Accelerating and financing London’s start ups

Accelera(ng
and
Financing

London’s
Start-‐ups

.

John
Spindler
CEO
of
Capital

Enterprise

1
@capenterprise

A
start-‐up
is
not
a
Game!

“
A
start-‐up
is
an

organisa(on
in
search
of
a

repeatable
and
scalable

business
model”
–
Eric

Ries-‐
Author
of
the
Lean

Start-‐up.

@capenterprise
2

Investable
start-‐ups
are…diﬀerent

•  Ambi(ous:
want
to
be

worth
£20M+
minimum

in
3
years.

•  “Game
Changing”

•  Build/leverage
new

technology/
business

model
innova(ons

•  Acquire
and
leverage
as

many
“Unfair
Advantages

as
possible”-‐
team,
key

partners,
resources
etc

•  Move
very
FAST

@capenterprise
3

To
get
investment
need
to
change

Business
Models

From
Gun
for
Hire
needs
to

become...

..To
Products

built
at
“own

risk”
...

@capenterprise
4

Games
vs
Gamiﬁca(on

@capenterprise
5

How
you
make
money
is
also

changing…

29
Business
Models

•  h`p://lsvp.com/
2008/07/02/29-‐business-‐
models-‐for-‐games/

Most
Popular
are

•  Retail
(Pay
upfront)

•  Freemium
(Ini(ally
free
un(l…)

•  Premium
(
Pay
for
extras)

•  Around
Game
Adver(sing

(
Banners,
click
throughs
…)

•  In
Game
Adver(sing
(
adverts/

product
placement
in
game..)

•  Subscrip(ons

•  Third
Party
sponsorship

@capenterprise
6

@capenterprise
7

Idea

Problem/

Space

Explora(on

Design/

Prototype

Beta
Test

Adapt/

PivotX2

Launch

Bootstrap-‐
FFF

Finance

InnovaGon
Awards

Start-‐up
Loans

Crowdfunding
i.e.
Kickstarter

Seedrs/
Crowdcube/
F6s
SEIS
-‐
Business
Angels

Super
Angels/

Angel
Groups

Early
Stage
VC’s

Tech
Start-‐
Up

Funding
Road

map.

MVP
Factories

Hackathons/
Hatcheries/
Meet-‐ups.

Accelerators
(Early)

Accelerators
(Late)

@capenterprise
8

1

Idea

Stage

2

Commitment

Stage-‐
Secure

Co-‐Founders

3

FFF
funding

round
–Build
&

Beta
Test

Minimum
Viable

Product

4

Seed
Investment

Round
(Angels
+

Early
VC’s)

-‐
Prove
Business

model
&
acquire

metrics
to
prove

scalability

5

Series
A
Round

(Angels,
VC’s
&

Strategic
Investors)
–

Go
for
scale,
build

out
team,

technology-‐

EXECUTE

6

Exit

(Average
7
years

and
aler
many

rounds)
–
Trade

Sale
or
IPO

££££££££££££££

How
Start-‐Up
Funding
Works
?-‐

Why
100%
of
“Nothing”
is
worth
Less
than
10%
of
something
big

“
An
Investable
Start-‐up
Needs..

•  Team,
Tech
&
resources

that
is
FIT
for
the
task
of

crea(ng
an
awesome

company

•  Product
that
is
the
best

solu(on
FIT
for
the
target

customers
problems.

•  Business
Model
that
is
FIT

to
be
scaled.

•  Smart
Ass
Team

•  with
a
Kick
Ass
Product

•  Disrup(ng
a
Big
Ass

Market

(
Jeﬀ
Clavier
3
Ass-‐es
rule)

+
Capital
Eﬃcient
to
Scale.

@capenterprise
9

How!

Advance
in
Stages…
..using
the
Lean
Start-‐up
Method

@capenterprise
10

Building
a
Smart
Ass
Team

•  Hipster

(Designer)

•  Hacker

(Developer)

•  Hustler
(Distributor)

@capenterprise
11

Building
a
Kick
Ass
Product

Change
behaviour....
...create
a
habit...

@capenterprise
12

Building
a
Kick
Ass
Product

Good
Product
design..

…makes
the
Funnel
Conversion

Metrics
work.

