1. Rivers Capital Partners ltd is authorised and regulated by the Financial Services Authority no: 519469 Investment Readiness Jonathan Gold 6 March 2013 Confidentiality Statement: Please note that this document or presentation is and remains the property of Rivers Capital Partners Limited.

2. © Rivers Capital Partners Ltd, 2013 Jonathan GoldDirector/Partner Director/Founder Finance Tree ltd – Founding Director Nstar and CEO Northstar Ventures (now NorthStar Equity) – Founder Rainbow Seed Fund – AEA Technology – DTI, Imperial Innovations, Set Squared, Qi3 – Johnson Matthey Venture Capital Manager (FSA) Deal maker Investment Readiness

3. © Rivers Capital Partners Ltd, 2013 What is “investment ready” ? Source: Smithsonian, Washington USA

4. © Rivers Capital Partners Ltd, 2013 Investment Readiness … Is… NOT a business plan An investment proposition A story that tells an investor what they need to know Meets the needs of the THE investor

5. © Rivers Capital Partners Ltd, 2013 5 Sources of Capital 1.Banks 2.FFF…. & Founders cash 3.Business Angels 4.Venture Capital 5.IPO/ Aim/ Stock Markets 6.Crowdfunding 7.Peer to Peer lending uk.zupa.com Colours of money !

6. © Rivers Capital Partners Ltd, 2013 Finance for Business North East Funds £25m £15m £7.5m £20m

7. © Rivers Capital Partners Ltd, 2013 1 in 100 Most VCs probably invest in 1 in 10 they look into But at least another 90 have tried So what makes you stand out ? How can you blow everyone else away 1.Displace the competition? 2.Convince people to buy-in and buy? 3.Do more than collect hits on a website 4.MAKE A RETURN… © FinanceTree ltd, 2012

8. © Rivers Capital Partners Ltd, 2013 Sources of capital of capital

9. © Rivers Capital Partners Ltd, 2013 Statistics of VC portfolios… 10 Investments 4 Fail 4 Living dead 2 Stars

10. © Rivers Capital Partners Ltd, 2013 Don’t get too hung up on…Value..IRR Ultimately its what an investor will pay ! Investment required Time to a given return Return the investor needs RISK Valuation Pre-investment Post-investment % ownership to give return

11. © Rivers Capital Partners Ltd, 2013 Lessons from Venture capital… What are investors looking for

12. © Rivers Capital Partners Ltd, 2013 12 The Management Team

13. © Rivers Capital Partners Ltd, 2013 13 Innovative Defensible Products

14. © Rivers Capital Partners Ltd, 2013 14 Market size

15. © Rivers Capital Partners Ltd, 2013 15 Scalable Business Models

16. © Rivers Capital Partners Ltd, 2013 16 Value drivers… …it all comes down to these…

17. © Rivers Capital Partners Ltd, 2013 Last but not least…EXITS… PLANNED from day one Fund Manager will want a well defined EXIT Investment Return to the fund from growth of company… Common exits Further investment round (someone else buys out fund) Listing on a stock exchange (IPO) Trade sale, sold to another corporation.

18. © Rivers Capital Partners Ltd, 2013 Business plan No right answer No set format No right length Communicate Concise Clear assumptions Back up evidence Team Financials Risk 18

19. © Rivers Capital Partners Ltd, 2013 19 Business Plan: It is Simple! But so many people don’t cover the basics Idea What is it? Applications explored Key Markets Users/ Benefits Environment / competition Strategy What is your goal By When? What type of business are you? How do you make money (sales) ? Revenue model Delivery / production Team and systems Risks / risks managed Finance Cash flow forecast (cumulative) Breakeven Investment needed Investment return 1.Exec Summary 2.Business Model 3.Mission 4.Ownership 5.Governance 6.Management 7.Risks 8.Key Personnel 9.Resources 10.QA 11.Marketing 12.Products 13.Financial Model 14.Investment Offering

20. © Rivers Capital Partners Ltd, 2013 Business models not Business plans... …and EXITS/returns !

21. © Rivers Capital Partners Ltd, 2013 Survive the Assessment Carried out on… You Your plan Your references …….others you don’t know By the Fund manager, external advisors, experts 21

22. © Rivers Capital Partners Ltd, 2013 Due diligence… going behind the plan INVESTMENT READINESS…. More than skin-deep Be prepared you will have to answer questions on everything about the business and your team: Directors (disclosures) Share agreements Other investors Finances Contracts (staff and customers) Orders, claims Patents, other IP…. …. And more 22

23. © Rivers Capital Partners Ltd, 2013 23 Jonathan Gold Director j.gold@riverscap.com 0191 230 6370 Pictures by J.Gold Copyright 2013 www.goldsplace.com www.twitter.com/financetree