Finance Yorkshire Welcome

Finance Yorkshire Tony Parsons - Director

Finance Yorkshire Why are we here this morning? Strengthening relationships with stakeholders, partners, intermediaries and clients Demonstrating how we are working in partnership with our LEP to support business growth Looking to the future Dialogue and questions

Finance Yorkshire Agenda Tony Parsons, Director, Finance Yorkshire Alex McWhirter, CEO, Finance Yorkshire David Grey - Local Enterprise Partnership Seedcorn Case Study – Chris Wright, Faradion Business Loans Case Study – Peter Skipworth, Ecus Equity Linked Finance Case Study – John Peters, GSE Research Questions & Answers

Finance Yorkshire Alex McWhirter - CEO

Finance Yorkshire What we are… £90m Venture Capital and Loan Fund Finance sourced from: £30m European Regional Development Fund £15m Yorkshire Forward/Business Innovation and Skills £45m European Investment Bank

Finance Yorkshire Our business approach… To fully invest the £90 million fund through helping SME’s constrained by finance to grow To create a sustainable fund To be recognised and respected as a key participant in the SME business and professional sectors To stimulate demand for finance in our key market segments To realise good returns for investors and value for money

Finance Yorkshire Our investment performance so far investments totalling over £39 million On track to meet economic targets; jobs created & safeguarded; increase in turnover; business starts and private sector leverage On track to achieve full investment by December 2014

Finance Yorkshire Investment Profile

Finance Yorkshire Investment impact... Created or safeguarded 5620 jobs Over £64 million Private Sector Leverage, resulting in £2 levered for every £1 invested £44.2 million in value added sales Legacy fund to be invested in region’s businesses in line with original objectives - to be utilised after 2019

Finance Yorkshire Investment performance by location...

Finance Yorkshire Investment performance by location...

Finance Yorkshire Investment performance by sector... Sector Analysis – All Funds SectorApplication Process (%)Investments (%) Business Services12%18% Engineering / Industrial products / Materials24%25% Financial Services1% Healthcare / Pharma / Bioscience14%7% ICT / Software / Telecoms / Media21%12% Leisure / Hospitality1%2% Renewables / Energy / Cleantech6%7% Consumer / Food & Drink6%10% Other15%18%

Finance Yorkshire Investment criteria… A business with growth potential A new start or growing business A business unable to source its full funding requirement from the commercial market SME’s paying business rates in Yorkshire and the Humber or relocating to the region

Finance Yorkshire Three portfolios Seedcorn Finance Business Loans Equity Linked Finance

Finance Yorkshire Seedcorn Finance Start up or early stage innovative businesses Involves strong technological ‘know-how’ and credible founders First products or services developed with potential for rapid growth Can invest up to £780,000 over the lifetime of the business through equity-based, tranched investments Investments of £2m+ when syndicating with other funds

Finance Yorkshire Case Study – Xeros  Environmentally friendly cleaning company backed by Finance Yorkshire Seedcorn Fund. Cleans laundry with vastly reduced water using Xeros polymer bead technology  Major savings in power, detergent and effluent production with superior cleaning  Recently completed a £10 million fundraising from existing and new investors. New funds will be used to roll out the Xerox commercial laundry cleaning system and finalise the household system

Finance Yorkshire Business Loans Fixed rate loans typically between £15,000 - £150,000 as syndicated or complete financial packages for businesses Financial packaging with other forms of debt finance including the banks Range of investments include; Working Capital, Capital Expenditure, Investment in Premises and development capital

Finance Yorkshire Case Study – Wilson Benesch  Sheffield based company which manufactures high end audio loudspeakers and turntables  Regarded as world class innovator in its field  £50,000 Business Loan which enabled the company to introduce new technologies and buy specialist tooling equipment.

Finance Yorkshire Equity Linked Finance Equity-linked investments from £100,000 to £2m and Mezzanine loans Some start ups, largely growth, development capital or expansion Work alongside other finance providers to invest in larger transactions Tailored deal structures to give maximum benefit to the investee companies

Finance Yorkshire Case study – Fluent Communications  Sheffield based IT lead generation company. Combines telemarketing, social media and digital marketing for IT sector  £210,000 Equity Linked investment to help triple its workforce in the coming year.  Investment will also help to purchase office equipment, upgrade IT and support working capital

Finance Yorkshire has: completed 346 investments Invested a total of £39.43m Seedcorn Finance – 44 investments totalling £7.93m Business Loans – 270 Investments totalling £15.00m Equity Linked Finance – 32 Investments totalling £16.50m Finance Yorkshire Portfolio performance to date..

