Finance Yorkshire Welcome www.finance-yorkshire.com
Feb 11, 2016
Finance YorkshireWelcome
www.finance-yorkshire.com
www.finance-yorkshire.com
Finance YorkshireTony Parsons - Director
www.finance-yorkshire.com
Finance YorkshireWhy are we here this morning?
• Strengthening relationships with stakeholders, partners, intermediaries and clients
• Demonstrating how we are working in partnership with our LEP to support business growth
• Looking to the future
• Dialogue and questions
www.finance-yorkshire.com
Finance YorkshireAgenda
• Tony Parsons, Director, Finance Yorkshire
• Alex McWhirter, CEO, Finance Yorkshire
• David Grey - Local Enterprise Partnership
• Seedcorn Case Study – Chris Wright, Faradion
• Business Loans Case Study – Peter Skipworth, Ecus
• Equity Linked Finance Case Study – John Peters, GSE Research
• Questions & Answers
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Finance YorkshireAlex McWhirter - CEO
www.finance-yorkshire.com
Finance YorkshireWhat we are…
£90m Venture Capital and Loan Fund
Finance sourced from:
£30m European Regional Development Fund
£15m Yorkshire Forward/Business Innovation and Skills
£45m European Investment Bank
www.finance-yorkshire.com
Finance YorkshireOur business approach…
• To fully invest the £90 million fund through helping SME’s constrained by finance to grow
• To create a sustainable fund• To be recognised and respected as a key participant in the
SME business and professional sectors• To stimulate demand for finance in our key market
segments • To realise good returns for investors and value for money
www.finance-yorkshire.com
Finance YorkshireOur investment performance so
far...• 346 investments totalling over £39 million
• On track to meet economic targets; jobs created & safeguarded; increase in turnover; business starts and private sector leverage
• On track to achieve full investment by December 2014
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Finance YorkshireInvestment Profile
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Finance YorkshireInvestment impact...
• Created or safeguarded 5620 jobs
• Over £64 million Private Sector Leverage, resulting in £2 levered for every £1 invested
• £44.2 million in value added sales
• Legacy fund to be invested in region’s businesses in line with original objectives - to be utilised after 2019
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Finance YorkshireInvestment performance by
location...
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Finance YorkshireInvestment performance by
location...
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Finance YorkshireInvestment performance by
sector...Sector Analysis – All Funds
Sector Application Process (%) Investments (%)
Business Services 12% 18%
Engineering / Industrial products / Materials 24% 25%
Financial Services 1% 1%
Healthcare / Pharma / Bioscience 14% 7%
ICT / Software / Telecoms / Media 21% 12%
Leisure / Hospitality 1% 2%
Renewables / Energy / Cleantech 6% 7%
Consumer / Food & Drink 6% 10%
Other 15% 18%
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Finance YorkshireInvestment criteria…
• A business with growth potential
• A new start or growing business
• A business unable to source its full funding requirement from the commercial market
• SME’s paying business rates in Yorkshire and the Humber or relocating to the region
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Finance YorkshireThree portfolios
• Seedcorn Finance
• Business Loans
• Equity Linked Finance
Finance YorkshireSeedcorn Finance
• Start up or early stage innovative businesses
• Involves strong technological ‘know-how’ and credible founders
• First products or services developed with potential for rapid growth
• Can invest up to £780,000 over the lifetime of the business through equity-based, tranched investments
• Investments of £2m+ when syndicating with other funds
www.finance-yorkshire.com
Finance Yorkshire Case Study – Xeros
www.finance-yorkshire.com
Environmentally friendly cleaning company backed by Finance Yorkshire Seedcorn Fund. Cleans laundry with vastly reduced water using Xeros polymer bead technology
Major savings in power, detergent and effluent production with superior cleaning
Recently completed a £10 million fundraising from existing and new investors. New funds
will be used to roll out the Xerox commercial laundry cleaning system and finalise the household system
Finance YorkshireBusiness Loans
• Fixed rate loans typically between £15,000 - £150,000 as syndicated or complete financial packages for businesses
• Financial packaging with other forms of debt finance including the banks
• Range of investments include; Working Capital, Capital Expenditure, Investment in Premises and development capital
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Finance YorkshireCase Study – Wilson Benesch
www.finance-yorkshire.com
Sheffield based company which manufactures high end audio loudspeakers and turntables
Regarded as world class innovator in its field
£50,000 Business Loan which enabled the company to introduce new technologies and buy specialist tooling equipment.
