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1 Sources of Finance for Creative Businesses Jason Ball Investment Executive - London Seed Capital 31 st March 2006.

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Presentation on theme: "1 Sources of Finance for Creative Businesses Jason Ball Investment Executive - London Seed Capital 31 st March 2006."— Presentation transcript:

1 1 Sources of Finance for Creative Businesses Jason Ball Investment Executive - London Seed Capital 31 st March 2006

2 2 SOURCES OF FUNDING COVERED Grants SFLGS Asset Finance Local Enterprise Support Regionally Focused VCs Young Entrepreneurs Seed Technology and Arts Business Angels Other Specialist VCs

3 3 GRANTS London Innovation – part of the London Development Agency Lists a number of grant funding sources available in London DTI R&D Grant – Four levels, from… Micro projects, grant of up to £20k… … to Exceptional projects (involving high-cost technology development, larger firms), = up to £500k EU various grants and loans Further Info: www.grantfinder.co.ukwww.businesslink4london.com www.sbs.gov.ukwww.dti.gov.uk/r-d www.london-innovation.org.uk/www.london-innovation.org.uk/ www.creativelondon.org.ukwww.creativelondon.org.uk www.londonchamber.co.uk/europe

4 4 SFLGS Start-up businesses often have few assets to use as collateral – so hard to obtain loans Under SFLGS the Government guarantees the loan 21 lenders including all high street banks 75% guarantee, no personal Guarantee loans of up to £250,000 Term up to 10 years Availability to qualifying businesses with turnover up to £5.6m and age up to 5 years old Further info: www.dti.gov.uk/sflgwww.dti.gov.uk/sflg

5 5 ASSET FINANCING Outstanding invoices often an SMEs biggest asset. Factor controls SMEs sales ledger, providing credit collection and control. Pays 80-90% of invoice within 24hrs Invoices are sent to and assigned to the factor Factor pays the balance (less charges) when the invoice has been paid Two ways to exploit COMMERCIAL invoices: (1) Factoring and (2) Invoice Discounting (1) Factoring: suited to smaller firms (below £1m turnover).

6 6 ASSET FINANCING (2) Invoice discounting: suited to larger firms Same as Factoring, with two important differences: Collection responsibility remains with the SME Invoices remain assigned to the SME, not the invoice discounter Both facilities involve two costs: Service charge (% sales) AND Interest Charge Further info: All major high street banks Independent Growth Finance: www.igfgroup.com www.igfgroup.com

7 7 LOCAL ENTERPRISE SUPPORT Numerous organisations offer support, including HBV Enterprise Kingston Innovation Centre Business Link 4 London Portobello Business Centre oneLondon Further info: www.hbv.org.ukwww.hbv.org.uk www.kingstoninnovation.comwww.kingstoninnovation.com www.pbc.co.uk www.gle.co.uk/onelondon/Loans/SBLoans.htm www.cdfa.org.ukwww.sbs.gov.uk www.businesslink4london.com

8 8 LOAN FUNDS OneLondon £7m Loan Fund available: Seed (e.g. £5k) Growth (e.g. £20k) Eligibility: Objective 2 areas (East/North-East areas; post-code specific), oneLondon and ELSBC, up to £250k All other areas up to £20k standard Advice and mentoring support post-loan Further info: www.one-london.comwww.one-london.com http://www.goeast.org/002access.htmhttp://www.goeast.org/002access.htm

9 9 SEED TECHNOLOGY and ARTS University Seed Funds – invest in university spin-out companies The Recycling Fund – recycling companies with a UK focus Film London – Film finance NESTA – innovation, most projects £35-£80k The Wellcome Trust – (Translation Awards), healthcare sector Further info: www.unico.org.ukwww.recyclingfund.com www.filmlondon.org.ukwww.nesta.org.uk www.wellcome.ac.uk

10 10 YOUNG ENTREPRENEURS Shell LiveWIRE - £10,000 prize 16-30yrs Princes Trust: a low interest loan (up to £4,000 for a sole trader, or up to £5,000 for a partnership) a grant of up to £1,500 in special circumstances a test marketing grant of up to £250 Further info: www.shell-livewire.org www.princes-trust.org.uk

11 11 EQUITY FINANCE Selling a share in your business Various sources of equity finance: –Friends and Family –Business Angels (private investors) –Venture Capital How do these link together?

12 12 EQUITY FINANCE DIAGRAM CAPITAL NEEDS TIME Seed Start-upEarly Growth Sustained Growth High Risk Low Risk Friends, Family & Fools Business Angels Formal Venture Capital IPO Growth

13 13 BUSINESS ANGELS High Capital Returns for risks involved SMEs with a clear/concise Business Plan Minority shareholder legal protection Potential for explosive growth Involvement post investment Exit in medium term Business Angel = private investor who might invest their own money in your business. Angel Network = organisation that links suitable businesses to its membership of Angel investors

14 14 BUSINESS ANGELS BBAA – angel network trade association Example Business Angel Network: London Business Angels. Not-for-profit, 180 investors meet 7 times p/a, invests £100k - £750k, 33% success rate. 800 applicants p/a and 40 selected. Co-investment funds invest alongside angels Further info: www.bbaa.org.ukwww.bbaa.org.uk www.lbangels.co.ukwww.lbangels.co.uk www.londonseedcapital.com

15 15 INVESTMENT FUNDS The Capital Fund: up to £250k, further £250k possible after 6 months – Greater London only Bridges Community Ventures: £150k+ in companies based in deprived areas London Seed Capital: £50k to £100k business angel co- investment fund – London and South East GoEast Ventures: £50k to £350k East London Creative Capital Fund: £75k co-investment, up to £500k available as follow-on funding Further info: www.thecapitalfund.co.ukwww.thecapitalfund.co.uk www.bridgesventures.comwww.bridgesventures.com www.londonseedcapital.comwww.bvca.co.uk www.goeastventures.co.ukwww.goeastventures.co.uk www.ccfund.co.ukwww.ccfund.co.uk

16 16 VENTURE CAPITALISTS Larger amounts of funding: £1m+ –Equity investors who seek a seat on the Board Typically invest in later stage companies Represented by British Venture Capital Organisation (BVCA) –Members invest in all sectors of the economy –170 full members Further info: www.bvca.co.uk

17 17 Jason Ball Thank you for your interest Tel: 0044 207 089 2309 www.gle.co.uk www.londonseedcapital.com jason.b@gle.co.uk


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