practical fund raising (for a hi-tech startup) david moore qubis ltd 028 9097 1521 [email protected]...

Practical FundRaising

(for a hi-tech startup)

David MooreQUBIS Ltd 028 9097 [email protected]

QUBIS Ltd - ‘Turning Research into Wealth’

Overview

Why raise external funds? Investment opportunity

(viewed from the other side of the table).

Typical sources (levels of risk and return).

Realistic amounts and timescales.


Why do you need funding? Product Development,

primarily salaries Equipment Working Capital

However - Early stage Fund Raising is difficult and time consuming!


Investment Opportunity Very high risk! Trust an unproven

management team to develop (and then sell) a conceptual product to a theoretical market at a profit!!

Wait 5-25 years for a return!!!


Business Plan Bugbears! ‘Hockey stick’ revenue growth. ‘We only need 0.1% of £5bn

market to achieve £5m sales’. ‘Top down’ rather than ‘bottom

up’ approach. This product will ‘sell itself’


‘Hockey Stick’ Sales


0.1% of £5bn Market


Investment Decision Man - team, experience, skills,

contacts etc Market - growth potential,

competition, channels, knowledge etc

Money - funding requirement, sources of funds, break even etc


Sources of Funds Self, personal savings ‘Sweat Equity’ ‘3 Fs’ - Friends/Family/Fools Free equity to obtain staff Customers InvestNI - PoC, GAP, Grant for R&D Private Investors, ‘Business Angels’ Seed funding, e.g. QUBIS Ltd, QUBIF Venture Capital


‘Bootstrapping’

Possibly the ideal funding mechanism for start-ups in today’s investment climate.

Using your ingenuity to raise funds from whatever sources are available.

Investors are normally not interested in getting involved before a revenue stream is established.


Sources of Funds Self, personal savings ‘Sweat Equity’ ‘3 Fs’ - Friends/Family/Fools Free equity to obtain staff Customers InvestNI - PoC, GAP, Grant for R&D Private Investors, ‘Business Angels’ Seed funding, e.g. QUBIS Ltd, QUBIF Venture Capital


Types of Capital

Loan Government Risk


Bank

Banks provide Loan Capital. Overdraft, short term, payable

on demand. Business Loan, fixed term. EFG, reduces risk to bank Key issues: Security, interest

& capital repayment i.e. not suitable for hi-tech start-up ventures, little security and no early cashflow.


Government Agencies InvestNI, InterTrade Ireland

provides Grant and/or Repayable support.

Business Development PoC, R&D , GAP Key issues: Additionality,

Admissibility, percentage contribution, export focus.


Business Angels

Business Angels provide Risk Capital seeking a return over 5-10 years.

High net worth individuals Probably have successfully

‘exited’ from previous venture Bring skills, expertise and

cash. Key issues: <£50k, ‘hands-on’

role, capital growth. QUBIS Ltd - ‘Turning Research into Wealth’

Venture Capital (VC)

Investment fund of Risk Capital, which will seek a return in circa 5 years.

May bring sectoral expertise, contacts and experience of similar ventures.

Relatively high investment threshold, high fixed costs.

Key issue: >£250k, capital growth, Board seat, focus.


QUBIS Ltd

Wholly owned by QUB Aim, create wealth through the

commercialisation of university research.

Invest cash and IPR in return for an equity stake, Seed Capital.

Typical investment size £5k-£50k.

www.qubis.co.uk for more infoQUBIS Ltd - ‘Turning Research into Wealth’

QUBIF

Overall fund size £1m Commercialisation of research from

QUB Typical investment £15k-£50k Willing to take a staged approach to

a max of £200k


Return on Investment Investors, whether business

angels, venture capitalists, banks will all be looking for a return on their investment.

The size of that return and the cost of their money is governed by the risk of the project.


Typical Returns

Business Angels, Seed Capital & Venture Capital all seek capital growth. Returns sought circa 20%-50% per annum.

Banks seek a 1%-3% (over base rate) return on their money, they do not want to lose any of their capital.


Funding Round 1

InvestNI PoC £60,000

Total £60,000

Prove technology in lab, pre company.

Funding Round 2

Founders (4x£1k) £4,000 QUBIS Ltd £10,000 +

IP QUBIF £50,000 Total £64,000

Develop ‘pre-production’ prototype within NewCo Ltd


Funding Round 3

QUBIS Ltd/QUBIF £25,000 Private Investors £25,000 Internal Funds £20,000 InvestNI (Bus Dev) £50,000 Total £120,000

Launch product, build initial sales revenues.


Funding Round 4

Internal Funds £50,000 InvestNI (Bus Dev) £45,000 Bank (EFG) £100,000

Total £195,000

Continue to grow sales revenues, strengthen team.


Funding Round 5

Internal Funds £50,000 INI Grant for R&D £100,000 Bank (EFG) £150,000

Total £300,000

Major new product development, substantial sales and marketing.


Funding Round 6 Internal Funds £100,000 InvestNI (Bus Dev) £100,000 Qubis £50,000 VC Investment £400,000

Total £650,000

Major growth phase, management team, new product development, substantial sales and marketing


Funding Summary Round 1 £60,000 Round 2 £64,000 Round 3 £120,000 Round 4 £195,000 Round 5 £300,000 Round 6 £650,000 Total £1,389,000


Funding Summary

Round £cash Time Sales Round 1 £60k 6 mths Round 2 £64k 2 yrs Round 3 £120k 2.5 yrs £0 Round 4 £195k 4.5 yrs £250k Round 5 £300k 6.5 yrs £500k Round 6 £650k 8.5 yrs £1m


Funding Summary

Round £cash Time Sales Round 1 £60k 6 mths Round 2 £64k 2 yrs Round 3 £120k 2.5 yrs £0 Round 4 £195k 4.5 yrs £250k Round 5 £300k 6.5 yrs £500k Round 6 £650k 8.5 yrs £1m Difficult, Possible, Support.


practical fund raising (for a hi-tech startup) david moore qubis ltd 028 9097 1521 [email protected]...

Documents

wealth slide

bn market qubis

qubif venture capital

hockey stick sales qubis

sources of funds self

business angels seed

loan capital

business plan bugbears