Finance YorkshireEquity Linked Finance
• Equity-linked investments from £100,000 to £2m and Mezzanine loans
• Some start ups, largely growth, development capital or expansion
• Work alongside other finance providers to invest in larger transactions
• Tailored deal structures to give maximum benefit to the investee companies
www.finance-yorkshire.com
Finance YorkshireCase study – Fluent
Communications Sheffield based IT lead generation
company. Combines telemarketing, social media and digital marketing for IT sector
£210,000 Equity Linked investment to help triple its workforce in the coming year.
Investment will also help to purchase office equipment, upgrade IT and support working capital
www.finance-yorkshire.com
Finance Yorkshire has:
•completed 346 investments
•Invested a total of £39.43m
Seedcorn Finance – 44 investments totalling £7.93m
Business Loans – 270 Investments totalling £15.00m
Equity Linked Finance – 32 Investments totalling £16.50m
Finance YorkshirePortfolio performance to date..
www.finance-yorkshire.com
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Finance YorkshireOur Investment approach
Working alongside the commercial market;
• Maintaining and developing relationships with financial intermediaries to promote awareness and dealflow
• Market making effect, making deals happen by spreading the risk with other investors and lenders
• Co-investing with other lenders and funds
www.finance-yorkshire.com
Finance Yorkshire
David GreySheffield City Region
Local Enterprise Partnership
• One of 24 in the first wave of LEPs – there are now 39 LEPs across the country (100% coverage)
• A genuine partnership between the public and private sector
• Board composition - 19 members: Private sector Chairman – James Newman 10 business representatives, including a University Vice-
chancellor 9 Council Leaders (inc. Doncaster Mayor)
• Seven SCR LEP Sector Groups represent the voice of business
• Strong / productive relationship with Government
The SCR LEP was formed in Autumn 2010
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Priorities set out in our Economic Overview document (updated January 2013)
Our priorities fall into two main areas:
•Maximising the potential of our key growth sectors; and
•Putting in place the foundations for growth.
• Key Principle 1: Leading on issues of Sheffield City Region significance
• Key principle 2: The importance of a true public and private sector partnership
• Key principle 3: Adopting a collaborative approach
• Key principle 4: Driving innovation to promote growth
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Putting in place the foundations for growth
• Economic Strategy / Growth plan – shaping the SCR economic programme in light of proposed devolution of powers / funding (including European Structural Funds)
• Management of the SCR Enterprise Zone (FT ranked ‘number 1’)
• Growing places fund – prudent investment decisions (including JESSICA investment fund)
• City Deal – particularly relating reform of Skills system
Key team initiatives include…
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• Regional Growth Fund programme (‘Unlocking Business Investment’) - £25 million, ~£100m of direct business investment, footprint of 2,000 new jobs by March 2016.
• Inward investment – additionality and generating new leads
• Sheffield City Region Investment Fund (SCRIF) – GVA driving infrastructure investment
• Sector Groups – voice of key industry sectors
…Key team initiatives include
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www.finance-yorkshire.com
Finance YorkshireSeedcorn Fund Testimonial
Chris Wright, Faradion
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22/04/23 Faradion Investment Opportunity 32
Kroto centre, University of Sheffield, Yorkshire• Access to the Materials Science and Engineering department• One of the leading departments of its kind in the UK
Location
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Committed to driving down the cost of battery technology For storage of renewable energy For electric vehicles
Faradion`s principal focus is Na-ion battery technology: comparable performance to Li-ion lower cost enhanced safety
Strong IP portfolio
2013: Na-ion battery demonstrator cells within the next 12 months low cost LiFePO4 cathode – early revenues
Recent £500K investmentJan 2013 Faradion Investment Opportunity -
Confidential 33
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Andrew Dixey, ChairmanOver thirty years managing global organisations. Former President and COO of the Titanium Metals Corporation; Director of Special Metals Company; Managing Director of London & Scandinavian Metallurgical Co. Limited; CEO of Atraverda
Dr. Chris Wright, CEOFormer Group Operations Director of AEA Technology PLC, responsible for Lithium battery licensing, and CEO of IP2IPO Ltd (now IP Group). Highly experienced entrepreneur and former executive chairman at Covesion Ltd and Molecular Vision Ltd
Dr. Jerry Barker, CTO Former Chief Scientist at Valence Technology Inc. and inventor on > 90 issued and ~50 pending US battery patents. Inventor of Li-ion active materials: LiVPO4F, Li3V2(PO4)3, LiMSO4F, Li2MP2O7, LiFe(Mg)PO4 and the Carbothermal Reduction (CTR) manufacturing method. IBA Technology Award, 2012
The Team
34Jan 2013 34Faradion Investment Opportunity
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A significant role in creating the company
Helped us get established with premises and links to professional advisers
Provided financial backing for the company
Gave assistance in early days when applying for grants
Finance Yorkshire’s Seedcorn Fund provided invaluable strategic and tactical advice.
