finance in the south west 2017 - established (>2 years) session

Finance in the South WestNick Farrant, Partner

Businesses trading for > 2 years…….

pkf-francisclark.co.uk

Structure of morning

• Background, Debt and Business Support (8.30am to 10am)

• Heart of SW LEP• Banks: an overview• Equity and Grants• Growth Hub

• Coffee Break

• Funding, Business Support, Investment Ready and SME perspective (10.25am to 12noon)

• Start Up (trading for < 2 years) or Established Business

• Lunch and Networking (12noon to 1pm)


• 10 minute presentations on:• LEADER (grant)• Marketplace lending – unsecured loans• Peer to Peer – secured debt• Debt – the range• Growth Capital (equity)• Venture Capital / Private Equity• Investment ready

• SME Perspective

Funding and support – for business > 2 years old

LEADER Funding Programme

•Sophie Price, Project Advisor

•The DR Company

Background to LEADER• Part of the Rural development programme

• Managing authority is RPA (Rural Payments Agency)• Focus on jobs/growth/economy

• Primarily capital investment •Greater Dartmoor LEAF £1.5m

•South Devon Coastal LAG £1.2m• Runs to 2020 – Brexit?

Greater Dartmoor LEAF / South Devon Coastal LAG(Rural Development Programme for England 2015-2020)


• Grant or loan?

• Who can apply?

• How much for?


• What to include in an application

• What’s the process and how long does it take?

• How and where do we start!

www.drcompany.co.uk 01837 658643 [email protected]

Greater Dartmoor LEAF / South Devon Coastal LAG

Selection of successful projects so far…..

Marketplace Lending – Unsecured Loans

Sarah Beard – Business Development Manager South West

22nd February 2017

• Online platform specifically designed to revolutionise traditional banking methods. Our priority is to secure a better deal for everyone

• Access in as little as 1 week, to fast affordable business loans for working capital, expansion, tax funding and much more …

• Marketplace lenders are not banks. Put simply, we directly connect business borrowers looking for finance to grow their business, with investors who want to lend

What is a Market-place lender?

A simple model: Lenders can spread risk by lending small amounts to hundreds of businesses

Traditional lending

Investors have control over their investment

Marketplace lending

Loan parts

Loan parts

Loan parts

Loan parts

Loan parts

Loan parts

Funding Circle – Who are we?

“Were passionate about small businesses”

“Thousands of people, financial institutions and the British Business Bank have lent over £1.8 billion to British businesses since 2010.

At rates that suit everyone.”

3 Founding Members – set up in 2010

Over $2.5 billion lent worldwide

600 Staff in the UK

300 Staff in CE/USA

Aim is to become the leading global market-place for investing and borrowing for SMEs

Funding Circle is the leading global lending platform for small businesses

14

2010 2011 2012 2013 2014 2015 2016 E 2017 F0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

Group Originations*Fu

ndin

g Ci

rcle

ann

ual o

rigin

ation

($m

)

October 2013Launch in the US

October 2015Launch in Germany, Spain &

Netherlands

Originated over $2.5B to tens of thousands of small businesses since 2010

Filling The Cashflow Funding Gap

At Funding Circle, we are committed to helping you:

• Grow your business

• Boost working capital

• Cover one-off business costs

• Buy an asset

• Develop a property

• Hire extra staff

Unsecured Loan

£5k - £350kSuitable for a wide range

of purposes6 months to 5 year termFixed interest rates from

4.9% No ERP’s

Secured Loan

£150k - £1m All asset security

agreement Charge on specific

properties or assets

Products

£150k-£3m Development Commercial Investment Fixed interest

rates No early

repayment fees

Property Finance

Any Sector, Any Purpose…

Loan Purpose

Working capital Expansion/growth Capital

Asset purchase OtherResidential prop-erty development

Asset finance

Refinancing a loan

Tax payment

Tax liability Annual purchaseCommercial mortgage

SectorAutomotive FinanceLeisure & Hospital-ity

Education & Train-ing

I.T and Telecommunica-tions

Agriculture

Consumer Services

Healthcare

Manufacturing and Engineering

Other

Professional and Business Support

Property and Construction

Retail Transport and Logistics

Wholesale

Funding Circle – Top Deals

• Garage repair centre. Borrowed £52,000 (7.5% rate) 60 months. Risk Band A+

Raising funds to purchase new equipment, plus marketing and recruitment spend

• Haulage company. Borrowed £30,000 (10.5% rate) 60 months. Risk Band B

To purchase new equipment and help with cashflow

• Hotel. Borrowed £205,000 (7.5% rate) 60 months. Risk Band A+

Working capital and wanted to carry out refurbishments

• Scaffolding business. Borrowed £298,000 (9% rate) 60 months. Risk Band A

To purchase assorted scaffolding equipment for new and ongoing contracts

Underwriting - Simple Credit Criteria

A minimum of 2 years

trading history

At least 1 year of filed or formally prepared accounts

No outstanding CCJs larger

than £250

What We Look For…

• Sole traders, partnerships, LLPS and Limited companies eligible

• Trading for 2 years with at least 1 years of filed accounts

• Clean personal credit – no CCJs, CVA, CVL or liquidated companies within past 6 years

