FINANCE IN 2020 Debt, Equity and Rewards - PKF Francis Clark
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FINANCE IN 2020 Debt, Equity and Rewards
DEBT, EQUITY AND REWARDS • Investor Ready - PKF Francis Clark • Rewards - Crowdfunder • Debt - British Business Bank • Debt - Boost • Debt - Capitalise • Debt - Lloyds Bank • Debt - SWIG Finance • Debt - Folk2Folk • Debt - Ignition Credit • Debt/ Equity - CIOSIF • Equity - Mylor Ventures • Equity - BGF • UK Government support - PKF Francis Clark PKF Francis Clark, Nick Tippett
I N V E S TO R R E A D Y - S T E P 1 Understand the funding options AND look for a match with your requirements Understand Understand funding your options and requirements funders requirements
I N V E S TO R R E A D Y - S T E P 2 Be PREPARED • Documents • Business plan • Financial projections • Housekeeping • Licences / contracts? • IPR ownership in the company? • Books and records in order? • VAT, PAYE/NI • Statutory Accounts/management accounts • Other fund/funder specific requirements • Dedicate time and resource to the process • Take expert advice (if applicable) • Understand deal breakers
Crowdfunder June 2020
6 Meet the Crowdfunder team Founding partners Rob Love Phil Geraghty Simon Deverell Dawn Bebe Chief Executive Chief Creative director Director of Officer Crowdfunding communications and local Officer partnerships On the board and Shareholders Alex Hook Caroline Norbury Pippa Dunn Andy Medd Non exec director, Non exec director, Co-founder of Co-founder of Broody Head of Investment CEO Creative Broody, Ex CMO at and Founder at Mother at Nesta England EE
7 Our numbers £87,095,603 We’re the UK’s biggest rewards-based crowdfunding platform, unlocking millions more from our partners Over 70 partners 242795 50,000+ total projects added visits daily Up to 300 1 million+ projects added daily supporters have pledged money
8 We enable change We recognise that government, charity and philanthropy are not enough to tackle society’s across the UK by challenges on their own and that grant giving in the funding the projects UK is in need of radical transformation. that matter We believe passionately that business should be good and that we can help lead the way by building a new generation of social entrepreneurs. We believe that everyone in the UK is a philanthropist in the making and they should have the power to make positive change in their communities. We know crowdfunding makes ideas happen and together we might just change the world!
9 Our purpose Crowdfunder exists to tackle society’s challenges by making ideas happen | 9
@britishbbank www.british-business-bank.co.uk 10
Our 6 objectives (pre Covid-19) 1 2 3 Increase the supply of Help to create a more Identify and help reduce finance diverse finance market imbalances in access to to smaller businesses where for smaller businesses, with greater finance* markets don’t work well choice of options and providers for smaller businesses across the UK 4 5 6 Encourage and enable Be the centre of expertise Achieve the Bank’s other SMEs on smaller business objectives whilst to seek the best finance suited to finance in the UK* managing taxpayers’ their needs providing advice and support for money efficiently Government within a robust risk management * New objectives from April 2018 framework @britishbbank www.british-business-bank.co.uk 11
Our success – last 5 years (Pre- Covid) 1 2 3 4 Increase the supply of Help to create a more Encourage and enable Achieve this whilst finance diverse finance market SMEs to seek the best managing taxpayers’ finance suited to their money efficiently needs @britishbbank www.british-business-bank.co.uk 12
Some of our partners active in the South West @britishbbank www.british-business-bank.co.uk 13
Regional fund in South West – (www.ciosif.co.uk) £400m+ £40m+ £250m+ @britishbbank www.british-business-bank.co.uk 14
Start Up Loans: www.startuploans.co.uk @britishbbank www.british-business-bank.co.uk 15
The Finance Hub Our Finance Hub has been built to help businesses understand and discover the finance options that could enable them to grow. www.british-business- bank.co.uk/finance-hub/ @britishbbank www.british-business-bank.co.uk 16
The Finance Guide Our Finance Guide has been developed with the ICAEW to help businesses access the right form of finance to push forward. https://thebusinessfinance guide.co.uk/business- finance/ @britishbbank www.british-business-bank.co.uk 17