Jan 2013 Faradion Investment Opportunity - Confidential 35
Finance Yorkshire’s involvementInves
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Finance YorkshireBusiness Loans Testimonial
Dr Peter Skipworth, Ecus
Finance Yorkshire Business LoansCustomer Viewpoint and
ExperiencePete Skipworth
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Presentation – Business Loans My experience and observations of using this type of
finance £15k to £50k for early stage businesses £15k to £75k for established businesses £15k to £150k for established and profitable businesses
In a number of companies Finance Yorkshire (and predecessor fund, South Yorkshire Investment
Fund)
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Environmental Monitoring
Environmental Consultancy
Infrastructure Management
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Environmental Monitoring Solutions Ltd www.em-solutions.co.uk “Industry’s Environmental Partner” ~£0.5m t/o in 2009 to ~£2m t/o in 2012 Full-time MD (day job!) backed by South Yorkshire Investment Fund
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Ecus Ltd www.ecusltd.co.uk Environmental Consultants Full development life-cycle
• pre-planning, planning/design, post-completion
~£1.5m t/o – turnaround just returned to pre-recession level Non-Exec Chairman Recent Equity Investment by Finance Yorkshire to go multi-office and ~£5m
t/o
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SEAMS Ltd www.seamsltd.co.uk Infrastructure Management Software and Consultancy co-founder and MD from 2002 – 2009 grew from start-up to ~£3m t/o backed by South Yorkshire Investment Fund
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Why Finance Yorkshire Business Loans?
They will consider things that the banks won’t .......(or the banks won’t unless there’s lots of security) Often unsecured
Taking the risk alongside the business
Net interest rates only slightly higher than banks They are interested in getting to know the business
and require reporting
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What Have I Borrowed Money For?
Developing the business e.g. A marketing push e.g. Recruitment of BD
(a general requirement for working capital)
New product development e.g. Software
......things which are less tangible than, say, buying an asset
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Syndicating Finance Yorkshire Business Loans funding with:
bank funding
self-funding (from profits)
“All jumping over the edge together!”
Finance Yorkshire Business Loans funding as
part of Equity Investments with Finance
Yorkshire Equity Linked Finance team
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Fore-runner to Equity Investment
Finance Yorkshire from £15k to £150k depending on
company’s stage of development So, more one-off projects than game-changing company development
In all 3 cases (EMS, ECUS, SEAMS) this type of
funding has been a fore-runner to Equity Investment
.....”getting to know you”
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Conclusion
A big help along the road of developing companies
Fills a gap in the availability of finance
For growth or difficult-to-fund projects
A stepping stone to bigger things
Will work flexibly and effectively with other funders
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Finance YorkshireEquity Linked Finance
Testimonial
John Peters, GSE Research
January 2011: “…just a kid with a crazy dream”
www.gseresearch.com
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February – April 2011: Too small for PE; too big for angel investors; nothing from banks
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April 2011 – November 2011: First meetings, many discussions, many plans
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November 2011: money pit!
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November 2011 – December 2012: Frustration. Challenges, expected and not
September 2012: second round investment
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2013: moving ahead – at last
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Finance YorkshireFuture work…
• Work collaboratively with the Sheffield City Region LEP and Local Authorities
• Creating the next gap fund for SMEs after 2014
• Develop the Finance Yorkshire brand and a recognised provider of growth finance to SMEs
www.finance-yorkshire.com
Finance YorkshireMaking an application
• Call us to make sure it’s eligible 0845 649 0000 or make enquiry via website www.finance-yorkshire.com
• An Investment Manager will contact you to discuss.
• Complete Application Form & the supporting information when advised by the Investment Manager.
Finance YorkshireQ & A
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Finance Yorkshire Ltd is a company limited by guarantee (Registered No 07075478). Finance Yorkshire Ltd (0845 649 0000) comprises three sub funds, Finance Yorkshire Equity Fund, which is managed by Neon Capital Partners Limited, Finance Yorkshire Small Loans Fund, which is managed by EV Business Loans Limited and Finance Yorkshire
Seedcorn Fund, which is managed by Enterprise Ventures Limited. Each of these Fund Managers is authorised and regulated by the Financial Services Authority.