• No consecutive losses

• Beneficial ownership in UK

• Non limited – must be a home owner

• Limited companies – will only lend up to £50k for non homeowner

20

• In 2013/14 the British Business Bank lent Funding Circle £60m, which has been channeled into more than 10,000 businesses across the UK.

• To this day, 10% of every loan funded on the partial loan marketplace is financed by the UK government

• In January 2017 Funding Circle proudly announced it had secured a further £40m from the government to continue to support UK SMEs

The Government’s commitment to supporting SMEs through Funding Circle

Thank you for listening

P2P Secured Debt

Jane DumeresqueCEO, Folk2Folk

AgendaWhat is P2P secured debt?

AgendaWhat is P2P secured debt?• Individuals lending money


•Typically faster


•Typically faster•Backed by collateral

AgendaWhat is P2P secured debt?

A FAIR way of enabling individuals to lend money to others while mitigating the risk of default by providing collateral.

We want to offer the best protection for Borrowers & Lenders

Fully authorised by FCA

£133m lent so far

The Only P2P with branches.

Yes we can• Need a quick decision

Get a yes or no within 24-48 hours• Need funds within weeks rather than months

• Time poor

• Wearing many hats

• Turned down by their bank



Funds within 7-10 days• Time poor

• Wearing many hats

• Turned down by banks




Easy application• Wearing many hats

• Turned down by banks





Simple and straightforward• Turned down by banks





Simple and straightforward• Turned down by banks

We don’t follow same judgement criteria

We’ll sort out the finance so you can focus on your business.

If you believe you can, we believe you can.

Simple process

1

Apply online, call us or drop into a

branch

Simple process

1 2


branch

Decision within 24-48 hours

Simple process

1 2 3


branch

Decision within 24-48 hours

Funds released in 7-10 days

Amount: • Min £25,000• Max 60% LTV Duration:• Fixed or flexible loansSecurity:• Land or property (not your home)Cost*:• Interest only loans at 5.5% or 6.5%• 2% set up fee, 1% annual service charge

Straightforward loans

* 3rd party fees and disbursements also apply

A bit about us

Your property against which the loan is secured could be at risk if you do not meet payments.

Growth Capital Investors

Edwin Davies, Investor

[email protected] 07880 384983

Introduction to BGF

Daniel Tapson, [email protected] 07964 904443


BGF is an investment firm that provides growth capital of £2m - £10m to UK businesses with turnover of £5m - £100m.

Who we are. Funding for growth and equity release

Day 1 investment of £2m – £10m for a minority stake

Long-term and patient capital, no forced exit

Access to huge network and support

Fast and focused investment process


BGF in numbers…£2.5bn – total fund

£1.1bn – invested to date

160 – total current investments

102 – non-executives introduced

40% – maximum stake

9 – investors in the Bristol team

9 – UK offices

£5m – minimum turnover threshold


Day 1 investment of £2m-£10m

Cash-in: to support long term growth

Cash-out: for existing shareholders

Equity stake of up to 40%

Always a minority partner – you retain control

What we can offer. Working alongside the banks, BGF provides growth capital in a way that meets companies’ needs.

No closed fund pressures

Patient capital. No drag rights, no forced exit


Fast and focused investment process Minimises disruption and fees

What we can offer. Working alongside the banks, BGF provides growth capital in a way that meets companies’ needs.

Flexible structures – equity / loan notes

Meets the needs of the company and shareholders

Fair legal approach Less onerous investor legal protections

More than money Access to impressive network and support


May 2012£4.0m

Online garden products retailerReading

December 2012£3.5m

Niche developer of mobile phones for

major brandsReading

South West Portfolio.

