John Spindler's Presentation from MoMoLo, 17th February 2014

Accelerating and Financing London’s Tech Sector Start-ups.

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John Spindler CEO of Capital Enterprise

1@capenterprise

A start-up is…

“ an organisation in search of a repeatable and scalable business model” – Eric Ries- Author of the vLean Start-up.

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Scale focused start-ups are…different

• Ambitious: want to be worth £20M+ minimum in 3 years.

• Solve a big problem for potential customer in a “Game Changing ” way.

• Build/leverage new technology/ business model innovations

• Acquire and leverage as many “Unfair Advantages as possible”- team, key partners, resources etc

• Move very FAST

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“ An Investable Start-up Needs..

• Team, Tech & resources that is FIT for the task of creating an awesome company

• Product that is the best solution FIT for the target customers problems.

• Business Model that is FITto be scaled.

• Smart Ass Team

• with a Kick Ass Product

• Disrupting a Big AssMarket

( 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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Idea to Tech Business- Three Chasms.

Help in Forming & Exploring Ideas

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Sources of Start-up Help for Tech Entrepreneurs

Information:

• Capital Enterprise; www.capitalenterprise.org• Meet-up - http://www.meetup.com• Mobile Academy- http://themobileacademy.org.uk/• Makers Academy- http://www.makersacademy.com/• GoGowo- http://www.gocowo.com• Skills Matter- http://skillsmatter.com/• Start- up Britain - http://www.startupbritain.org• British Library- www.bl.uk/bipc• Google Campus- http://www.campuslondon.com• General Assembly- https://generalassemb.ly/locations/london• Innovation Warehouse- http://www.theiw.org• IC Tomorrow - https://connect.innovateuk.org/web/ictomorrow• UCL Decide- https://www.ucl.ac.uk/decide• Start-up Weekend- London- http://london.startupweekend.org/• Launch 48- http://launch48.com/• Start-ups on Air at Google Campus-

https://docs.google.com/spreadsheet/viewform?formkey=dEpuYlRFRFJ6SUVDdHVLRms3YmdBcmc6MQ• Hubventurelabs - http://hubwestminster.net/hubventurelabs• 3 Beards- http://www.3-beards.com/• Tech Hub- http://www.techhub.com/events/• Dreamstake- http://www.dreamstake.net/events• Capital List Get Together- http://www.capitallistblog.co/our-monthly-monday-get-together/

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Forming Businesses.. ideas from???

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Developing the team & Product

• Hipster (Designer)

• Hacker (Developer)

• Hustler (Distributor)

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Minimum Viable Product (MVP): Problem – Solution FIT

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Proof of Concept?

Does it work? Does anyone care?

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Funding Product Development & Beta Testing

Grants & Awards General• 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

• IC Tomorrow- https://connect.innovateuk.org/web/ictomorrow

• NESTA- http://www.nesta.org.uk/

• 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

• J4B- Portal for grant finding http://www.j4b.co.uk

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/

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Crowdfunding ( Reward)

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.- Great for pre-selling cool tech hardware. • www.kickstarter.com• www.indiegogo.com (USA)• www.peoplefund.it• www.sponsume.com• https://www.buzzbnk.org• www.pleasefund.us• www.wefund.com• www.pozible.com• www.crowdfunder.co.uk• http://spacehive.com• https://www.banktothefuture.com

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Need less than £20K to get to Build and test MVP?

- 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- £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 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/

Need Less than £10K to Launch a

business

No Funds

Grant-www.j4b.co.uk

Unemployed?New Enterprise

Allowance Scheme

Self Fund

BorrowWrite a simple

Business Plan & 12 month cashflow

Community Development

Finance Institution

Start-Up Loan Bank

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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 & Facilities

• Mentors ( 1st Industry- 2nd

Investors)

• Help to Rapid Field Trail with users & customers.

• Demo days- Introductions to Investors/ customers

…so that they can test..

• Product- Assess Functional use/

improve design & UX

• Market Reaction- interest/

usage/revenue - AARRR

• Revenue/ profit Potential-pricing, market timing, LTV/CCA

• Business Model- “To Pivot or Not

To Pivot”

• Investor reaction- interest and

valuations

• Team- ability to work together and deliver.

Accelerators In London

http://www.f6s.com/

https://capitallist.co

AcceleratorsAccelerators : Training & Mentoring programmes that provide fast-track to seed funding forScalable new businesses

1. Seed Camp: http://www.seedcamp.com2. Tech Stars Europe -http://www.techstars.com/program/locations/london3. Wayra- http://wayra.org/en/wayra4. Microsoft Ventures - http://www.microsoft.com/en-in/accelerator/5. Start-Up Bootcamp ( 3 new accelerators including Fintech in London)- http://www.startupbootcamp.org6. Emerge Venture Labs- ( Education TECH) http://www.theemergelab.org7. Oxygen Accelerator ( Now in London) - http://www.oxygenaccelerator.com/8. BBC Worldwide Labs- http://www.bbcworldwide.com/digital/labs.aspx9. Accelerator Academy ( Part-Time)- http://acceleratoracademy.com10. Fintech Innovation Labs- https://www.fintechinnovationlablondon.co.uk11. Entrepreneur First- http://www.entrepreneurfirst.org.uk12. The Bakery ( Adtech) - http://thebakerylondon.com/#!/13. Healthbox- http://www.healthboxaccelerator.com/14. Level 39- http://level39.co ( More of an incubator)15. Idea London ( Cisco, DC Thompson and UCL) – www.idea-london.co.uk16. IC Start-up- ( Imperial) http://www.icstartup.com17. Bethnal Green Ventures ( Social Impact)- http://bethnalgreenventures.com/18. HUB Launchpad- (Social Impact)http://www.hublaunchpad.net/19. True Start- (Retail Tech) – http://www.truecapital.co.uk/truestart/20. Eco-Machines incubator (Hardware)- http://www.ecomachinesincubator.com