@capenterprise
13

Minimum
Viable
Product
(MVP):

Problem
–
Solu(on
FIT

@capenterprise

Market
Size

•  How
big
in
terms
of

number
of
customers
and

value
of
sales
is
your

poten(al
available

market?

•  How
big
is
the
immediate

addressable
market
your

start-‐up
can
reach
in
the

next
12-‐24
months?

•  What
%
of
that

addressable
market
will

you
aim
to
capture?

@capenterprise
15

Sources
of
Start-‐up
Help
for

Scale
Focused
Entrepreneurs

InformaGon:

•  Capital
Enterprise;
www.capitalenterprise.org

•  Meet-‐up
-‐
h`p://www.meetup.com

•  Mobile
Academy-‐
h`p://themobileacademy.org.uk/

•  Makers
Academy-‐
h`p://www.makersacademy.com/

•  GoGowo-‐
h`p://www.gocowo.com

•  Skills
Ma`er-‐
h`p://skillsma`er.com/

•  Start-‐
up
Britain
-‐
h`p://www.startupbritain.org

•  Bri(sh
Library-‐
www.bl.uk/bipc

•  Google
Campus-‐
h`p://www.campuslondon.com

•  General
Assembly-‐
h`ps://generalassemb.ly/loca(ons/london

•  Innova(on
Warehouse-‐
h`p://www.theiw.org

•  IC
Tomorrow
-‐
h`ps://connect.innovateuk.org/web/ictomorrow

•  UCL
Decide-‐
h`ps://www.ucl.ac.uk/decide

•  Start-‐up
Weekend-‐
London-‐
h`p://london.startupweekend.org/

•  Launch
48-‐
h`p://launch48.com/

•  Mobile
Collec(ve
h`p://mobilecollec(ve.wordpress.com

•  3
Beards-‐
h`p://www.3-‐beards.com/

•  Tech
Hub-‐
h`p://www.techhub.com/events/

•  Dreamstake-‐
h`p://www.dreamstake.net/events

•  Capital
List
Get
Together-‐
h`p://www.capitallistblog.co/our-‐monthly-‐monday-‐get-‐together/

@capenterprise
16

Idea
to
Tech
Business-‐
Three
Chasms.

Proof
of
Concept/
Proof
of
Market?

1.
Does
it
work?

2.
Does
anyone
care?

@capenterprise
18

Funding
Games
Development
&
Beta
TesGng

Grants
&
Awards
General

•  Technology
Strategy
Board
(
R&D
Funding)
-‐
h`p://www.innovateuk.org
-‐

h`p://www.innovateuk.org/content/compe((on/grant-‐for-‐rd-‐single-‐business.ashx

•  Knowledge
Transfer
Networks-‐
www.innovateuk.org

•  Abertay
Prototype
Fund
-‐
h`p://prototypefund.abertay.ac.uk/

•  Skillset
-‐
h`p://www.crea(veskillset.org/games/

•  IC
Tomorrow-‐
h`ps://connect.innovateuk.org/web/ictomorrow

•  NESTA-‐
h`p://www.nesta.org.uk/

•  London
European
Enterprise
Network-‐
h`p://www.een-‐london.co.uk

•  E
Funding
for
SME
R&D
-‐

h`p://www.eurostars-‐eureka.eu/what.do

•  EU
Funding
for
R&D
collabora(ons:
h`p://ec.europa.eu/research/par(cipants/portal/page/calls

•  Knowledge
Transfer
Partnerships
funding
support-‐

hap://www.ktponline.org.uk/ktp-‐what-‐will-‐it-‐cost-‐my-‐business

•  J4B-‐
Portal
for
grant
ﬁnding
h`p://www.j4b.co.uk

Game
CompeGGons

• h`p://www.daretobedigital.com/

• h`p://www.glasgow2014.com/press-‐releases/digital-‐game-‐compe((on

@capenterprise
19

@capenterprise

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

-‐  Sources
of
Grants-‐
www.j4b.co.uk

-‐  Compe((on
funding
£1000
issued
to
10+
businesses
per
month-‐
h`p://www.shell-‐livewire.org

-‐  Princes
Trust
h`p://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
Associa(ons-‐
h`p://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

•  Sol
loans
for
Crea(ve
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

Borrow

Write
a
simple

Business
Plan
&
12

month
cashﬂow

Community

Development

Finance
Ins(tu(on

Start-‐Up
Loan
Bank

20

Crowdfunding
(Reward)

Crowd
funding
Plaforms-‐

Reward
based
Crowdfunding
playorms-‐
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

•  h`ps://www.buzzbnk.org

•  www.pleasefund.us

•  www.wefund.com

•  www.pozible.com

•  www.crowdfunder.co.uk

•  h`p://spacehive.com

•  h`ps://www.banktothefuture.com

@capenterprise
21

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
&
Facili(es

•  Mentors
(
1st

Industry-‐
2nd

Investors)

•  Help
to
Rapid
Field
Trail
with

users
&
customers.