New Schemes & Future Fund Source: British Business Bank December 2018 @britishbbank www.british-business-bank.co.uk 18
Recent impact (April-June 2020) We now over support more than 180 over partners £35bn of finance to business 800,000 now delivering our programmes businesses supported Source: British Business Bank December 2018 @britishbbank www.british-business-bank.co.uk 19
No representation, express or implied, is made by British Business Bank plc and its subsidiaries as to the completeness or accuracy of any facts or opinions contained in this presentation and recipients should seek their own independent legal, financial, tax, accounting or regulatory advice before making any decision based on the information contained herein. No part of this presentation should be published, reproduced, distributed or otherwise made available in whole or in part in any jurisdiction where to do so would be unlawful. British Business Bank plc is a public limited company registered in England and Wales registration number 08616013, registered office at Steel City House, West Street, Sheffield, S1 2GQ. As the holding company of the group operating under the trading name of British Business Bank, it is a development bank wholly owned by HM Government which is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). It operates under its own trading name through a number of subsidiaries, one of which is authorised and regulated by the FCA. British Business Bank plc and its subsidiary entities are not banking institutions and do not operate as such. A complete legal structure chart for British Business Bank plc and its subsidiaries can be found at www.british-business-bank.co.uk. @britishbbank www.british-business-bank.co.uk
Finance in 2020: CBILS and BBLS
Products through and beyond PRE-COVID CRISIS RECESSION RECOVERY GRANTS, SSP, HMRC GRANTS JOB RETENTION INCOME SUPPORT CBILS and BOUNCE BACK LOANS LENDING COMMERCIAL LENDING BOOK A CONSULTATION AT CAPITALISE.COM
CBILS Marketplace ● What is is? ○ £50,001 -£5m ○ 25% of 2019 t/o ● Who is providing it? ○ 83 lenders ○ 48 accredited ○ 24 with Capitalise ○ Very limited marketplace as most lenders are only supporting existing clients ● What Information is required? ○ Banks - extensive ○ Alternatives - basics ● Is my business ‘viable’ ○ 1.5-2x Retained Profit
Applying for Engaged in trading or commercial activity Not part of a wider group which has received a Bounce Back Loan/ CBILS Bounce Back Loans Not a bank or building society, Not subject to a debt relief order insurance, public sector or or IVA, an undischarged 20 lenders offering Bounce individual in a partnership bankrupt nor in liquidation Back Loans. More than 50% of revenues Use credit granted only to derived from my/our business' provide economic benefit to As a lending product without trading activity my/our business an underwriter comes with lots of declarations! Not a business in difficulty on 31 Not have the benefit of the December 2019 (e.g. debt/equity protection and remedies that 7.5 & serviceability) would otherwise CCA 1974 @CAPITALISERS See capitalise.com/covid19/bounce-back-loans
What we’re seeing ~14 days 40% We have had >£12m of offers across Banks and Alternatives in the last 6 weeks - CBIL Response time for a Acceptance from decision application to lender We can access CBILS for Term Loans, Invoice Finance and Asset Finance. E.g Close Brothers - £500k E.g Hitachi - £5m ID Line ‘top up’ Profitable Loan types businesses Mostly £250k+ and Term Loans only Must be viable
CBILS CONTACT Sinead Johnson Lauren Couch 07884 696637 07784 237 245 sinead@boostandco.com lauren@boostandco.com https://growth-lending.com/ https://growth-lending.com/
WHO ARE GROWTH LENDING? Growth Lending are a group of specialist working capital providers, working with innovative and high-growth SMEs, helping them to accelerate their growth by providing flexible credit solutions. GapCap provide £100k-£3m invoice KX Media Capital are a global working BOOST&Co provide £2m-£20m term loans finance and supply chain finance solutions capital provider to the digital media, and working capital facilities for high tech, for innovative SMEs. marketing and technology sectors. high growth SMEs.
