Message from Chris Dines, CEO of Informed Funding

 

I am delighted at the progress we are making at Informed Funding. With just a month to go before our official launch, the development of our website is moving at pace and looking great.  We no longer have a holding page on informedfunding.com but now have 80% of our site up and live so we can showcase just how good it is looking. We already have over 50 funders signing up to have a microsite. The microsites are being developed via unique Content Management System directly by the funders. You will see these in their full glory once we launch on the 26^th February.  At that point, businesses will then be able to search for funders using our powerful search tool. Members will also be able to complete self-diagnostic tools to better understand their funding options and how ‘business ready’ they are for funding.

 

We are very excited about our launch event on 26 February. It will be held at Workspace’s newly refurbished where we have planned a full afternoon and evening of informative presentations, panel discussions and interviews with businesses that have benefitted from funding. There will also be an opportunity to speak directly to funders and advisors at their trade stands and drop in advice clinics, where you can have your growth strategy and exits strategy checked out by leading experts. We will end the evening in the stunning Metal Box atrium with drinks and canapés. To ensure you don’t miss out, please register your interest to attend the event . More details on the scheduling of the event are below.

 

I look forward to seeing you there.

 

Regards

 

 

We are thrilled at the number of funding providers signing up for microsites on our platform. We have been encouraged by the positive feedback we have received from a broad range of financial providers that see the benefit and value that Informed Funding will bring to growing businesses seeking finance and to funders who will have a powerful marketing tool that will link them to businesses relevant to their offer.

 

Financial providers that have signed up to Informed Funding include Market Invoice, rebuildingsociety.com, iwoca, Growth Street and RateSetter. Below are some of the comments we have had from them:

 

“At iwoca we believe education is crucial to increasing SME access to finance, which is why we're proud to be supporting Informed Funding”

 

- Pierce Glennie, Digital Marketing Manager, iwoca

 

“We want to be part of Informed Funding because we believe it will help us get our message across to UK businesses. The Informed Funding network is large, the team produces slick events and maintains constant contact, so we’re sure business owners looking to expand will hear about the loans available through rebuildingsociety.”

 

- Nick Moules, Marketing & Communications Manager, rebuildingsociety.com

 

 “RateSetter is very excited to be partnering with Informed Funding.  We see working with their network of small businesses as a tremendous opportunity to grow our commercial lending book whilst also helping to fund innovation within small businesses.”

 

- Peter Behrens, CCO and Co-Founder, RateSetter

 

 “During a time of exponential growth in alternative finance it is vital that we get behind good educational and comparative websites such as Informed Funding. This way we’re both increasing the profile of alternative finance and, more importantly, allowing businesses to make the best financial decision”

 

 

We have a packed and informative agenda including:

 

• Barry Naisbitt the Global Economist from Santander on “What next?” for UK business.

• Leading alternative finance providers explain what they can do for businesses at different points in their growth journey.

• A chance to quiz a panel of leading bankers on how they are now adapting for business “post-crash”.

• Interviews with businesses that have benefitted from specialist funding such as

• Will digital money (Bitcoin!) change the World? A discussion led by Jonathan Segal, a Partner at .

• Drop in advice clinics, giving you the chance to test out your strategy.

• Funders Trade Stands

• Ending with drinks and canapés and a great opportunity to network

 

 

Finance, premises and skills: the challenges facing new and growing companies (NGCs)

 

On Tuesday 13th January 2015, in the Churchill Room at the Houses of Parliament, Workspace hosted the inaugural NGC Forum, a conference about new and growing companies (NGCs) powering the economy. Home to many of these fast growing, high-net-worth businesses, Workplace felt ideally placed to investigate how NGCs are obtaining finance and using technology to grow. Here's an introduction to the NGC Forum.

 

NGCs are crucial for economic recovery - and didn’t the speakers and panellists know it. Parliamentary host of the event, Mary McLeod, the Small Business Ambassador for , stressed ‘NGCs are so essential to what we're trying to do as UK plc’. She mentioned that she had been asked to speak at the Charter of Business Responsibility by the Chancellor himself that afternoon but she’d declined on the grounds that she was doing ‘something much more important.’

 

Chaired by Chris Dines, founder of the business network Knowledge Peers and Informed Funding, the panel included Steve Folwell, MD at LOVESPACE UK (profiled here) and Emma Obanye, founder of BuddyBounce (profiled here), both Workspace-based NGCs. Alice Bentinck, co-founder of Entrepreneur First, a leading pre-seed investment programme for Europe’s best technical founders based at Club Workspace Bridge, offered a start-up perspective. The other panellists came from the alternative finance world: Louise Beaumont, founder of Platform Black and now Head of Public Affairs and Marketing at GLI Finance and Andy Davis, former editor of the FT Weekend and now editor of Informed Funding.

 

Despite general optimism, the panel focused on the threefold challenge faced by NGCs, namely the availability of finance, premises and skills. According to research on NGCs in Workspace business centres which was conducted by Professor Peter Tyler from the Cambridge Economics Associates, who also attended the Forum, 48% of NGCs reported access to finance as a growth constraint.

 

Alice Bentinck, co-founder of Entrepreneur First, offered a start-up perspective while the other panellists, Louise Beaumont, Head of Public Affairs and Marketing at GLI Finance and Andy Davis, editor of Informed Funding, came from the alternative finance world.

 

To find out more about the key insights from the inaugural NGC Forum panel discussion and to watch a video from the day, click on the links below:

 

- 

 

- 

 

 

On Monday February 16th 2015 the AFN will be holding a free morning (8:30am – 11:00am) seminar, focusing on the much changed regulatory framework as it applies to the Alternative Finance sector.

