Finance in the South West 2017 - Start Up Session

Finance in the South WestPaul Butler, Partner

Businesses trading for <2 years…….

pkf-francisclark.co.uk

• Business structure: Sole traderPartnershipLimited Company

• Red Tape: HMRC registrationAccounting systemsPensions and Auto-Enrolment

• Ongoing services: PayrollManagement accountsTax planning/remuneration strategies

Issues facing start up businesses


• Strategies for growth: Business plansCash flow projectionsAcquisitions/disposals of trade or assetsGrant funding

• Tax opportunities: R&DPatent BoxUtilising taxable losses due to CA’s and

investment

Issues facing start up businesses


• 10 minute presentations on:• Support for exporters• Start Up Loans• SEIS/EIS• Investment ready x 2• Cloud accounting• University support

• SME Perspective

Funding and support – for business < 2 years old

Gustavo Anacleto MIEx.

Export for Growth

DIT International Trade Adviser

Growth through Exports

Why Export? Spread risk – reduce dependency on home market Increase market share Increase profits/ bottom line

Perceived barriers to Export Lack of knowledge Complexity/ Language Fear of the unknown

You are no longer alone!

3 step - Simplified Export Dynamics

International Sales & Marketing We will work with you to find suitable buyers overseas

Export Process The Department will guide you every step of the way

Training Full range of international trade support services

Export for Growth Support:

Export Essentials

Focused on new to export SMEs Ready to export workshops Funding and investment advice Digital marketing support Market visit support and advice Mentoring Research Intellectual Property advice

Contact details:

Gustavo Anacleto MIEx. | International Trade Adviser | Department for International Trade | Leigh Court | Abbots Leigh | Bristol BS8 3RA |

Mobile: +44 (0) 7741 314152 | E-mail: [email protected]

great.gov.ukexport4growth.co.uk

mailto:[email protected]

SWIG Finance

Start Up LoansBrian Steer

• Government-backed low interest loan (6%)

• Free business support• £500 to £25,000• Repayable up to 5 years • Trading up to 24 months• Loans to business owners• Can include business

purchase

Operating across the South WestOver 1,000 entrepreneurs with over £7.3 million in 4 years

Our clients are Award Winning!

Thank you for listening.

[email protected] 223 883


SEIS / EISAdam Kefford

Equity Investments

- Cash invested into a company in the form of subscribing for shares

- Most commonly, shares are either ordinary or preference shares

- Understanding what it means by giving up an equity stake in the business

- Tax incentives on offer for certain investments in ordinary shares


pkf-francisclark.co.ukpkf-francisclark.co.uk

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SEIS / EIS

• Equity Incentive Schemes – offer of tax incentives to investors to encourage investment in start up / relatively new businesses

• Often considered where debt cannot be obtained (or only offered on unattractive terms)

• Given up an ownership stake in the business – how much are you willing to give up?

• HMRC’s view is that the schemes are aimed at companies with a high financial risk

pkf-francisclark.co.ukpkf-francisclark.co.uk

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Tax relief for investorsRelief SEIS EIS

Income tax relief 50% (max inv. £100k) 30% (max inv. £1.0m)

CGT exemption Yes – after 3 years Yes – typically 3 years from date of issue

CGT deferral No Yes

IT loss relief Yes - potentially Yes - potentially

BPR Yes Yes

The above are subject to conditions and rely on continual qualification in the period after the issue of shares.


Seed Enterprise Investment Scheme (“SEIS”)

• Companies where trade is less than 2 years old

• Up to £150k can be raised through the issue of SEIS shares – limit reduced by any other State Aid received in the 3 years preceding the issue of SEIS shares

• New shares must be issued in return for ‘new’ cash

• Cash used for the purposes of a qualifying trade and spent within 3 years of the share issue

• Individual investors cannot be connected with the company

• Less than 25 employees / no more than £200k gross assets

• Numerous other conditions


Enterprise Investment Scheme (“EIS”)

• Typically for companies < 7 years old

• Can raise no more than £5m in any 12 month period – includes from any venture capital scheme and other state aid investment e.g. certain grants

• New shares must be issued in return for ‘new’ cash

• Cash used for the purposes of a qualifying trade and spent within 2 years

• Individual investors cannot be connected with the company

• Numerous other conditions


Practical considerations

• Is your company carrying on a qualifying trade?

• Applying for advance assurance to give investors certainty.