WHAT IS CBILS? CBILS can help SMEs that have lost revenue and had cashflow disrupted as a result of the COVID-19 outbreak. Funding is not provided by the government directly but from accredited lenders. This scheme was created to provide financial support for smaller businesses. The government guarantees 80% of the loans covered by the scheme and covers the interest and fees of the facilities for the first 12 months. The borrower remains fully liable for the debts. • They’re a PLC, Limited company or LLP registered in the • As at 31st December 2019, the business wasn’t classified UK. as a “business in difficulty”: • A business is in difficulty if, it was more than 3 years old and had accumulated losses of more than 50% (subscribed share capital), • Has been adversely affected by the COVID-19 crisis. had entered into administration or a CVA or had previously received rescue or restructuring aid from the Government or European Union. A • Turnover must not exceed £45m Eligibility business needs to fulfil only one of these criteria to be a business in difficulty. • One or more of the company’s director’s lives in the UK. Criteria • The business is not in one of the below sectors: • The business’ application would’ve been viable prior to the • Banks, insurers and reinsurers (but not insurance brokers) • Public-sector bodies pandemic. • State-funded primary and secondary schools. • Construction
CBILS ACCREDITATION GROWTH LENDING We have been accredited by the British Business Bank for 3 products, to suit the different needs of UK SMEs. Revolving Credit Facility Invoice Discounting Term Loan Flexible line of credit, unlocking funds tied Invoice discounting facility allowing you to Loans designed to extend the funding runway up in your balance sheet, strengthening leverage your sales ledger, boosting your & providing capital to achieve next level of working capital. cashflow position. growth. KEY TERMS KEY TERMS KEY TERMS • Funding Limit: £100k-£5m • Funding Limit: £100k-£5m • Funding Limit: £750k-£5m • Contract Length: 2-3 years • Contract Length: 2-3 years • Contract Length: 5 years • Interest: 6-14%pa (plus fees) • Interest: 6-14%pa (plus fees) • Interest: 6-14%pa (plus fees) • Security: first ranking debenture • Security: first ranking debenture • Security: first ranking debenture
REVOLVING CREDIT FACILITY IN FOCUS Growth Lending’s Revolving Credit Facility explained What is the fee structure? The Revolving Credit Facility is a flexible credit line unlocking funds An interest rate on drawn funds of 6%-14%pa depending on the tied up on the balance sheet, strengthening working capital. Whilst size/risk of the facility. There are supplementary charges which this is not a "receivable" finance product, the size of the aged include a registration fee of up to 2.5% of the facility size and a 1% receivable and stock balances, along with any other unencumbered annual facility fee. The government covers all fees for the first 12 assets will be taken into account in the facility size decision. months. How is the facility size determined? Are clients able to terminate their loans early? The highest of 1) twice the annual wage bill in 2019 or the last Yes – clients can repay the loans whenever they wish during the first 12 audited accounts available (including social charges and the cost of months with no penalty. Thereafter there is a small repayment fee. subcontractors/consultants), 2) 25% of total turnover in 2019 or 3) the liquidity needs of the company for the coming 18 months (its Is the RCF a fixed amount or is it a set % of aged receivable/stock? liquidity plan can include both working capital and investment The facility limit is fixed. We take into account the average level of costs). Internally, asset coverage will define our maximum limit. each company's AR and stock levels along with and other unencumbered assets when reaching the facility limit.
TERM LOAN IN FOCUS Growth Lending’s Term Loan explained. What is the fee structure? Loans designed to provide an extended funding runway & providing We have an interest rate on drawn funds of 6%-14%pa depending on capital to achieve next level of growth. the size/risk of the facility. There are supplementary charges that include a registration fee of 0.5%-2.5%. All fees within the first 12 How is the facility size determined? months are covered by the government. The highest of 1) twice the annual wage bill in 2019 or the last audited accounts available (including social charges and the cost of Is the loan released in tranches? subcontractors/consultants), 2) 25% of total turnover in 2019 or 3) The loan is available in up to four tranches - the first drawdown is the liquidity needs of the company for the coming 18 months (its available immediately and the rest available from 18 months liquidity plan can include both working capital and investment thereafter. costs). Internally, asset coverage will define our maximum limit. What is the amortization profile of the loans? What is the term of the facility? The loans amortize at 6% in year 1 and then on a straight line Our facility terms are up to 5 years however you are able to terminate amortization thereafter. the agreement with no termination fees within the first 12 months.
INVOICE DISCOUNTING IN FOCUS Growth Lending’s Invoice Discounting product explained. What is the fee structure? Our CBILS invoice discounting facility releases funds There are two ongoing fees for with our invoice discounting facility. A tied up on your sales ledger, boosting your working service fee which is charged against the assigned turnover - this will capital position. likely sit between 0.5-1% - and a discount rate which is charged against the outstanding balance of the facility - this will be between 4- How is the facility size determined? 8%pa. The APR of the facility to the borrower will be up to 14%. All fees The facility limit will be agreed post due diligence and will range within the first 12 months are covered by the government. between 70-90% of the aged debtor balance. Is this a full ledger facility? What is the term of the facility? This is a full ledger invoice discounting facility however we will be Our facility terms vary from 24 to 36 months however you are able to flexible on excluding certain debtors depending on the circumstances. terminate the agreement with no termination fees within the first 12 months. Does the facility include export debtors? Yes we are able to include export debtors within the facility however we restrict certain countries.
