1. UK as Europe’s innovation hub
Setting up, running and funding your business
14 July 2012

2. Table of Contents
1. Setting up your business
• Tech Clusters
• Advantages offered by the UK
• Legal issues
2. Running your business
• Digital media
• Sales and marketing analysis
• Legal issues
3. Funding your business
• Company valuation
• Financial considerations
• Legal issues
• Fundraising strategy
• Investment incentives: SEIS, EIS
• Gearing up for Venture Capital [2]

3. Tech clusters
Advantages offered by the UK
Legal issues
SETTING UP YOUR BUSINESS
[3]

4. Setting up your business
Tech clusters
• London Tech City (Silicon Roundabout)
 Mind Candy (Moshi Monsters)
 Tweetdeck
 Last.fm
• Silicon Fen (world class tech-hub in Cambridge)
 ARM ($7 billion valuation)
 Advanced RISC Machines
• Silicon Glen (tech –hub in Scotland)
 Rockstar North (creators of GTA)
• Bristol
 ICERA
[4]

5. Setting up your business
Advantages offered by the UK
• The small business rate relief
• New immigration routes for entrepreneurs
Tier 1 Entrepreneur visa
Applicant must either have access to £200,000 or to £ 50,000 + Conditions
Tier 1 Graduate Entrepreneur visa
Does not apply if applicant is outside UK at time of application
• Small businesses get capital gains tax breaks for their first
£10m of profit
• R&D tax credits of up to 200 per cent (increasing to 225 per
cent in 2012)
• Access to UK Trade & Investment’s export services
[5]

6. Setting up your business
Legal issues (1)
• Intellectual property e.g. patents, copyright, trademarks and
design rights
• IPR exploitation as a revenue stream
• Contracts and other agreements
• Legal structures for enterprise in UK
 Unincorporated association
 Limited Company
 Limited Liability Partnership
 Community Interest Company
[6]

7. Digital media
Sales and media analysis
Legal issues
RUNNING YOUR BUSINESS
[7]

8. Running your business
Digital media
• Search engine optimisation
• Mobile and Social media:
• Online reputation management
• Viral Marketing
[8]

9. Running your business
Sales and marketing analysis
• Sales funnel
• The buying cycle: AIDA
• 4Ps: Product, Price, Place and Promotion
• Competition and risk analysis: SWOT & PESTLE
[9]

10. Running your business
Legal issues (1)
• Taxation
 Corporation Tax
 Capital Gains Tax
 National Insurance
 Income Tax
VAT
[ 10 ]

11. Running your business
Legal issues (2)
• Corporation Tax
Rate 2012 values
Small profits rate 20%
Small profits can be claimed by qualifying ₤300,000
companies with profits at a rate not exceeding
Marginal relief lower limit ₤300,000
Marginal relief upper limit ₤1,500,000
Standard fraction 1/80
Main rate of corporation tax 25%
Special rate for unit trusts and open-ended 20%
investment companies
[ 11 ]

12. Running your business
Legal issues (3)
• Capital Gains Tax
Rate 2012 values
Rates for individuals 18% / 28%
Rates for trustess and personal representatives 28%
Annual exempt amount for individuals and ₤10,600
personal representatives
Annual exempt amount for most trustees ₤5,300
Rate on gains subject to Entrepreneurs’ Relief 10%
Capital Gains Entrepreneurs’ Relief 2011-2012 values
Entrepreneurs relief lifetime limit of gains ₤10,000,000
[ 12 ]

13. Running your business
Legal issues (4)
• National insurance contributions (1)
Employee and employer rates and thresholds 2012 values
£ per week unless stated
Lower Earning Limits for class 1 NICs £102.00
Upper Earnings Limits for Employees’ Class 1 £817.00
NICs
Upper Accrual Point £770.00
Primary Threshold £139.00
Secondary Threshold £136.00
Employee’s (Primary) Class 1 contribution rates 2012 values
2011 – 2012 weekly earnings from £139.01-£817.00 12%
2011 – 2012 weekly earnings above £817.00 2%
[ 13 ]

14. Running your business
Legal issues (5)
• National insurance contributions (2)
Employee’s contracted out rebate 2012 values
For both salary-related (COSR) and money 1.6%
purchase (COMP) schemes between LEL & UAP
Married women’s (primary) Class 1 contribution 2012 values
rates
2011 – 2012 weekly earnings from £139.01-£817.00 5.85%
2011 – 2012 weekly earnings above £817.00 2%
Employer’s (secondary) Class 1 contribution 2012 values
rates
2011 – 2012 weekly earnings from £136.00 13.8%
[ 14 ]