Capital’s Accelerator Programme Partners.

www.f6s.com

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Capital’s Accelerator Programme Partners and Co-Investors

Pre-Acceleration Support/ Incubation

Acceleration Support

Connections to Investors

Accelerators want businesses who..…

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Idea

Problem/ Space

Exploration

Design/ Prototype

Beta Test

Adapt/ PivotX2

Launch

Bootstrap- FFF

Innovation AwardsStart-up Loans

Crowdfunding i.e. Kickstarter

Seedrs/ CrowdcubeSEIS

Super Angels/ Angel Groups

Early Stage VC’s

Start- Up Funding road –map.

MVP Factories

Hackathons/ Hatcheries/ Meet-ups.

Accelerators

Accelerators

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1Idea Stage

2 Commitment Stage- Secure Co-Founders

3FFF funding round –Build & Beta Test Minimum Viable Product

4Seed Investment Round (Angels + Early VC’s)- Prove Business model & acquire metrics to prove scalability

5Series A Round (Angels, VC’s & Strategic Investors) – Go for scale, build out team, technology-EXECUTE

6 Exit

(Average 7 years and after many rounds) – Trade Sale or IPO

££££££££££££££

How Start-Up Funding Works ?-Why 100% of Nothing is worth Less than 10% of something big

Investment Essentials

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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.

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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 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 exemption (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 Reputation – “Track Record”

• Great Source – “Having good introducers”

• Good Selection – “ Sticking 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.

• Getting Value – “ Getting a Good deal at all stages”

www.capitallist.co #capenterprise

Capital List –The Minimum Viable Introducer

“ Showcasing and connecting Entrepreneurs to champions and

investors”

beta.capitallist.co

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Send a slide deck and get introducedhttp://www.slideshare.net/slidesthatrock/how-to-pitch-a-vc-redesigned

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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

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Send to : [email protected]

Airbnb pitch deck

http://www.businessinsider.com/airbnb-a-13-billion-dollar-startups-first-ever-pitch-deck-

2011-9?0=sai#-1

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7 Types of Early Stage Investors in London Market

1. Crowdfunders/ Platforms2. Tax Relieve Seeking SEIS/EIS Funds3. Government Backed ECF’s4. Traditional Angel Syndicates5. Super Angels6. VC’s 7. Strategic Investors ( Corporate Venture)

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Seed/ Early stage Investment Platforms

Crowdfunders.

www.crowdcube.com

www.seedrs.com

www.f6s.com

Angel Platforms

- www.angel.co

- www.syndicateroom.com

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Play & Pay Funds.

Top SEIS Funding Syndicates1. Jenson Solutions-

www.jensonsolutions.com2. Ingenious Media-

www.ingeniousmedia.co.uk3. Ascension Ventures-

http://www.ascensionmedia.com/ascension-ventures.php

4. Start-up Funding Club-http://www.startupfundingclub.com/

5. Ascot SEIS –www.ascotwm.com

Top Traditional Angel Syndicates

1. London Business Angels: http://www.lbangels.co.uk/

2. E100 (LBS)

3. Oxford Angels: http://www.oxei.co.uk

4. Cambridge: http://cambridgeangels.com

5. Envestors- www.envestors.co.uk

6. Angels Den- www.angelsden.com

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Super Seed Investors

• Playfair Capital- http://playfaircapital.com

• Angel Pad/ Avonmore -http://www.avonmoredevelopments.com/

• Kima Ventures- http://www.kimaventures.com

• Boundary Capital - www.boundarycapital.com

• Venerex ( Fashion Tech- see Capital List)

• Jam Jar Investments- http://jamjarinvestments.com

• No 1 Seed - www.number1seed.co.uk

• Warner Yard Associates - http://www.warneryard.com/

• Angel List – www.angel.co

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Active 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.

• 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 mobeto USA.

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Specialist FundsSocial/ Tech for Good

- NESTA - www.nesta.org.uk/investments

- Unltd – www.ubltd.org.uk

- 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

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

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Corporate Players

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Investment State of Play 2013

Deals Under £0.5M

• SEIS Deals £5-6m per month - 82 Deals - £72K Average

• EIS & SEIS - £600M in New Companies in 2012-13.

- Estimated 1,116 New Companies received investments.

Deals Over £0.5m

Courtesy of Stuart McKnight at www.ascendant.co.uk

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Q &A

If you want an introduction then send a slide deck

[email protected]

40@capenterprise