Finance in 2020: Market update etc.
Products through and beyond PRE-COVID CRISIS RECESSION RECOVERY GRANTS, SSP, HMRC GRANTS JOB RETENTION INCOME SUPPORT CBILS and BOUNCE BACK LOANS LENDING COMMERCIAL LENDING BOOK A CONSULTATION AT CAPITALISE.COM
CBILS UPDATE Businesses with a BBL can now refinance this into a CBILS. You can have multiple CBILS, both as loans, Important updates & AF and IF across any number of accredited lenders. announcements Surveyors can go back to value property, which means that The marketplace is opening up and more the property market has officially re-opened flexibility is being shown Materiality clause, on the 19th May RICS members discussed if it is now appropriate to remove - this means valuations now carry full liability. The Economic Secretary, John Glens announced a new reinsurance scheme for credit insurance, which unlocks traditional lending beyond government schemes
MARKET UPDATE ● Clearly the lending landscape has changed dramatically and government back schemes Questions are now dominant - over £30bn lent so far. ● BBL, up to £50k, 100% government backed guarantee - just a declaration from the directors - really important that the declaration is fully understood. No underwriting from Lenders - money in 48 hours. An overview of recent developments and how we will ● CBILS - 80% gty - full underwriting required - be looking to provide funding to support businesses during the ● Can only have one scheme at anytime - so important to fully understand cashflow requirement and also that it is not free money - it will need to be repaid. post covid-19 recovery ● Beyond government support we have secured lending, valuations are now back with standard LTV returning and people are spotting opportunities in the marketplace. ● Invoice Finance - a really fundamental product to allow clients to trade back up to pre- covid levels as this will take significant working capital. ● Merchant Cash advance for retail now all non-essential shops are open. Allows clients to borrow based on card turnover. ● Asset finance - people need new equipment - delayed purchases and orders due to initial uncertainty and manufacturers being closed or having very limited output.
MARKET UPDATE ● Ensure they understand exactly what their funding gap and requirement is. Is a £50k BBL Questions enough or does the business require longer term ongoing support such as that which can be provided through IF. ● Have all the documentation and information available from the outset - especially if they are looking for a CBIL from their Bank lender. Top Tips for potential applications looking to ● Have a clear expectation of what debt the business can actually service. Businesses do secure funding to support have a tendency to overestimate what they can borrow. their recovery ● If the client is looking for a property purchase, be it a commercial mortgage, BTL or development they need to ensure they have the appropriate cash stake. Usually around 30% as well as taking into account associated costs and timescales. ● If there is affordability it is always better to borrow slightly more than slightly less, as there are no early repayment figures on the loans. ● Plan in advance. Depending on the complexity of the deal it can take a significant amount of time for deals to complete. Most transactions where tangible security is required take 3 months to draw. ● You are 4x more likely to secure the right funding through using your accountant than trying to go direct.
MARKET UPDATE Important for businesses and advisors to realise that BBL/CBILS has Questions just been designed to ensure clients have enough cash to survive this period, not as free money that will last forever. “Seems almost half of UK businesses will run out of cash within 6 The importance of funding months despite all government schemes, according to ONS survey for SME’s post covid. results. It showed that 44% of the 18,506 responding firms said their reserves would last for less than 6 months, with 24% unsure how long they would last and 4% reporting no spare cash. Only 27% said their reserves would last beyond six months.” FT
Classification: Public Data as of 3rd June 2020 • Bounce Back Loans – 162K+ Approved, to the value if £4.9bn • Coronavirus Business Interruption Loans - 7,492 approved, to the value of over £1.3bn • Supported our business customers by agreeing agreed more than 47,000 fee free overdrafts, capital repayment holidays and deferred payments. Lloyds Bank Coronavirus Support Page, Click Here
Classification: Public Information required when applying for finance: *not limited to • Amount required – A cash flow forecast will help establish the amount needed for working capital • Three years Full Trading Accounts • YTD Management Accounts, Profit & Loss and Balance Sheet • Details of existing finance commitments – monthly payments, balances and maturity dates. i.e. HP Schedule • Personal Statement of Assets and Liabilities • What actions has the business taken to ease cashflow during the pandemic i.e. secure grants, furlough staff or cut back on expenditure
Classification: Public Solutions Available: web links (right click and select open link) • Bounce Back Loan (BBL) • Lloyds Bank • British Business Bank • Coronavirus Business Interruption Loan (CBIL) • Lloyds Bank • British Business bank • Asset Finance • Lloyds Bank AF • Invoice Finance/Discounting • Lloyds Bank ID IF
SWIG Finance – Who are we? SWIG Finance provides loans from £500 – £250,000 to viable start- ups and established SMEs based in Cornwall, Devon, Somerset, Bristol, Dorset, Wiltshire & Gloucestershire. We are: • A not-for-profit company • Established 1989 • FCA Regulated • A Responsible Finance Provider • Offices in Truro, Exeter and Bristol • Trustees from Cornwall Council, Cornwall Chamber of Commerce, Devon County Council, Gloucestershire First LEP, Barclays and Lloyds banks.