• Method for attracting investors – business angels, crowdfunding, equity funds

• Valuing the company and offer price

• Professional costs

• Steps to ensuring and monitoring compliance e.g. separate bank accounts

• Dual SEIS / EIS offer

Investment ReadyEd Marffy


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Selecting the right funding: Options

• Angel investors

• Venture capital

• Friends / family

Equity• Banks

• Other organisations

• Alternative finance

• Angel investors / VC

Debt• Government

scheme

• Intermediaries

Grants

Crowdfunding


Selecting the right funding: Choosing

Understand funding

options and funders

requirements

Understand your

requirements

• Competition

• Tailoring your pitch

• Appropriate finance


.

• Business plan

• Projections

• Housekeeping

Getting ready: General


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• Industry & current operations

• Future strategy

• Communicates “business case”

• Professional

• Especially important for start-ups

• Tailored

Business plan


.

• Realistic• Supported

• Add up• Underpin business case

• Profit & Loss• Monthly

• Cash flow & balance sheet

• Cash headroom

• Sensitivities – Negative & Positive

Projections


.

• Licences / contracts

• IP ownership in the company?

• Books and records in order?

• Tax VAT, PAYE/NI

• Statutory Accounts/management accounts

Housekeeping


.

• Equity

• Debt

• Grants

• Crowdfunding

Getting ready: Specific


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Equity: Funders requirements

• Growth

• Often no market so are “locked in”

• Exit route and returns to the investor


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Equity: Getting ready

• Be prepared to discuss valuation

• Investors expertise vs. loss of independence?

• Passive / active?

• Restricted matters?

• Potentially more subjective: softer skills / enthusiasm / excitement


Debt: Funders requirements

• Cash flow – serviceability / headroom / sensitivity

• Security / personal guarantees

• Covenants – achievable / appropriate

• Government initiatives – eligibility


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Debt: Getting ready

• Numbers and accounts in order

• Projections

• Credit rating

• Shop around


• “Project” eligibility – sector, size, location…

• Impact / project – i.e. usually not for general expenses

• Ongoing compliance.

Grants: Funders requirements


.

Grants: Getting ready

• Timescale – prescriptive, process and panels

• Match funding

• Competition

• Cash flow – claim in arrears

• Admin

• Patience

An Introduction to Cloud AccountingDarren Jasper: Head of CloudSourcing Feb 2017

Contents

• What is cloud?

• And cloud accounting?

• So, why?

• Demonstration

• Anything else?



What is cloud?

..What is it?

Cloud technology is simply to host, or store, data remotely rather than on a machine at your premises.


.

And cloud accounting?

• Multi-user & multi-location

• Immense server processing power

• Machine learning

• Application programming interface (API)


So, why?

• Time = Money

• Time saved on your books is time to invest in your business.

• Make business decisions based on real time data.

• Automated bank feeds

• Invoice recognition

• Dashboards

• Management accounts


Automated Bank Feed


Processing Power


Image Recognition


Image Recognition!


Dashboards


Dashboards!


Management Accounts


Anything else?

• Cash – this is Finance in the South West after all…

• Automate invoicing and debt collection

• Sell your debtor book

• Pre-approved in-app finance?

• Other cool stuff:

• Integrated business solutions – link:

• Website, PayPal, Stock Management, CRM, etc.


.

Who to contact?

Thomas Roberts ACCACloudSourcing Technologist – [email protected]

Darren Jasper ACA CTAHead of [email protected]

Welcome to Finance in the South West 2017

Relationship Director

South West Region

Josie Cooksley

Preparation & Planning

The Meeting

Summary

Investor Ready – How to approach your bank for finance

Who are your customers and what & why do they buy from you?

Understand what it is you are asking the Bank to fund

Invest time in a formal Business Plan – consider professional advice

Allow sufficient time to get funds in place

Preparation & Planning

The Bank will want to understand the key risks to your business

Have you considered the risks & how they can be mitigated?

Balance of Risk – Owner v Bank Contribution

What is the fall-back if things go wrong?

What are the risks if the business performs better than you had forecast?

Has the most appropriate structure for funding been considered?

The Meeting

Ensure you are: Prepared

Honest

Realistic

Open to feedback

Persistent

Summary

The Innovation Centre, University of Exeter, Exeter EX4 [email protected] - 01392 262300

© 2009 Peninsula Innovations Ltd All Rights Reserved, Peninsula Innovations Ltd. Registered in England under No 06022710

What can the University of Exeter ever do for us?

