Gaynor Dykes Grant Thornton

The funding landscape

Funding clinic Clear route? In an ideal world a company comes on to bottom of the escalator with a proof of concept or commercialisation fund ( or possibly a grant); go on to the business angel network and also access a matched equity fund; and finish on a debt fund once they knew they could repay the debt. So quite straight forward and technically pain free experience…

The reality… Funding clinic The reality Well let's just say, this is more of a representation of accompany journey when raising growth finance. Multiple routes – angels, funds, crowd funding, venture capital; loans, invoice finance, asset finance Not knowing the best route - Sometimes finding themselves where they should not be

Funding clinic Funding landscape INVESTIGATION COMMERCIALISATION IN THE MARKET CONCEPT FEASIBILITY PLANNING MARKET ENTRY GROWTH OWN CASH, FRIENDS AND FAMILY GRANTS EQUITY ALTERNATIVE FINANCE (INCLUDING CROWD-FUNDING) Here is a snap shot of sources of finance given where your company is within the company life cycle – it is a representation only as there are no hard and fast rules, however, using this as a guide can already start to focus a company's attention on raising a form of finance that is suitable for the business and can lead to time saving…classic example here are start-ups that I have seen in the last year looking at raising debt to get their product or service off the ground – given the risk appetite of banks in today's market this is a no – even start-up loans which could be here look at the viability of repayment and have tightened lending criteria in the past year. DEBT REVENUES PRE-REVENUE PHASE General representation only – industry sectors have differing characteristics

- Influx of start-ups / entrepreneurial spirit Funding clinic Market observations – general Cultural changes - Influx of start-ups / entrepreneurial spirit - Increase in funding options and providers - Knowledge gap more prevalent than funding gap More options, same fundamentals - More providers have entered the market, but companies still struggle to raise finance - Importance of tax incentives to early stage investors

- VCs have moved away from the early stage market Funding clinic Reliance on angel finance at early stage equity - VCs have moved away from the early stage market - Emerging R&D / innovation funding gap - Reduction in grant availability - Recent inflows of cash, but fund managers struggle to find quality deals Market observations Significant innovation in response to the financial crisis - Alternative finance products and providers emerged - Excluding real estate loans, peer-to-peer lending recorded £881 million for the year 2015. This was the equivalent of 3.9% of new loans lent to SMEs Banks still lending to the right businesses UK is the world leader in equity crowd funding - More than just the money; a powerful way to grow your brand and is now a proactive choice for many

Skills gap in management team Non credible financial projections Funding clinic Why do Funders reject proposals? Skills gap in management team Non credible financial projections No track record or proof of concept A solution without a problem Lack of financial commitment from directors/owners Too complex Lack of market awareness and/or competition No clear exit or repayment route Inadequate financial return for an investor Lack of security for a lender

And Finally… The P’s PREPARATION PRESENTATION PERSISTANCE !

Gaynor.a.dykes@uk.gt.com 07721 606966