SWIG Finance – Why are we different? • Our decisions are made by people not computers • We can often lend when the bank can’t • We treat each business individually • We lend to startups and established businesses • We are the largest SUL provider in the South West • We are an accredited CBILS lender
SWIG Finance – Facts & Figures 2019>>2020 Lending Breakdown Amount Invested Female Lending £6.5m 39% Businesses Under 45’s Jobs Created Supported Lending & Safeguarded 403 77% 561 Avg Loan Size Social Impact SWIG £44k £12m SUL £12k CIOSIF £37k
SWIG Finance – Case Studies Business Loans Start Up Loans Little Kitchen Green Cow Dairy Investment amount: £60,000 Investment amount: £40,000 (£20k each) Sector: Food Production Sector: Dairy Farm Use of funds: support business continuity during COVID-19 Use of funds: to buy a milk bottling plant “We were really happy with the service provided by SWIG “The Start Up Loans we received with the help of SWIG Finance. Our dedicated Business Manager, Nicola Mapp, Finance has enabled us to spend more time on the business was supportive throughout. The application process was and accelerate business growth. Sarah was very supportive straight forward, and the funds were released quickly”. throughout the process”.
SWIG Finance – Our Partners
SWIG Finance – Contact To speak with one of our friendly and professional business managers please contact: www.swigfinance.co.uk info@swigfinance.co.uk 01872 227 930
• We are a local lending company, facilitating secured loans for business WHAT purposes • A secured loan is when you borrow WE money which is secured against an asset you own. DO • FOLK2FOLK loans are secured against your land or property
1. Businesses that want to grow and develop 2. Businesses that want to diversify 3. Borrowers that need to bridge a gap WHO 4. Borrowers with unusual/diverse income streams 5. Business owners looking to release equity WE 6. Those deemed ‘too old’ by the bank HELP 7. Those who don’t meet standard lending criteria 8. Property development, purchase & construction 9. To facilitate partnership break-ups 10. To refinance
• We have injected over £360m into businesses (£17.3m during lockdown) WHY • We take an holistic approach to assessing CHOOSE borrowers • We only offer interest-only loans US? • We lend for almost any business purpose • Loans in weeks not months
Loans for almost any business purpose WHAT • AMOUNT: From £50k • TERM: 6 months - 5 years WE • RATES: • LTV: Typically 0.54% p.m. Max 60% LTV (Market Value) OFFER Fees and conditions apply. The property against which your loan is secured could be at risk if you do not meet payments.