•  Demo
days-‐
Introduc(ons
to

Investors/
customers

…so
that
they
can
test..

•  Product-‐
Assess
FuncKonal
use/

improve
design
&
UX

•  Market
Reac(on-‐
interest/
usage/
revenue
-‐
AARRR

•  Revenue/
proﬁt
Poten(al-‐

pricing,
market
Kming,
LTV/CCA

•  Business
Model-‐
“To
Pivot
or
Not

To
Pivot”

•  Investor
reac(on-‐
interest
and

valuaKons

•  Team-‐
ability
to
work
together
and
deliver.

Capital’s
Accelerator

Programme
Partners
and
Co-‐
Investors
in
London

Pre-‐AcceleraGon
Support/

IncubaGon

AcceleraGon
Support

ConnecGons
to
Investors

Accelerators
want
businesses
who..…

Investment
Essen(als

@capenterprise
26

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.

@capenterprise

Seed
Enterprise
Investment
Scheme-‐SEIS
is
a
tax
break
launched
in
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
exemp(on
(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”?

27

Think
like
an
Angel!

Why
Do
Angels
Invest?
Where
to
ﬁnd
them?

www.capitallist.co

#capenterprise

Key
to
being
s
Successful

Business

Angel?

•  Good
Reputa(on
–
“Track

Record”

•  Great
Source
–
“Having
good

introducers”

•  Good
Selec(on
–
“
S(cking

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.

•  Ge{ng
Value
–
“Ge]ng
a

Good
deal
at
all
stages”

@capenterprise

Capital
List
–

The
Minimum
Viable
Introducer

“
Showcasing
and
connecKng

Entrepreneurs
to
champions
and

investors”

beta.capitallist.co

@capenterprise
30

31

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

@capenterprise

Pitch
deck
for
investors
h`p://www.slideshare.net/slidesthatrock/how-‐to-‐pitch-‐a-‐vc-‐redesigned

Book
to
come
and
see
Capital
List
for

pitch
reviews,
advice
on
investment

opportuni(es
and
poten(al

introduc(ons
to
investors.

32
@capenterprise

h`p://www.capitallistblog.co/startups/meet-‐capital-‐list/

7
Types
of
Early
Stage
Investors
in

London
Market

1.  Crowdfunders/
Playorms

2.  Tax
Relieve
Seeking
SEIS/EIS
Funds

3.  Government
Backed
ECF’s

4.  Tradi(onal
Angel
Syndicates

5.  Super
Angels

6.  VC’s

7.  Strategic
Investors
(
Corporate
Venture)

@capenterprise
33

Seed/
Early
stage
Investment

Playorms

Crowdfunders.

www.crowdcube.com

www.seedrs.com

www.f6s.com

www.crowdbank.com

Angel
Plaforms

-‐  www.angel.co

-‐  www.syndicateroom.com

@capenterprise
34

Syndicates.

Top
SEIS
Funding
Syndicates

1.  Jenson
Solu(ons-‐

www.jensonsolu(ons.com

2.  Ingenious
Media-‐

www.ingeniousmedia.co.uk

3.  Ascension
Ventures-‐

h`p://
www.ascensionmedia.com/
ascension-‐ventures.php

4.  Start-‐up
Funding
Club-‐

h`p://
www.startupfundingclub.com/

5.  Ascot
SEIS
–
www.ascotwm.com

Top
TradiGonal
Angel
Syndicates

1.  London
Business
Angels:

h`p://www.lbangels.co.uk/

2.  E100
(LBS)

3.  Oxford
Angels:

h`p://www.oxei.co.uk

4.  Cambridge:

h`p://cambridgeangels.com

5.  Envestors-‐
www.envestors.co.uk

6. 