As of April 2014, the Crowdfunding marketplace (which includes fintech businesses in P2P Lending and Equity Crowdfunding) became fully regulated under the FCA. Prompting a slew of changes, implementation throughout the past year has brought both advancements and challenges to the space.

Some of the topics discussed during our seminar will include:

• The Authorisation Process for Fintech Businesses

• Ensuring Compliance and FCA Reporting Post-Authorisation

• Implications of Regulatory Changes to Social Promotions

 

The seminar will be held at Buzzacott, 130 Wood Street EC2V 6DL.

 

 

R&D tax credits: a source of funding for technology businesses

 

One of our partners, Buzzacott Chartered Accountants, who provide financial services and advice to businesses at every stage of their growth, have created a very useful guide to understanding research and development (R&D) tax credits that are available to qualifying businesses in the UK. The R&D tax credit is an HM Revenue & Customs (HMRC) incentive designed to encourage innovation. It enables businesses to claim relief on the R&D costs they incur, which can then be used to finance further expansion and growth. To understand if your business is eligible, what you could be entitled to and how to claim, click on the link below

 

 

 

There is a vast array of different types of funding options for businesses. In this newsletter we provide an overview on a further four funding methods firstly, with a deeper look into Angel Networks.

 

 

1. Angel Networks

 

Deep Dive into Angel Networks:

 

What are angel networks and where do I find them? Business angels are wealthy individuals, many of whom have already built successful businesses of their own, who invest their own money in early-stage entrepreneurial companies in return for an equity stake. Angels may invest alone but increasingly they join networks which have scores or even hundreds of members, who tend to club together into syndicates in order to invest in a business. Syndicates usually have a “lead angel” who represents the members in negotiations. A “gatekeeper” for the network receives business proposals and decides which ones are suitable to be presented to the members at formal pitch events. You can find a directory of angel networks on the UK Business Angels Association website.

 

How much can I raise this way? Syndicates of business angels bring together a number of wealthy individuals and therefore the sums available can be quite large. While individual angels are unlikely to invest more than £100,000 in a single transaction, depending on their resources, syndicates are capable of assembling larger sums of up to £1m or more, depending on the number of angels involved, the capital requirements of the business proposition and its growth potential.

 

How long does the process take? Raising equity funding from an angel network is likely to take several months, taking into account the need to negotiate terms, carry out due diligence and prepare the legal documents that will set out the agreement. Having been accepted to pitch to an angel group, the entrepreneurs may be offered coaching and help with their business plan to prepare them for the event. If negotiations subsequently begin with an angel syndicate these tend to result in a Heads of Terms document fairly early in the process, which sets out the main elements of the agreement but is not binding on either side. Final, legal documents will be drawn up and signed at the end of the process, once all due diligence is concluded.

 

What kind of due diligence is involved in an Angel investment? While some angel syndicates may bring in professional advisers to help them scrutinise your business plan and management team, many will rely on their own expertise and contacts. They will want to assess the backgrounds of all the key people involved in the company to judge their experience and pedigree; test the soundness of the accounts and financial projections you have made, including whether your valuation of the business is realistic; check the legal aspects such as existing contracts and ownership of key intellectual property; and research the commercial background for your venture such as the market size and growth rate, existing competition and so on.

 

What does it cost? Aside from your own costs in drawing up business plans and undertaking early development of your product or service, angel networks charge a fee that covers the training and support provided to businesses selected to pitch to their members. This is usually between £250 and £750. There will be further costs if you take your own legal and financial advice on the terms of any deal that you negotiate with a group of angels.

 

What will the final agreement consist of? The exact terms of an angel investment will be set out in the legal documents signed at the end of the process. These will include the Investment and Shareholders Agreement, which specifies the terms of the deal; the Articles of Association, which set out the rules for the running of the company; and the Disclosure Letter, which sets out detailed disclosures of information that the company makes as part of the agreement and that it gives a warranty are true and complete. These are legally binding agreements and can give grounds for legal redress in the event of disputes.

 

Will angels expect seats on the board?  Normally yes, although this may involve only the lead angel from the syndicate. Angels are also likely to put in place rules guaranteeing their rights, including the right to appoint directors, have access to information on the company’s trading performance and to have final approval on spending decisions above a certain level.

 

Angel Networks: Need To Know:

• Under the regulation that governs angel investing, angels need to be either Self-Certified Sophisticated Investors or Self-Certified High Net Worth Individuals, as set out in the Annexe to the Financial Services and Markets Act, 2000. 

• Angel investors usually want to take advantage of tax incentives such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme and you should therefore determine whether your business is eligible for funding under these schemes before you approach potential angel investors. The regulations are available from the HMRC website. 

• It is a good idea to be frank from the outset with angel investors about any issues that make be uncovered during due diligence. Finding out later on about problems that weren’t mentioned at the outset can destroy trust and sour relationships.

 

2. Public Equity

 

Raising funds via the equity markets involves offering shares in a company to the public that will be tradable on a public market such as the Stock Exchange or any of the smaller markets such as ISDX. If companies are seeking more than the equivalent of E5m they will be required to publish a prospectus, a legal document that complies with the EU Prospectus Directive

 

 

 

3. Private Equity

 

Private Equity investors usually acquire established companies in order to help accelerate their growth, for example by expanding into international markets or by acquiring competitors in order to consolidate their position. Transactions can include management buy-outs, management buy-ins and refinancing that allow owner-managers to stay in place while realising a portion of their equity value. PE funds usually aim to hold their shares for anything between three years and seven years.

 

 

4. Leasing

 

Leasing offers a popular way for companies to acquire essential equipment of all sorts - from vehicles to IT equipment and machinery - without having to pay the full cost up front. Assets are paid for over the life of the lease in instalments and, depending on the type of lease involved, may ultimately be owned by the company or returned to the lessor.