Tectona partnership presentation

Securing Business Finance Workshop

Presented by Nick Lawson

Woking, 10 September 2014

© Tectona Partnership

www.tectonapartnership.com

Who are we?

Click through to our video – just 61 secs long

http://tectonapartnership.com/financial-management-solutions-for-owner-managed-businesses

http://tectonapartnership.com/financial-management-solutions-for-owner-managed-businesses



A case study

Aim – walk through the process of funding a growing start-up and

highlight useful lessons learnt along the way

• Secure voice payments and PCI de-scoping

• Formed July 2009

• 2013 – turnover of £3.8m, net assets of £(0.8)m

• Funds raised to Dec 13 - £3.7m over four funding rounds



Round 1 – preparation Aug/Sept 2009

For EIS share issue

• vehicle

• ownership of IP and registration/patent

• start-up costs

• board – regular meetings/documentation



Round 1 – execution – two stages

• staff equity issue at £0.10 par of £21k

• kept founders under 30% and off the board

• friends and family equity issue at £4.70 premium and

founders at par

• 10% option pool identified for EMI in shareholders’

agreement

• no financial model

• Founders now hold 27% each (excl. option pool) – £410k

raised



Round 2 - preparation

• corporate finance advisors on board

• teaser “deck” for potential investors (product, plan,

people)

• full financial model – P&L, B/S and funds flow – and

detailed business plan

• meet the investors “beauty parade”



Round 2 – execution June 2010/11

• Octopus VCT and EIS investor presentation

• due diligence – legal, financial and commercial

• EIS pre-approval by lawyers

• £2m EIS raise limit (now £5m) so invested in two stages

• Founders diluted to 15% each and Octopus took 41% for

£1.8m (£4.4m EV)

• Fees – Octopus £54k, DD £32k, Semafone lawyer £14k

and CF advisors £89k - £189k/10.5%



Round 3 – execution March 2012

• Octopus follow on £1.3m at £8.1 per share

• founders now at 11%

• Octopus hold 51% at EV of £6.7m

• new class of share and preference on exit – they double

their money first



Founder holding % versus value

Round 1 2 3 4

Holding 30% 27% 15% 11%

Share of EV - £k 6 116 660 737



Lessons learned

1. Get structure right at outset

2. Think about the board

3. Keep an eye on the shareholding levels for EIS/SEIS

4. Think about options and splash a bit of equity

5. Use your own network

6. Invest in your presentation and financial model – build

some confidence in your investors



Contact us


020 3503 0002

Economy & Finance

Tectona partnership presentation