Angels
Den-‐
www.angelsden.com

@capenterprise
35

Super
Seed
Investors

•  Playfair
Capital-‐
h`p://playfaircapital.com

•  Angel
Pad
h`p://angellab.co.uk/

•  Kima
Ventures-‐
h`p://www.kimaventures.com

•  Boundary
Capital
-‐
www.boundarycapital.com

•  Venerex

(
Fashion
Tech-‐
see
Capital
List)

•  Jam
Jar
Investments-‐
h`p://jamjarinvestments.com

•  No
1
Seed
-‐
www.number1seed.co.uk

•  Warner
Yard
Associates
-‐

h`p://www.warneryard.com/

•  Angel
List
–
www.angel.co

@capenterprise
36

Ac(ve
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.
•  Forward Group- Early stage investor.

•  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
mobe
to

USA.

@capenterprise
37

Specialist
Funds

Social/
Tech
for
Good

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

-‐  Unltd
–
www.ubltd.org.uk

-‐  Big
Society
Capital-‐
h`p://www.bigsocietycapital.com

-‐  Sources
of
Social
Finance-‐
h`p://www.bigsocietycapital.com/finding-‐the-‐right-‐investment

-‐  Bridges
Venture
Fund

h`p://www.bridgesventures.com/social-‐entrepreneurs-‐fund

-‐  Big
Issue
Investment-‐
h`p://www.bigissueinvest.com

-‐  Social
Finance-‐
h`p://www.socialfinance.org.uk

-‐  Social
Investment
Fund-‐
h`p://www.thesocialinvestmentbusiness.org

Women

-‐  Stargate
Capital-‐
Trapezia-‐

h`p://www.stargatecapital.co.uk/trapezia_1.aspx

-‐  FSE-‐
Incito-‐
h`p://thefsegroup.com/investors/business-‐angels/incito-‐ventures/

-‐  Aspire
Fund
-‐

h`p://www.capitalforenterprise.gov.uk/files/Aspire%20Informa(on%20Leaflet%20(v%202)%20Flyer%20brochure.pdf

Green

-‐  Bridges
Sustainable
Fund-‐
h`p://www.bridgesventures.com/sustainable-‐growth-‐funds

-‐  Ingenious
Media-‐
Cleantech
Fund

h`p://www.ingeniousmedia.co.uk/investments/investment-‐opportuni(es/clean-‐energy

-‐  Carbon
Trust-‐
h`p://www.carbontrust.com/about-‐us/our-‐investments

-‐  Low
Carbon
Accelerator-‐
h`p://www.lowcarbonaccelerator.com

-‐  CT
Investment
Partners-‐
h`p://www.c(p.co.uk

-‐  Wellington
Partners-‐
h`p://www.wellington-‐partners.com/wp/index.html

@capenterprise
38

Ac(ve
Corporate
Players

@capenterprise
39

UK
Investment
State
of
Play
2013

Deals
Under
£0.5M

•  SEIS
Deals
£6-‐7m
per
month

-‐
82
Deals
-‐
£72K
Average

•  EIS
&
SEIS
-‐
£600M
in
New

Companies
in

2012-‐13.

-‐

EsKmated
1,116
New

Companies
received

investments.

Deals
Over
£0.5m

Courtesy
of
Stuart
McKnight
at

www.ascendant.co.uk

40

Games
Investors

•  London
Venture
Partners
-‐
h`p://www.londonvp.com/

•  DN
Capital
-‐
h`p://dncapital.com/

•  Ini(al
Capital
-‐
h`p://www.ini(alcapital.com

•  White
Star
Capital
-‐
h`p://whitestarvc.com/

•  Playfair
Capital
-‐
h`p://playfaircapital.com

•  Profounders-‐
h`p://www.profounderscapital.com

•  Connect
Ventures-‐
h`p://connectventures.co.uk

•  Balderton-‐
h`p://www.balderton.com

•  Index-‐
h`p://www.indexventures.com

•  Nokia
Growth
Partners-‐

h`p://www.nokiagrowthpartners.com/

@capenterprise
41

42
@capenterprise

Book
to
come
and
see
Capital
List
for
pitch

reviews,
advice
on
investment
opportuni(es

and
poten(al
introduc(ons
to
investors.

h`p://www.capitallistblog.co/startups/meet-‐capital-‐list/

Accelerating and financing London’s start ups

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