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Securing Business Finance
Presentation to
Woking
10th September 2014
James Edwards, Senior Fund Manager, FSE Group
The FSE Group
Fund management and support – delivered to SMEs
Independent Community Interest Company
Established 2002
FCA authorised
Approx. £50 million funds under management, debt and equity
Business growth & social impact funding
Mainly public monies
Broad industry experience
Over 450 companies supported
The FSE Group - Method of Operation
Filling holes in the funding landscape
Access to finance where conventional funding not available
Complementary rather than competitive
High level of due diligence for higher risk proposals
Supportive to applicants
Focus on Management, Business Plan and integrated forecasts, less
so on historic trading
The over-arching aims of the Scheme under management:
- To support high growth SMEs and
- Achieve new job creation in Hampshire and Surrey
Enterprise M3 Funding Escalator
Early Growth Early GrowthBank loans
Expansion
Bank loans, factoring, invoice discounting,
asset finance, export finance
Expansion
Follow-on
Bank products, corporate bonds
Traditional Finance Funding Escalator
EM3 Expansion Loan SchemeEM3 Growth Fund
FSE Investor and other Networks
Follow-on
Venture Capital, Bank products,
corporate bonds
Start-up
Own funds, friends & family, Grants, Crowd Funding
Enterprise M3 Local Enterprise Partnership - £5.5m to support SMEs across the EM3 LEP area
Enterprise M3 Expansion Loan Scheme
Fund Size
Loan Size
£4m
£50,000 - £200,000
Loan Term Up to 4 years, with potential for up to 6 months capital repayment holiday
Loan Purpose Expansion activities that will deliver substantial growth impact (no re-
financings, turnarounds or working capital funding)
Eligibility Established SME limited company based in Hampshire & Surrey
Product/service with sustainable competitive advantage
Trading for 12 months+ and sales of at least £100k p.a
Rationale to borrow Insufficient track record for conventional finance, complement existing
funding lines or funding beyond bank criteria
Security Mortgage debenture; limited unsupported personal guarantee and keyman
insurance if applicable
Charges Interest, turnover levy and fees
Sustainability Loan co-funding
European funded scheme in South-East, lending alongside public loan funds
For companies delivering:
products/technologies that will reduce carbon emissions; and/or
innovation in other sectors that lead to more resource efficient business practices
Can be used to double the amount of an EM3 Expansion loan on same terms
The companies supported so far span a range of different sectors, including:
• reduced vehicle emissions technology
• intelligent lighting controls
• domestic food waste recycling
• clean power technology
• optical measurement and inspection systems
• biomass technology
Enterprise M3 Growth Fund
Fund size
Investment Size
£1.5m
£75,000 - £125,000 (alongside matched equity investment)
Investment Structure Equity investment, typically 5-year exit plan
Investment Purpose Growth capital to build product or service proposition/infrastructure (no re-
financings, turnarounds or funding of acquisitions)
Eligibility Early stage SME limited company based in Hampshire & Surrey
Product/service with sustainable competitive advantage
Initial/near-term sales
Participation in investment preparation process with VitalSix (our
partner at Henley Business School)
Security Not applicable
Charges Arrangement, monitoring and legal fees
Investment Support
FSE Angel Club (network of HNWIs)
Investments of between £100k and £500k either individually or as part of a syndicate
Monthly investor events in London and Camberley
Rigorous selection and preparation process for companies seeking equity
Pro-active deal and syndication support
FSE Ready for Equity! Academy
Training seminars for Business Angels to facilitate best practice in investing
Training seminars for Entrepreneurs to assist in raising funds
FSE Mentoring Programme
Free service to find a mentor with specialist skills to provide guidance to entrepreneurs
Application Process
Pre-application
Full application
Short form to check broad eligibility (or submit draft business plan)
By invitation (form includes business plan format if needed)
Due diligence
Credit / Investment
committee
Detailed assessment, visit
Decision
Timescales • Pre-application – within 5 days
• Full application – within 6 weeks
• Longer for equity investments
Post drawdown • Monthly management accounts
• Close support
Debt Funding Scenarios
Pursue first export opportunity for established commercial music composer operating only in UK
Extend network of vendors for breakfast drink supplier with one key existing client
Expand operations for supplier of retail security software following successful trials
Sales/marketing activities of medical diagnostics supplier following completion of trials
Build a web-based platform to streamline client orders for mobile marketing company
Expand product range for analytical instrumentation company
Support international marketing activities for router technology business
Funding for:
Staff costs Larger office running costs
New equipment Marketing campaign
Product /Service
development
× Working capital
Equity Case Study: UserReplay
UserReplay’s product helps companies with ecommerce channels understand the difficulties that
their customers face when using their websites – such as poor usability and navigation – so
conversion rates can be improved.
Acting as a black-box recorder, UserReplay tracks customer journeys through an ecommerce
website so users can see exactly what each customer has done
FSE lead a funding round with Business Angels to invest cumulatively c.£700k
Funding facilitated the development of the product and the expansion of UserReplay’s sales
team to expand its client base in the USA and overseas
Enterprise M3 area of coverage
SME must be headquartered or with material part of the business based in the EM3 area
Summary
Scheme £5.5m Enterprise M3 Thames Funding Escalator
(Funded by the Enterprise M3 Local Enterprise Partnership)
Location Hampshire & Surrey
Investment size £50k to £200k
Purpose Market development, scaling up, expansion
Outcome Growth, job creation, prosperity
Further information www.thefsegroup.com
01276 608510
fundingenquiries@thefsegroup
Contacts
Enterprise M3 Expansion Loan Scheme:[email protected]
01276 608531
Enterprise M3 Growth Fund:[email protected]
01276 608521
01276 607307