Talk to us and see if we can help www.folk2folk.com 01566 773296 enquiries@folk2folk.com
Ignition & STAR Asset Finance • Founded in 2005, Ignition Credit have helped arrange over £450 million for businesses, either through our own funds or via joint trading relationships with a panel of major finance houses. • Customer service is the key to our success with c.80% of our customers returning for additional funding support. • 1st April 2015 Ignition was acquired by STAR Asset Finance. STAR Asset Finance are owned by STAR Capital Partners a leading European Fund Manager, with offices in London, Coleshill (Midlands), Norwich, Bournemouth and Truro. • 2019 Ignition were awarded ‘7th Fastest growing Company in the South West’ • 2020 have been shortlisted for ‘Deal of the Year’ by NACFB • 2020 Approved Broker for British Business Bank CBILS products
What is Asset Finance? Benefits of Asset Finance Hire Asset Leasing Purchase Finance Small Business Helps Cashflow A market solution to a market failure in Update Supporting Medium Frees up Public the SME market Obsolete Size capital Sector Investment “British Business Equipment Enterprises Bank” Security taken on Large the asset Companies
What Can We Finance? Asset Finance can assist in financing any moveable asset. The main types of assets we finance are: • Cars and Classic/Prestige Cars • Motorbikes • Vans, LCV’s, HGV’s, Bus & Coach • Construction • Agricultural • Engineering • Technology • Catering Equipment • Refurbishment & Fit-Out Finance • Refinance of existing assets • The list is endless
AssetProduct Ignition’s financeoffering statistics The latest report from The British Business Bank (BBB), 2018 SME Business Finance Survey, showed that asset finance new business of £18.9 billion went to SMEs in 2018, • CBILS 3% higher thanApproved Broker from the 2018 report include: in 2017. Highlights • Leasing • Leasing / hire purchase was the most common type of finance sought by SMEs. • Lease Purchase • Awareness of leasing / hire purchase is high among SMEs surveyed reaching 89%. • Hire Purchase • Awareness – Regulated of providers of assetand Nonalso finance regulated increased to 53%. • Loans • A third of SMEs sought finance to purchase fixed assets. • Invoice • Avoiding Discounting additional debt and fear of rejection are the main reasons for SME’s not applying for finance. • Merchant Loans – via your credit card machine
What do our customers say? • An excavating Contractor based in Cornwall “as the business has grown, we’ve needed to invest in more equipment vehicles, and can always rely on Ignition to provide us a good deal and great service. The team are Fantastic. The make the whole process easy!” • A survey equipment supplier based in Dorset and Devon “Fortunately, the Ignition team is always available to help us. All it takes is a simple phone call, and we know a decision will be made and finances arranged swiftly.” • A professional marine and land based civil engineering business based in Devon “Ignition offer excellent all-round service but what really stands out is their speed and efficiency. Dealing with them is effortless and seamless. I wouldn’t bother trying any other finance provider now, as I can always trust ignition to give me a good deal and get the job done quickly”.
In Summary • Asset Finance can assist in financing any moveable asset (hard or soft) from Cattle to Cars. • Dealer or Customer routes to market. • Finance agreements can be tailored to business needs, with flexibility of terms & repayment schedule. • Typical finance amounts range from £1k to £1m+ • Security generally taken on the asset alone, depending on the asset & covenant of borrower. • Quick & easy to put asset finance in place.
For more information please contact: Paul Caunter 01872 272900 www.ignitioncredit.co.uk
Cornwall & Isles of Scilly Investment Fund (CIOSIF) Loan Funding
CIoS Investment Fund Mission: to invest £40million into high growth Cornish businesses in order to enable sustainable economic growth Supporting ambitious and growing SMEs Creating jobs across the CIoS region Promoting new product development and innovation Leveraging private investment (match funding) Working with the wider finance community and partners
Loan Funding Available Loans from £25k up to £1m Loan term up to 5 years Capital Repayment Holiday Available Security: typically debenture & personal guarantee (partial) Dedicated Fund Manager Forward looking assessment New flexibility around investment into the tourism, hospitality, and leisure sectors, looking to assist business in these important sectors within Cornwall & IOS that are seeking to grow
Use of Funds
Example of Debt Deals Caterbook IsoSpaces Investment amount: £131,250 (2 tranches) Investment amount: £450,000 Sector: Property management software Sector: Off Site Modular Spaces Use of funds: testing & Marketing Use of funds: new staff, infrastructure, equipment and marketing
Contact Brent Treloar Brent.Treloar@thefsegroup.com Or ciosif@thefsegroup.com www.ciosif.co.uk
Raising Equity Finance: What’s the reality? CIoS Investment Fund Ralph Singleton Head of Funds , Cornwall ciosif@thefsegroup.com
CIoS Investment Fund Mission: to invest £40million into high growth Cornish businesses in order to enable sustainable economic growth Supporting ambitious and growing SMEs Creating jobs across the CIoS region Promoting new product development and innovation Leveraging private investment (match funding) Working with the wider finance community and partners
CIOSIF Equity Investments KEY FEATURES ELIGIBILITY Amount: £50,000 – £2million (excluding High growth potential SMEs matched private investment) Credible business strategy with view of exit Co-finance required Viable product/service; compelling market opportunity Security: generally none For activities that deliver substantial growth impact including: Arrangement fees, monitoring fees and legal Sales & marketing activity costs apply Hiring new staff Board observer, right to appoint a NED and New product development various consent rights 5 year exit strategy (longer for earlier invs?)
