Pitching For Investment MasterclassDecember 6th 2011

Part 3: From Concept to CashBrendan Waters (Johnston Carmichael)

Let’s talk about growing your business

From Concept to Cash

7 December 2011

“Straightforward excellence in all we do”

Agenda

Who we are

About me...

What funding is available

Setting the scene

What do investors look for in a Company?

Don’t

The downside of raising equity

Who we are

Largest independent Chartered Accountancy firm in Scotland

One of Top 25* CA firms in UK

10 offices located throughout Scotland

Over 10,000 clients

48 partners and over 400 employees

£27.9m turnover FY11 (4% growth).

Part of the Leading Edge Alliance, an international network of independently-owned accounting and consulting firms in over 100 countries

Winner of Best Medium Firm in 2008, 2009, 2010 and 2011 Scottish Accountancy Awards

* Accountancy Age UK Top 50 League 2010

An entrepreneurial, award-winning firm

Selection of companies we have worked with

Celtic Renewables Cloud Tomo6

About me…

Director of Corporate Finance at Johnston Carmichael

Technology team focus

Scottish Investment Bank role

Hillington Park Innovation Centre

What funding is available

R&D Start-up Early growth

Accelerated growth

Sustaining growth

Maturity growth

Public sector

F&F

Business Angels

Venture Capital

Trade buyer / IPO

Bank loans

Sales

Grants

Equity

DebtOther loans

Grants

Equity

Debt

Business Angels

Venture Capital

“Crowd funding”

SLF

BGF

R&D tax credits

Bank loans

ABL

Setting the scene

GOOD NEWS

SIB completed 125 investments, putting £23m into 109 companies

This was on the back of £53.7m from the private sector

NOT-SO GOOD NEWS

many investments were follow on rounds

Bank funding not an option

Not as many exits for Angels / VCs

Irrelevant?

Great opportunities will get funded

Down to business

Many investors receive HUNDREDS of plans a year

How do you stand out from the crowd

A good pitch will clearly articulate the proposition

A great pitch will also know what the investor wants/needs

We look for teams that are committed

to solving a real problem with

a novel approach in a large

or growing market

What do investors look for in a Company?

What does an investor want hear – quickly!

ain

remise

roof

eople

urpose

Thought process

Investment proposition

5 Ps

Executive summary

Business plan

The pain

Is it a real NEED TO HAVE

Or just a NICE TO HAVE

Is this a NEED that CUSTOMER are prepared to PAY for

However

Did you NEED an iPadDid you NEED Facebook

The premise

NOT a detailed technical description / schema

NOT innovation for innovation’s sake

How are you going to sell it

IP?

The proof

If you have SOLD it, ideal If you have sold it to lots of different customers, even

better If you have sold it repeatedly to lots of different customer,

best case If not.. Prove the market size – specifically! Prove that people will buy it

The people

Experience

Of the product or serviceOf the marketOf managementOf growing a successful businessOf achieving a successful exitOf failing?

Admit gaps

The purpose

How much

What for - milestones

Future funding

Exit

Don’t

Leave it until the last minute

Over-egg the financials

Under-egg the financials!

“I have no competition”

“Our market is worth $570 trillion and we will capture 10%”

“I want £1 million for 1% of my business”

Overstate the technology – don’t lose sight of the customer

“Revolutionary technologies looking for a problem” vs “Real problems being solved with evolutionary technology”

The downside of raising equity

Dilution

Control

Commercial restrictions

Exit focus (Double edged sword)

Personal restrictions

Onerous terms

Valuation

Further information

Johnston Carmichael LLP227 West George Street

Glasgow G2 2NDTel: 0141 222 5800Fax: 0141 222 5801www.jcca.co.uk

Brendan Watersbrendan.waters@jcca.co.uk

07801 852 068

Find out more about Hillington Park Innovation Centre Business Masterclasses:

www.innovationcentre.org

Digital media business development:www.interactivescotland.com

Multimedia recording and production by Inner Ear: www.innerear.co.uk