Finance Yorkshire Our Investment approach Working alongside the commercial market; Maintaining and developing relationships with financial intermediaries to promote awareness and dealflow Market making effect, making deals happen by spreading the risk with other investors and lenders Co-investing with other lenders and funds

Finance Yorkshire David Grey Sheffield City Region Local Enterprise Partnership

One of 24 in the first wave of LEPs – there are now 39 LEPs across the country (100% coverage) A genuine partnership between the public and private sector Board composition - 19 members:  Private sector Chairman – James Newman  10 business representatives, including a University Vice- chancellor  9 Council Leaders (inc. Doncaster Mayor) Seven SCR LEP Sector Groups represent the voice of business Strong / productive relationship with Government The SCR LEP was formed in Autumn

26 Priorities set out in our Economic Overview document (updated January 2013) Our priorities fall into two main areas: Maximising the potential of our key growth sectors; and Putting in place the foundations for growth. Key Principle 1: Leading on issues of Sheffield City Region significance Key principle 2: The importance of a true public and private sector partnership Key principle 3: Adopting a collaborative approach Key principle 4: Driving innovation to promote growth

27 SCR / LEP PRIORITIES Putting in place the foundations for growth

Economic Strategy / Growth plan – shaping the SCR economic programme in light of proposed devolution of powers / funding (including European Structural Funds) Management of the SCR Enterprise Zone (FT ranked ‘number 1’) Growing places fund – prudent investment decisions (including JESSICA investment fund) City Deal – particularly relating reform of Skills system Key team initiatives include… 28

Regional Growth Fund programme (‘Unlocking Business Investment’) - £25 million, ~£100m of direct business investment, footprint of 2,000 new jobs by March Inward investment – additionality and generating new leads Sheffield City Region Investment Fund (SCRIF) – GVA driving infrastructure investment Sector Groups – voice of key industry sectors …Key team initiatives include 29

Finance Yorkshire Seedcorn Fund Testimonial Chris Wright, Faradion

Investee Business

09/05/2015Faradion Investment Opportunity32 Kroto centre, University of Sheffield, Yorkshire Access to the Materials Science and Engineering department One of the leading departments of its kind in the UK Location Investee Business

 Committed to driving down the cost of battery technology  For storage of renewable energy  For electric vehicles  Faradion`s principal focus is Na-ion battery technology:  comparable performance to Li-ion  lower cost  enhanced safety  Strong IP portfolio  2013:  Na-ion battery demonstrator cells within the next 12 months  low cost LiFePO 4 cathode – early revenues  Recent £500K investment Jan 2013 Faradion Investment Opportunity - Confidential 33 Company Overview Investee Business

Andrew Dixey, Chairman Over thirty years managing global organisations. Former President and COO of the Titanium Metals Corporation; Director of Special Metals Company; Managing Director of London & Scandinavian Metallurgical Co. Limited; CEO of Atraverda Dr. Chris Wright, CEO Former Group Operations Director of AEA Technology PLC, responsible for Lithium battery licensing, and CEO of IP2IPO Ltd (now IP Group). Highly experienced entrepreneur and former executive chairman at Covesion Ltd and Molecular Vision Ltd Dr. Jerry Barker, CTO Former Chief Scientist at Valence Technology Inc. and inventor on > 90 issued and ~50 pending US battery patents. Inventor of Li-ion active materials: LiVPO 4 F, Li 3 V 2 (PO 4 ) 3, LiMSO 4 F, Li 2 MP 2 O 7, LiFe(Mg)PO 4 and the Carbothermal Reduction (CTR) manufacturing method. IBA Technology Award, 2012 The Team 34 Jan Faradion Investment Opportunity Investee Business