December 2012£7.0m

Design & manufacture of high composite pipes

for oil & gasPortsmouth

April 2013£3.9m

Design, manufacture & distribution of branded travel products for kids

Bristol

April 2014£4.0m

Cloud based IT services to the public sector

Corsham

August 2014£8.0m

Manufacturer & retailer of luxury kitchens

Devizes

August 2014£3.6m

Sustainable energy business that designs &

installs systemsTetbury

August 2014£6.0m

Furniture retailer with 40 stores across the UK

Slough

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAQQjRw&url=http://www.canburg.com/&ei=OIMZVNbFI4zXapHcgYgD&bvm=bv.75558745,d.d2s&psig=AFQjCNELkMbAjpS-ryrmHzdZsnDxn0MwJw&ust=1411044536629504

http://www.ecovisionsystems.co.uk/

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=6zVGfTvRho0RFM&tbnid=WDWfD4-HRQgMtM:&ved=0CAcQjRw&url=http://home-garden39957.blogspot.com/2011/08/furniture-village-inspirations-exotic.html&ei=AYYZVNC3G4zYatrVgpAI&bvm=bv.75558745,d.d2s&psig=AFQjCNGcfAGuqa41RldqupbAqq5TOO1VBg&ust=1411045240166875


April 2016£9.0m

Production of high quality, bespoke technical fabrics

Bridgwater

August 2016£2.0m

Liquid waste removal and drainage services

Cardiff

August 2016£2.0m

Data analytics

Corsham

South West Portfolio.

October 2016£3.0m

Retailer of solid wood kitchen worktops

Gloucester

October 2014£7.0m

IT managed services and cloud hosting

Cirencester

March 2015£4.0m

Communications infrastructure and

outsourced IT services

Chippenham

July 2015£10.0m

Multi-channel retailer of clothing, footwear,

household and fishing tackle products

Brecon

January 2016£4.4m

Web-based email marketing solution

Oxford

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiH6e2q3_7KAhVLPxQKHfy7C40QjRwIBw&url=https://www.marketingweek.com/brands/adestra/&psig=AFQjCNEQzZsOHor3N4-PXgdb51elfZY0CA&ust=1455796663623657

Growth Capital Investors70

BGF South West and South Wales Team

James AustinInvestor

07872 819093

Greg NormanInvestor

07557 747302

Edwin DaviesInvestor

07880 384983

Paul OldhamRegional Director

07887 657697

Dan TapsonInvestor

07964 904443

Ned DorbinInvestor

07800 682195

Alex GarfittInvestor

07770 582021

Alex SnodgrassInvestor

07766 781923

James SkadeInvestor

07967 816583

http://www.businessgrowthfund.co.uk/paul-oldham/

http://www.businessgrowthfund.co.uk/paul-oldham/

Private Equity, Mobeus and the South WestRichard Babington, Partner, Mobeus Equity Partners

Private, Mobeus and South West

72

• What private equity is not

• Private equity – what it is and what it all means

• Where does the money come from and how does it all work?

• How does the private equity market segment itself?

• How does the investment process work?

• What should you look out for in an adviser and a private equity partner?

• Mobeus and the South West


73








It’s somewhere between Dragon’s Den and the Apprentice right?

74

Private Equity and Mobeus

75








What is private equity?

76

Long term capital investment in unquoted

companies in return for an equity stake

Average investment period > 5 years Growth is key

Companies are privately held

PE house and management are both shareholders


77








Where does the money come from?

78

Borrow 10-year money from financial institutions (Limited Partners “LPs”)

Form an investment vehicle to invest the money in a series of privately owned businesses (General

Partner “GP”)

First 5-6 years investing in businesses alongside management teams and growing

them

Last 5-6 years growing the businesses and exiting the shareholdings

Proceeds distributed back to the LPs, management teams and the GP

Where does Mobeus’s money come from

79

Fund IV still in the investment phase

£150m raised from pension funds, insurers, Mobeus partners

Mobeus IV formed June 2016

Kinneir Dufort MBO (October 2016), Factor 21 MBO (November 2016)

Investments from earlier funds in the process of being developed and exited

Private Equity and Mobeus

80








How does the private equity market segment itself

81

Stage of development

Investment mindset

Scale of investment

Investment horizon

Sector specialty

Start up

Development capital Established Turnaround

Passive ActivistActive

£500k-£2m £2m-£20m £20m-£100m £100m-£1bn £1bn+

2 years 10 years5 years

Specialist Generalist


82








How does the investment process work?

83

Direct approaches

Introductions from advisors

Inbound enquiries

Meetings with management, site visits, exchange of information and

expectations

Heads of terms and a period of exclusivity agreed

Due diligence (financial, commercial, legal, management plus specialist), negotiation of legal

agreements and building out of 5-year strategic plan

Legal completion and execution of the strategic plan

4 weeks

4 weeks

8 weeks


84








Questions for yourself and your adviser

85

• Is your company prepared for the process?• Corporate and financial records all complete and up to date• Strategy for advancing the company in place• “Transaction blockers” removed or capable of being contained

(outstanding legal actions, rogue shareholders, short leases)

• How should you go about choosing an adviser• Match their capabilities (horsepower, network) with your

needs• Meet the entire team who will work on your transaction• Examine the company’s track record in what you are trying to

achieve• Reference the firm, reference the individuals• No question is a stupid question

• Consider talking to an advisor if the above is not the case

Questions for your private equity partner

86

• What experience does the PE firm have with what you are trying to do with your business now and in the future