Joe PearceBusiness Support



Who are We

Innovation, Impact and Business

Peninsula Innovations Limited



Meet Joel

• Joel Stobart• Chief Technology Officer• Custodian Solutions Ltd

“We have the experience and technology to help you protect your brands from

counterfeiting and protect your business from insecure and incomplete

evidence.”



Entrepreneurship Training Programme– 2 Days of training– Introduction of tools – Business Model Canvas– Investor Readiness – Pitching to panel of investors



Science Park Centre or Innovation Centre client– Virtual @ £50/month– Hotdesk @ £150/month– Your Desk @ £250/month– Offices from ~ £600/month



Recruitment– Student Business Projects (SBP)– Graduate Business Projects (GBP)– Knowledge Transfer Partnerships (KTP)– Degree Apprenticeships



Academic Collaborations– Consultancy, Contract Research, FacilitiesResearch Collaborations– Open Innovation – PhD studentships– Collaborative Research– Post-Doc placements



Consultancy Module– Present a project to the MBA Students– 3 month assignment – In depth report



Castle Demos– Based at Exeter Castle– Free networking event– Test your ideas with an audience of entrepreneurs– Quarterly events – next in April



PitchFest Competition– Pitch training and workshops– 1 of 12 finalists from across the region– Won a range of cash a support prizes



SETsquared Investment Showcase– 20 companies from the partnership– “Warm up” event in the Apple store to a local

investor audience– >200 Investors at the London based event



Giving Back– Weekend long business creation event– 60 people in 8 startup teams– Supported by mentors – Pitching to judges



“Working with the University of Exeter through the SETsquared team at the Science Park Centre has enabled Custodian

Solutions to access support and opportunities that have helped our businesses grow, enabled our development and helped us

attract clients and investment opportunities”



Find us

Innovation Centre & Science Park Centrewww.spaceforsuccess.co.uk

SETsquaredwww.setsquared.co.uk

Innovation, Impact & Businesshttp://www.exeter.ac.uk/iib/contact/ [email protected]

http://www.spaceforsuccess.co.uk/

http://www.setsquared.co.uk/

http://www.exeter.ac.uk/iib/contact/

mailto:[email protected]

Crowd Funding RaiseHoliday Rental Industry

$180bn MarketB2B SaaS

Rentivo February 2017

Richard Vaughton


https://player.vimeo.com/video/190064334?color=ff9933&byline=0&portrait=0


50,000 Managers3m Owners6M+ Properties$180bn Business

• Based in Torquay (not Silicon Valley)• 4 years old• Outside of various funding regions• A very specific complex business (B2B)• A rapidly changing business environment• Funds needed for growth (£250K)


Funding Options:• Personal• VC/Angels• Bank• Crowd lending• Crowd equity funding• Regional Grants (?EU)


Company Status:• T/O £120K• Break even• IP ownership• No debt• 100% owned by

founders• Quality partnerships


1. Foundation:The Story The Trading RecordThe Team The FinancialsThe Valuation (PM £1.9m) Equity (13.5%)Articles Share type (A/B)

2. PreparationThe Video AuditThe Business Plan/Pitch-Deck PrimingIncentives Messaging

3. CF Launch:Don’t just rely on the CF site!• Email campaigns• Forums• News sites• Press releases• Phone calls• Friends & family


4. The Pain• Questions on value• Questions on market• Questions on projections• Forum follow ups• Regular updates• Investor locations• Engaging your primers


Pledge Graph


11/24/2016

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1/29/2017

0.00

50000.00

100000.00

150000.00

200000.00

250000.00

300000.00

350000.00

400000.00

50% of target

271 Shareholders£90,000 ~ B shares£250,000 ~ A shares (>£5,000)70% Industry investors

“Relief Zone”


The Beer Syndrome (B2C vs B2B)

• We make craft beer• It’s a growing market• You drink beer• Other people drink beer• Beer can be bought in pubs and supermarkets• You can drink your investment• EASY DECISION


Advice• Ask questions• Involve experts• Present a story, keep it simple• Ensure your own marketing reach is strong• Your presentation is professional• Choose the correct funding platform• Remember you will have shareholders

Finance in the South West – wrap up

Paul Butler, Partner


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Summary

• The South West is a great place to do business and has great businesses

• The South West full of entrepreneurial spirit (businesses and funding options)

• Funding and business support here…

• http://www.francisclark.co.uk/news-views/blog

• Thank you


Presentations

And more… (24 presentations in total, covering “full range” of funding and business support options)

(c) copyright PKF Francis Clark, 2017

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