 A significant role in creating the company  Helped us get established with premises and links to professional advisers  Provided financial backing for the company  Gave assistance in early days when applying for grants  Finance Yorkshire’s Seedcorn Fund provided invaluable strategic and tactical advice. Jan 2013 Faradion Investment Opportunity - Confidential 35 Finance Yorkshire’s involvement Investee Business

Finance Yorkshire Business Loans Testimonial Dr Peter Skipworth, Ecus

Finance Yorkshire Business Loans Customer Viewpoint and Experience Pete Skipworth Investee Business

Presentation – Business Loans  My experience and observations of using this type of finance  £15k to £50k for early stage businesses  £15k to £75k for established businesses  £15k to £150k for established and profitable businesses  In a number of companies  Finance Yorkshire  (and predecessor fund, South Yorkshire Investment Fund) Investee Business

Environmental Monitoring Environmental Consultancy Infrastructure Management Investee Business

 Environmental Monitoring Solutions Ltd  “Industry’s Environmental Partner”  ~£0.5m t/o in 2009 to ~£2m t/o in 2012  Full-time MD (day job!)  backed by South Yorkshire Investment Fund Investee Business

 Ecus Ltd  Environmental Consultants  Full development life-cycle pre-planning, planning/design, post-completion  ~£1.5m t/o – turnaround just returned to pre-recession level  Non-Exec Chairman  Recent Equity Investment by Finance Yorkshire to go multi- office and ~£5m t/o Investee Business

 SEAMS Ltd   Infrastructure Management Software and Consultancy  co-founder and MD from 2002 – 2009  grew from start-up to ~£3m t/o  backed by South Yorkshire Investment Fund Investee Business

Why Finance Yorkshire Business Loans?  They will consider things that the banks won’t  (or the banks won’t unless there’s lots of security)  Often unsecured  Taking the risk alongside the business  Net interest rates only slightly higher than banks  They are interested in getting to know the business and require reporting Investee Business

What Have I Borrowed Money For?  Developing the business  e.g. A marketing push  e.g. Recruitment of BD (a general requirement for working capital)  New product development  e.g. Software ......things which are less tangible than, say, buying an asset Investee Business

Syndicating  Finance Yorkshire Business Loans funding with:  bank funding  self-funding (from profits)  “All jumping over the edge together!”  Finance Yorkshire Business Loans funding as part of Equity Investments with Finance Yorkshire Equity Linked Finance team Investee Business

Fore-runner to Equity Investment  Finance Yorkshire from £15k to £150k depending on company’s stage of development  So, more one-off projects than game-changing company development  In all 3 cases (EMS, ECUS, SEAMS) this type of funding has been a fore-runner to Equity Investment .....”getting to know you” Investee Business

Conclusion  A big help along the road of developing companies  Fills a gap in the availability of finance  For growth or difficult-to-fund projects  A stepping stone to bigger things  Will work flexibly and effectively with other funders Investee Business

Finance Yorkshire Equity Linked Finance Testimonial John Peters, GSE Research

January 2011: “…just a kid with a crazy dream” Investee Business

February – April 2011: Too small for PE; too big for angel investors; nothing from banks Investee Business

April 2011 – November 2011: First meetings, many discussions, many plans Investee Business

November 2011: money pit! Investee Business

November 2011 – December 2012: Frustration. Challenges, expected and not September 2012: second round investment Investee Business

2013: moving ahead – at last Investee Business

Finance Yorkshire Future work… Work collaboratively with the Sheffield City Region LEP and Local Authorities Creating the next gap fund for SMEs after 2014 Develop the Finance Yorkshire brand and a recognised provider of growth finance to SMEs

Finance Yorkshire Making an application Call us to make sure it’s eligible or make enquiry via website An Investment Manager will contact you to discuss. Complete Application Form & the supporting information when advised by the Investment Manager.

Finance Yorkshire Q & A Finance Yorkshire Ltd is a company limited by guarantee (Registered No ). Finance Yorkshire Ltd ( ) comprises three sub funds, Finance Yorkshire Equity Fund, which is managed by Neon Capital Partners Limited, Finance Yorkshire Small Loans Fund, which is managed by EV Business Loans Limited and Finance Yorkshire Seedcorn Fund, which is managed by Enterprise Ventures Limited. Each of these Fund Managers is authorised and regulated by the Financial Services Authority.