Why Equity and what we look for… Early stage businesses where debt funding is not suitable. Great team – ideally with prior experience and clear strategy to realise vision. Scalable business model In a sizeable market and/or niche “addressable” market with early revenue promising but not yet established. Need for Growth Capital, typically used for product development, key hires and international expansion. Obvious early identifiable exit route.
… and what is less interesting A virtual business – that is unproven but looking for cash to get started. Technology which is difficult to understand (Buffet) - and claims to have no competition Consultancy businesses that want to become product companies - can often take longer than expected to deliver product and growth Hobbyist solutions - often have limited commercial growth opportunities (narrow markets) Over optimistic forecasts (the J curve or hockey stick) - that lead to underperformance during early phase of growth Excessive valuations - making it difficult to raise equity in subsequent rounds Pre revenue and excluded ERDF sectors – Most pre revenue investments fail
Co – Investors & Exit strategy Co-Investors Need independent matched investment Can accept 20% of total raise from existing or connected parties Can introduce like minded institutional investors FSE Angel Network see all CIOSIF investments – free to join Happy to work with other angel networks Will work with Crowdfunders as cornerstone investor (but on our terms) or with corporate investors – must have same investment criteria Exit Strategy Investors won’t come in until the way out is clear. Want to buy an asset that someone else wants to buy Good companies with good cash flow will be easier to exit either via buy back or trade sale The best reason for an exit strategy is to plan how to optimise a good situation – peak of hope! Clarifying growth trajectory and exit point is key.
Summary - 5 key Criteria for investment 1. Market – growing, desirable, right time & high barriers to entry(IPR, exclusivity, niche) 2. Offering – compelling market proposition & differentiated 3. Business model – viable & scalable 4. Co-finance – is all co-finance in place? 5. Team – risk/reward, capability & composition
Angel Network: MyVAN
Introduction • Mylor Ventures Angel Network (MyVAN) – Business Angels with a SW focus, members of the UKBAA – Active Experienced investors with added value: • Networks and sales connections • Technical • Bring their own disciplines – Invest their own cash – Will often take a board or NED position
An integrated Approach • Mylor Ventures Angel Network (MyVAN) and/or…. Your own cash Family and Friends Crowd (Crowdcube, Seedrs, Funding Circle) and/or…. Grants Cornwall Fund [VCs – EBITDA>£0.5m]
What Angels Look For: • Businesses with – Strong Value propositions – Large markets – Intellectual Property – Credible Management • Capital Efficiency • Gross margin must cover HR asap • EIS/SEIS • Willingness to let Angels participate • [NED Register]
MyVAN ref Crowd & Grants • Crowd (Fixed timeline) – Pump priming (MyVAN) – Detailed preparation – Alongside corporate/VC/PE • Grants (Non dilutive) – When available – Reduce overall risk
What Angels Look for - Preparation • Investment Readiness Toolkit – Templates • IMs, Models, Presentations – Documents • NDAs, Contracts, SH Agreements – Policies • Procurement, Ethical, Environmental • Its always a buyers market but good companies well prepared always get funded
Process - Delivery • MyVAN – Apply at www.mylorventures.co.uk/angel-network/ – Investment Readiness (1 – 2 months) – Due Diligence (Stephens Scown template) – Summary Document– ‘yes/no’ – Meetings/Skype – Agreement/Participation – Execution • Crowd – note timeline benefits • Grants – non dilutive but ensure focus is maintained
rob@mylorventures.co.uk 07760 282106
Introduction to BGF Investment as it should be
About BGF A £2.5bn investment company Long-term, minority Investments across equity investments all sectors and all of £1m - £15m regions of the UK & Ireland A well-capitalised Proud to be #1 and evergreen active growth balance sheet investor globally Investment as it should be 84