15. Running your business
Legal issues (6)
• National insurance contributions (3)
Employer’s contracted out rebate 2012 values
Employer’s contracted out rebate – salary related 3.7%
schemes (COSR) between LEL and UAP
Employer’s contracted out rebate – money 1.4%
purchase schemes (COSR) between LEL and UAP
[ 15 ]

16. Running your business
Legal issues (7)
• Income tax
Income tax band Income tax rate on Income tax rate on Income tax rate on
non-savings income savings dividends
£0 - £2,560 Not available 10% Not applicable – see
Starting rate for basic rate band
savings
£0 - £35,000 20% 20% 10%
Basic rate
£35,001 - £150,000 40% 40% 32.5%
Higher rate
Over £150,000 50% 50% 42.5%
Additional rate
[ 16 ]

17. Running your business
Legal issues (8)
• VAT (1)
Category VAT rate
Exempt supplies: education, finance, insurance, 0%
and the services of doctors and dentists
Food (but not restaurant or takeaway meals), 0%
children’s shoes and clothing, prescriptions,
books and newspapers, new house sales and
prescriptions
Reduced rate: includes fuel and power used in 5%
homes and by charities
Standard rate: goods not falling in the above 20%
Paid quarterly if annual turnover exceeds £73,000
Can be claimed back on some goods/services e.g. office
supplies, vehicle servicing, fuel
[ 17 ]

18. Running your business
Legal issues (9)
• VAT (2) – Optional flat rate scheme
Allows businesses with up to £187,500 turnover to make a
flat-rate calculation for VAT payments based on turnover,
rather than having to record the VAT of every sale and
purchase
The flat rate varies by sector e.g.
2% for retailing food, confectionery, tobacco, newspapers or children's clothing
11.5% for labour-only building or construction services, Computer and IT
consultancy or data processing, lawyer or legal services, computer repair services,
management consultancy, lawyers & legal services
[ 18 ]

19. Company valuation
Financial considerations
Legal issues
Fundraising strategy
Investment incentives: SEIS, EIS
Gearing up for venture capital
FUNDING YOUR BUSINESS
[ 19 ]

20. Funding your business
Company valuation
• What is my company worth?
• Equity: how much should I give away?
• Capital injections: how do they affect my company
valuation?
• What do investors look for?
[ 20 ]

21. Funding your business
Financial considerations (1)
• Sources of finance (debt and equity):
 3 Fs: Family, Friends, Fools
 Banks, Angels and VCs
 Crowd Funding: crowdcube
 Incubators : Google Campus, Imperial Innovations, Springboard,
The Difference Engine, Techhub, General Assembly
 Government Agencies: Technology Strategy Board, KTP
• Financial instruments that need to be understood
• Forecasts and accounting
• Exit Routes i.e. the Investor’s Perspective e.g. MBO, IPO, Sale
[ 21 ]

22. Funding your business
Fundraising strategy
• Proof of Concept/Market
• Structure the team
• Choose Investment Strategy
• Investment Documents
• Negotiation
• Transaction
[ 23 ]

23. Funding your business
Investment incentives
• Seed Enterprise Investment Scheme (SEIS)
 50% Income Tax relief on ₤100,000 limit
 Capital Gains Tax exemption upon share sale
 Balance sheet gross assets ≤ £200,000
• Enterprise Investment Scheme (EIS)
 30% Income Tax relief on ₤1m limit
 Capital Gains Tax exemption upon share sale
 Balance sheet gross assets ≤ £15m before & £16m after
investment
[ 24 ]

24. Funding your business
Gearing up for venture capital
• Golden rules and common misconceptions
• The investment process including key points and time scales
• Deal structuring: entrepreneur/investors point of view
• Post-investment focus
[ 25 ]

25. Summary
• Services offered to entrepreneurs by Amoo
Investment readiness
Financial control
Management consulting
IP-Skim™
• Events organised or sponsored by Amoo
Amoo Booster Series
Meet VCs, Patent Attorneys and fellow entrepreneurs
place4BRICs
Holds events with Amoo to explore topical themes within the start-up community
[ 26 ]

26. Managing Director
Nzube Ufodike
Investment Director
Alexey Buditskiy
Supported by
Amoo Venture Capital Advisory
Suite 84, 77 Beak Street
London W1F 9DB
+44 7 830 143 489
www.amoo.co.uk
contact@amoo.co.uk
www.twitter.com/amootweets
[ 27 ]