Business Planning Biotechnology YES Young Entrepreneurs Scheme Monday 13 October 2014

1. Business PlanningBiotechnology YESYoung Entrepreneurs SchemeMonday 13 October 2014

2. Stephen Slater Director

3. Who are RMT ? North East’s leading Independent accountancy practice 6 directors & 70+ staff Started in 1954 National and international networks Full range of service “One-Stop Shop” Owner Managed Business Specialists

4. Commercial- isation Revenue Generation Strategy Dvpt Market Research Product Dvpt Working Capital IP Protection Funding Package IP Exploitation Idea Dvpt Company Set Up Concept Research Business Plan Commercialisation Lifecycle Strategy Risk Management

5. What is a start up? A distinct type of business with 5 key attributes

6. Five Factors of a Fundable Business

7. What is a scalable business? Businesses that scale are businesses with Operating Leverage Revenue Operating Expenses % Annual growth Adding Operating Costs (Technology, Sales, Staff etc.) at the same rate as which Revenue grows does not equal scale. Time / Years

8. What is a scalable business? What is a Scalable Business? Businesses that scale are businesses with Operating Leverage Revenue Businesses that achieve exponential revenue growth with only small and incremental increases in operating costs are scalable businesses. % Annual growth Operating Expenses Time / Years

9. Articulating Product/Market Fit Describing your Start-Up’s “value zone” is about working out where the 3 circles intersect: Your business plan should position your start-up here

10. Make up of an investor ready business plan The Structure of an Investor Ready Business Plan Executive Summary 1 Introduction Product & Technology Overview 2 Business Model 3 Market and Competitor Analysis 4 Customer/User Acquisition Strategy 5 Product Roadmap 6 Management Team 7 Financial Projections 8

11. What Investors Want To Know • What is your IP and can it be protected? What barriers are there? • What is so compelling about your product/service? Why will people want to buy it? • Who are the key competitors and how are you different? • How scalable is the business? • What is your market? • Do you have a clearly defined revenue model – how will your business make money? • What is your route to market? Can you add credibility to this? • Complete and robust financial projections – the return! • The risks – SWOT and PESTLE • Confidence in management team – technical and non-technical. Are they incentivised? • Exit plan

12. Tips and common mistakes

13. Credibility Builders The most important word in raising early-stage funding is Credibility. This starts with the CEO. What impression do you think you are making with an investor? You can will make it work at all costs (convincing) Demonstrated commercial savvy (not just technical) Track record with other technology start-ups (growth/exit) Growth ambitions that are also believable and pragmatic Deep subject matter expertise and/or industry knowledge Know your business plan and model inside out

14. Compromising your credibility Credibility Failures

15. Typical Mistakes in Investor Ready Business Plans Typical Mistakes in a Business Plan Seeking to Raise Finance

16. …and the classic mistake “Start-Up X will achieve its projected revenues by taking just 1% of the £48bn Global market”

17. The Investor Pitch Find out how long you have and who is attending. All of your Management Team should attend. Address objections with specific data – build their investment case for them. Answer questions factually and to the point (don’t waffle) Investors see lots of presentations. You have to stand out. Be confident and show passion but explain what you do in English. Investors will not spend time trying to find out about your product. Treat objections as a sign of interest. Do not get defensive - investors will push you to test you. A bad presentation is a missed opportunity – you won’t get a second chance.

18. The Slide Deck 5 Minutes Introduction (Including Elevator Pitch and Team Introductions (5 Minutes) Concisely say who and what you are. Elevator Pitch and Team introductions. Problem Solution (Including Demo) Underlying Technology Business Model User Acquisition Team Headline Financials Timeline and Milestones One Slide Each Core of the Presentation: 15-20 Minutes 2 Minutes Summary and Call to Action

19. The Slide Deck • Back Up Slides (After Your Final Slide): • Market Data • Details of Technology • Financials • Competitors • Patent Applications • Customer Correspondence • Letters of Intent Do Not Present These but have them in reserve: Be ready with back up slides / materials on more detailed areas outside of what the slide deck covers in case you are asked. Use the relevant slide to then explain your point or answer. The Slide Deck should give a summary overview of the Business Plan

20. Tax Relief for Angel Investors Effective for shares issued from 6 April 2012

21. Research & Development Tax Relief Activities/projects which seek to: “extend overall knowledge/capability in the field of science or technology” • Eligible expenditure: Wages and salaries, consumable materials, power, water, fuel, computer software • Tax Reliefs Enhanced deduction of 130% to 225% against profits from 1 April 2012 chargeable to corporation tax, or Repayable tax credit (up to 25p per £1) if loss making

22. Patent Box Elect to Apply 10% Tax Rate to Profits Arising from Qualifying Patents

23. Grants • NBSL www.nbsl.org.uk • Business & Enterprise Group www.investment4growth.co.uk • Newcastle Science City www.newcastlesciencecity.com • Growth Accelerator www.growthaccelerator.com • BICC Innovation Programme www.ne-bic.co.uk • Local councils • Lets Grow – RGF – http://www.thejournal.co.uk/all-about/let's%20grow • Research & Development Grants – www.innovateuk.org • Technology Strategy Board – www.innovateuk.org

24. Venture Capital • Proof of concept – www.northstarventures.co.uk • Early stage seed funding (Accelerator) – www.northstarventures.co.uk • Technology – www.ipgroupplc.com • Angel match fund – www.riverscap.com • Business Angels – www.bbaa.org.uk • Private Sector Venture Capital – www.bvca.co.uk • NESTA – www.nesta.org.uk • Local Angel Groups – www.big-angels.co.ukwww.gabriel-investors.com

25. Websites www.nea2f.co.uk www.j4bgrants.co.uk www.carbontrust.org

26. Crowdfunding • Finance Raising (Equity or loan) – Crowdcube • Product Funding - Kickstarter

27. Useful links… www.gov.uk/browse/business www.bytestart.co.uk/ www.hmrc.gov.uk/newbusinesses/ www.r-m-t.co.uk

28. Example – Would you invest? • Belle and Sebastian want to start up in business together. They have both been working in the club scene for over ten years, Belle as a DJ and Sebastian as a venue manager. They have had an idea of creating a website to endorse up and coming DJ’s by giving them the opportunity to record, promote and sell their music. • They have £20,000 between them to put into the business but need to raise a further £30,000 to get the business off the ground. • Where are the concerns for an investor?

29. Thanks for listening! Any Questions?

30. Contact details Stephen Slater Director RMT Accountants and Business Advisors Limited 0191 256 9500 Stephen.slater@r-m-t.co.uk www.r-m-t.co.uk @cyberaccountant