Our approach to investment A minority investor Investment in all stages of growth Our equity share is typically between 10-40%. We invest in a range of companies from earlier stage The company remains in control with BGF acting ventures to more established SMEs (including those as a junior partner alongside management teams listed on the AIM market) and those with £100m+ and shareholders. revenues across all sectors. Long-term partner Valuable business network We initially invest between £1m and £15m, with We provide companies with access to a global significant follow-on funding to support new growth network of business leaders, sector specialists, other opportunities. There are no exit deadlines or drag investors and our other portfolio companies. rights - exits are driven by the shareholders not BGF. Flexible funding Skills and expertise of our people We provide a mix of equity and loan notes into We have the combined expertise of over 100 investment businesses for growth, strengthening your balance professionals across 16 offices in the UK and Ireland. sheet, and/or cash out to existing shareholders. We Alongside our network of business leaders, BGF can help can invest alongside bank debt and co-invest with with strengthening boards, succession planning, exit other partners. strategies & exit processes. Investment as it should be 85
Typical uses of BGF funding Investment in systems & Marketing & brand Capex infrastructure development Strengthening balance De-risking management Acquisitions sheets and refinancing shareholders existing debt Investment in Working capital Succession planning people Restructuring the Product development Site roll-outs shareholder base Investment as it should be 86
Growth investments What do we look for? ESTABLISHED BUSINESS Established trading operations, generating revenues of £2m+ GROWTH PLAN Clear strategy and detailed plan to grow profits MANAGEMENT A high-calibre management team with a track record of delivering TEAM growth SECTOR Resilient sectors with higher barriers to entry and a growing / MARKET addressable market Businesses with a strong brand/ concept or unique proposition that is USP / IP hard to replicate HISTORICAL A good indicator of management and sector performance PERFORMANCE EXIT Alignment with shareholders and confidence an exit will occur to / ALIGNMENT deliver our return
The benefits of partnering with BGF Founders and CEOs from across the portfolio are on hand to speak to you about their experiences of partnering with BGF and how they’ve tapped into the benefits detailed here. Follow-on funding capability We can provide multiple rounds of further funding to support additional growth opportunities Access to our Talent Network In particular through the appointment of a non-executive chair Time and experience From one of our own investors or portfolio managers joining the Board, as well as a wealth of specialised skills across our infrastructure teams Professionalisation and rigour This can lead to immediate efficiencies and help to prepare a business for an exit M&A experience and exit planning In BGF and through its advisory network, we can fast track growth strategies as well as ensure their success Sector expertise Having invested in over 300 companies, we are able to share our vast experience of the challenges and opportunities across all sectors Recapitalisation Strengthens the balance sheet, particularly for those companies with existing debt. This gives companies the headroom and headspace to move forward with their growth plans Investment as it should be 88
UK GOVERNMENT SUPPORT FOR BUSINESS PKF Francis Clark, Richard Wadman richard.wadman@pkf-francisclark.co.uk
U K G O V E R N M E N T S U P P O RT F O R B U S I N E S S https://www.pkf-francisclark.co.uk/coronavirus-updates/ https://www.pkf-francisclark.co.uk/insights/ Includes: • Bounce Back Loan Scheme • CBILS • CLBILS • Future Fund • Business Grants (rates) • Local Authority Discretionary Fund • Fisheries Response Fund • Dairy Response Fund • Coronavirus Job Retention Scheme/ Flexible Furlough Scheme • Self Employed Income Support Scheme • VAT and Self Assessment deferral
U K G O V E R N M E N T S U P P O RT F O R B U S I N E S S : L O A N SCHEMES Loans by value as at 28 June 2020: Total £43.23bn BBLS CBILS CLBILS Future Fund
U K G O V E R N M E N T S U P P O RT F O R B U S I N E S S : P K F F R A N C I S C L A R K C L I E N T C B I L S S TAT S ( A P P R O X . ) Circa 60 clients assisted Circa £30m offered to our clients through CBILS and non- CBILS Over 80 templates sent out to clients and non-clients
U K G O V E R N M E N T S U P P O RT F O R B U S I N E S S : C O R O N AV I R U S J O B R E T E N T I O N S C H E M E Coronavirus Job Retention Scheme Official Statistics (11 June 2020)
C O R O N AV I R U S J O B R E T E N T I O N SCHEME / F L E XI B L E F U R L O U G H S C H E M E PKF Francis Clark, Scott Campbell scott.campbell@pkf-francisclark.co.uk
C O R O N AV I R U S J O B R E T E N T I O N S C H E M E / F L E X I B L E FURLOUGH SCHEME WEBINAR – CORONAVIRUS JOB RETENTION SCHEME: CHANGES AND FLEXIBLE FURLOUGH https://www.pkf-francisclark.co.uk/coronavirus-updates/
THANK YOU… Crowdfunder British Business Bank Capitalise Boost Lloyds Bank SWIG Finance Folk2Folk Ignition Credit CIOSIF Mylor Ventures BGF London Stock Exchange
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