Sources of Finance for Creative Businesses

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

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. 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.creativelondon.org.uk www.londonchamber.co.uk/europe

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/sflg

5. ASSET FINANCING Outstanding invoices often an SME’s biggest asset. Two ways to exploit COMMERCIAL invoices: (1) Factoring and (2) Invoice Discounting (1) Factoring: suited to smaller firms (below £1m turnover). • Factor controls SME’s 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

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

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.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. 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.comhttp://www.goeast.org/002access.htm

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. YOUNG ENTREPRENEURS • Shell LiveWIRE - £10,000 prize 16-30yrs • Prince’s 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. 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. EQUITY FINANCE DIAGRAM CAPITAL NEEDS Growth IPO High Risk Formal Venture Capital Business Angels Low Risk Friends, Family & Fools TIME Sustained Growth Start-up Early Growth Seed

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. 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.lbangels.co.uk www.londonseedcapital.com

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.bridgesventures.com www.londonseedcapital.comwww.bvca.co.uk www.goeastventures.co.ukwww.ccfund.co.uk

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