• Does the PE firm’s approach match what you want from a business partners

• Are the people you are dealing with the decision makers at the firm

• How established is the firm and does it have committed funding lines

• Reference the firm. Reference the individuals you are dealing with. Do the references on your terms, and talk to investments that haven’t gone so well in addition to the stars

• Reference them again


87








Mobeus and the South West• Founded 1998, doing mid-market transactions ever since and

active in the South West from day 1• One of the most stable and successful teams in UK private

equity• £400m under management, £150m currently being invested

from Mobeus IV

• Investing £2m to £20m in MBOs, equity releases and development capital

Private Equity, Mobeus and the South WestRichard [email protected]

+44 7909 994 665https://www.linkedin.com/in/richard-babington-

343ab63

Investment ReadyAndrew Killick


.

Funding options


.

Business Strategy Business Plan

• What are you trying to achieve?

• Allow for thinking and evaluation time

• Document the assumptions

• Financials should follow the narrative


.

Management

• Roles and responsibilities

• Any changes or additional requirements?

• Track record

• Personal investment/commitment


The Business

Case


.

The numbers

• Match funding to cash requirements and business model

• Monthly profit and loss, cash flow and balance sheet projections

• Review

• Cash headroom and sensitivities


.

Investment ready - housekeeping

Licences / contracts / IPR

Books and records in order and up to date?

VAT, PAYE/NI, Corporation tax

Statutory Accounts/management accounts

Website


.

Requirements: Equity

• Equity funder requirements » growth

• Exit route and returns to the investor

• Investors expertise vs. loss of independence?

• Be prepared to discuss valuation


.

Requirements: Grants

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

• Timescale – prescriptive, process and panels

• Match funding

• ‘need for grant’ versus viable proposition

• On going requirements


.

Requirements: Debt

• Serviceability & Headroom

• Security / Personal Guarantees

• Conduits for government initiatives

• Covenants – achievable / appropriate?


.

Investment ready - Conclusions

Suitable funding

Robust Business case and appropriate Management

Detailed financial projections and documented assumptions

Resolve the ‘deal breakers’

Allow sufficient time

In-Chip Sensors

Market leading embedded monitoring IP solutions for today’s technologies

GLOBAL IN-CHIP MONITORING

Finance in the South West 201722nd February 2017

V2, 15mins

Stephen CrosherManaging Director

102

The Challenges Posed …

Advanced Technologies:

Mobile CommunicationsData centresAutomotiveIOT

Challenges to advanced product design:

Increased integrationPhysical conditionsContinued advancement and complexity:

• Artificial intelligence• Self driving vehicles

Solution: Monitoring ……

103

Moortec Semiconductor

Semiconductor Design Company (‘IP Vendor’)

Licensing of circuits & sub-system solutions

Mission: To become world #1 for in-chip monitoring solutions

Located in the Plymouth Science Park

Global customer base

Silicon Valley ChinaS.KoreaIsraelUK/EU

Taiwan

Japan

2005 - Founded in 2005

2005 to 2010 - Chip Design Services

2010 - IP Product Development

2014 - Innovate UK (TSB) GrantsProject#1 July 2014Project#2 Oct 2014

2015 - Turning pointPure-Play IP Product ModelMarket TractionTSMC IP Alliance MembershipSought investment

2016 - A Big Year!Received Investment for GrowthTSMC Open Innovation Platform® Partner of the Year New IP AwardLargest customer order

2017 - Growth

104

Timeline

2005

2010

2020

2015

Industry Awards

Industry Alliances

Foundry Alliances

Investment - Altitude Partners

105

Lessons

The ‘Right’ Team: Board structure Define roles and employ the best Culture (‘can do’ attitude, quality, personal learning & development)

A Ruthless Focus Marketing Sales Product Roadmap (standing still is not an option)

Mentoring Seek from various sources Learn to prioritise

Burn-out v Delegate Especially within a start-up culture

Recognise your successes!

106

Next Stage of Journey

Focus on Revenue IP Sales doubling each year

Increasing headcount High-tech work force Increased by 50% in the last year

Customer Reach Account management New Global Offices

Mission: To become world #1 for in-chip monitoring solutions

Silicon ValleyHong Kong

UK/EU

107

Global In-Chip Monitoring

Thank You

Finance in the South West – wrap upNick Farrant, Partner


.

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)


Structure of morning

• Background, Debt and Business Support (8.30am to 10am)

• Heart of SW LEP• Banks: an overview• Equity and Grants• Growth Hub

• Coffee Break

• Funding, Business Support, Investment Ready and SME perspective (10.25am to 12noon)

• Start Up (trading for < 2 years) or Established Business

• Lunch and Networking (12noon to 1pm)

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