com/

www.capenterprise.org

Crowdfunders
Crowd funding Platforms-
Reward based Crowdfunding platforms- will help you to raise funding to build a proto-type and market test a
great idea or product.-
• www.kickstarter.com (USA)
• www.indiegogo.com (USA)
• www.peoplefund.it
• www.sponsume.com
• www.pleasefund.us
• www.wefund.com
• www.pozible.com
• www.crowdfunder.co.uk

Equity/ investment Crowd funding platforms:

- www.crowdcube.com
- www.seedrs.com

http://crowdfundingtech.eventbrite.com


Business Angels
Angel Investment - £100-500K Seed Investment

• NESTA - www.nesta.org.uk/investments
• British Business Angel Association- www.bbaa.org.uk
• Capital 4 Enterprise- http://www.capitalforenterprise.gov.uk/portfolio
• Angel Co-Fund- http://www.angelcofund.co.uk/

Capital Enterprise top 10 Angel Networ in London
1. London Business Angels: http://www.lbangels.co.uk
2. Oxford Early Investments- http://www.oxei.co.uk/about.php
3. Envestors- www.envestors.co.uk
4. Finance South East- www.thefsegroup.com
5. Angels Den- www.angelsden.com
6. Venture Director- www.venturedirector.com- www.boundarycapital.com
7. Start-up Funding Club- http://www.startupfundingclub.com/
8. E100- London Business School -
http://www.london.edu/facultyandresearch/subjectareas/strategyandentrepreneurship/enterprise100.ht
ml
9. #1 seed- www.number1seed.co.uk
10. Keiretsu Forum- http://www.keiretsuforum.com
For an alternative list check out- http://www.designcity.co.uk/angelnews/edition_94.htm#article1

SEIS- Tax breaks to encourage investment in start-ups

Seed Enterprise Investment Scheme-SEIS is a tax break launched in April 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 2012-13 tax year, tax payers can roll any chargeable gain in the tax year in to a SEIS
with a full capital gains tax exemption (another 28%)
• 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.


Specialist Funds
Women

- Stargate Capital- Trapezia- http://www.stargatecapital.co.uk/trapezia_1.aspx
- FSE- Incito- http://thefsegroup.com/investors/business-angels/incito-ventures/
- Aspire Fund - http://www.capitalforenterprise.gov.uk/files/Aspire%20Information%20Leaflet%20(v%202)%20Flyer%20brochure.pdf

Green
- Bridges Sustainable Fund- http://www.bridgesventures.com/sustainable-growth-funds
- Ingenious Media- Cleantech Fund http://www.ingeniousmedia.co.uk/investments/investment-
opportunities/clean-energy
- Carbon Trust- http://www.carbontrust.com/about-us/our-investments
- Low Carbon Accelerator- http://www.lowcarbonaccelerator.com
- CT Investment Partners- http://www.ctip.co.uk
- Wellington Partners- http://www.wellington-partners.com/wp/index.html

Social
- Big Society Capital- http://www.bigsocietycapital.com
- Sources of Social Finance- http://www.bigsocietycapital.com/finding-the-right-investment
- Bridges Venture Fund http://www.bridgesventures.com/social-entrepreneurs-fund
- Big Issue Investment- http://www.bigissueinvest.com
- Social Finance- http://www.socialfinance.org.uk
- Social Investment Fund- http://www.thesocialinvestmentbusiness.org

Early Stage VC’s & Supper Angels
Accel Partners: Stage agnostic, see their portfolio here. • ACT: Early to mid-stage, see their portfolio here.

• Bloom Equity: Early to mid-stage angel syndicate, see
their portfolio here.
Anthemis Investment- Stage Agnostic, see their portfolio
here • DFJ Esprit: Early to mid-stage, see their portfolio here.

• Charlotte St: Early to Mid Stage, see there portfolio here

Eden Ventures- Early- mid stage – see there portfolio here • Dawn Capital: Early to mid-stage, see their portfolio
here.

Index Ventures: Stage agnostic, see their portfolio here.
• Doughty Hanson- Stage Agnostic, see portfolio here

• Seraphim Capital – Early-mid stage see there
Passion Capital: Early Stage, see their portfolio here. portfolio here.

• Kernel Capital: Early stage, see their portfolio here.
Delta Partners: Early to mid-stage, see their portfolio
• Octopus Ventures: Early to mid-stage, see their portfolio
here. here.

• Hoxton Ventures ; Early stage with disruptive tech.
Atomico: Stage agnostic, see their portfolio here.
• EC1 Capital: Early stage, see their portfolio here

• Connect Ventures- Early stage and very New.
Profounders: Early and mid-stage, see their portfolio
here. • Pen Tech Ventures- Early Stage to mid- See portfolio Here

AIB Seed Capital Fund: Managed by two funds which Alternatively you can check out Crunch Base
invest under-€250k and over-€250k, see their http://www.crunchbase.com/financial-organizations

portfolio here.

Active London Angels…

• http://bamlondon.blogs
pot.co.uk/p/angels_16.
html

• https://angel.co/

27

Step 4: So remember –What’s important
when seeking finance

• The quality and “connections” of the management team
• The size of the business opportunity/ funding need
• The scope for building a sustainable competitive advantage
• The level of risk/ security.
• And the timeliness of the proposal

Will determine the attractiveness of your business to investors,
lenders and funders

• The ability of the entrepreneur to negotiate well and of the team to
execute the business plan convincingly-

Will determine the type, price and quality of the deal that can be achieved


Recommended Slide-deck
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


The End

#capenterprise


Start up a business and change the world vs4

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