A VC s view of raising investment 8 October

A VC’s view of raising investment 8 October 2014 Jonathan Gold Confidentiality Statement: Please note that this document or presentation is and remains the property of Finance Tree ltd. We will enforce our copyright to all material. Reproduction or use of this material is only permitted with prior written consent of Finance Tree ltd. 1

An Early Stage VC Founder 4 businesses 3 Fund Management Companies 6 Venture Capital Funds Raised over £ 50 m www. riverscap. com © Finance Tree ltd, 2013

2008 Management Buyout and creation of Finance Tree 2009 created Rivers Capital Partners 2010 Managers of the £ 7. 5 m North East Angel Fund 2014 Invested in 55 businesses and over 90 deals £ 7. 5 m from NE Angel Fund © Finance Tree ltd, 2013 £ 4 m private capital

4 Sources of Capital Pitching and Presenting to an Investor What investors look for

Sources of Capital 1. Banks 2. FFF…. & Founders cash 3. Business Angels 4. Venture Capital 5. IPO/ Aim/ Stock Markets 6. Crowdfunding 7. Peer to Peer lending uk. zupa. com 5 © Finance Tree ltd, 2013 Colours of money !

According to the SME Finance Monitoring study of 2011 sources of external finance accessed by SMEs are: 28% Bank overdraft 19% Credit cards 11% Bank loans 7% Hire purchase 5% Loans & Equity from Family/Friends 2% Invoice finance 2% Grants 1% Export Finance 1% Other party loans (assets finance etc) 1 -2% Equity or VC finance. © Finance Tree ltd, 2013

Crowd Funding Its relatively new… Advantages / Disadvantages www. investingzone. com www. crowcube. com www. growthfunders. com © Finance Tree ltd, 2013

Investing. Zone • Web-based equity crowdfunding platform • Easy to use • Low cost for companies and no fees for investors • Allows small investors to easily access a previously unavailable asset class and to take advantage of SEIS and EIS tax reliefs • Launched in July 2013 • National advertising and PR campaigns www. investingzone. com

USA… VC view of startups and VC “Entrepreneurs can benefit by knowing how to take off without venture capital, and to… … use venture capital only if they cannot dominate without it – as fuel for the fire, not as a crutch or catalyst…. …your odds of getting venture capital from larger, more established venture-capital funds before proof of success are slim…. ”

Edison “ I have not failed. I’ve just found 10, 000 ways that won’t work. ” Thomas Edison

Edison built… Track record • Western Union Telegraph Company with several inventions of his relating to the telegraph, especially the quadruplex telegraph system • Edison thought of asking for about $2000, but instead he turned the question around and replied, "Well suppose you make me an offer. " • Edison was offered … $40, 000!

Edison … the Venture Investors • Thomas Edison sought $30, 000 in R&D funding for the Incandescent light bulb • He obtained this financing from a syndicate of financiers, including J. P. Morgan and the Vanderbilt family. THE VC and Angels of their day !

Before

After

EU VC by Sector Source: EU Commission 2013

Finance for Business North East Funds © Finance Tree ltd, 2013

What do investors look for ? © J. Gold, 2011 all pictures by J. Gold rights reserved © Finance Tree ltd, 2013

Unreasonable risk for an unreasonable return © Finance Tree ltd, 2013

Lessons from Venture capital… What are investors looking for © Finance Tree ltd, 2013

TEAM…. CRUCIAL !! Larry Page & Sergy Brin • • • Founders with vision. . . Bringing in experience. . . Eric Schmidt Mutual respect (vital to a senior team) Shared values (all were engineers) Different skills and perspectives

Team Scale Innovative step / USP Access to market Traction EXIT RETURN. . . £ x 10 © Finance Tree ltd, 2013 © Finance. Tree ltd, 2011

Are you 1 in 100 Most VCs probably invest in 10 they look into But at least another 90 have tried So what makes you stand out ? How can you blow everyone else away 1. Displace the competition? 2. Convince people to buy-in and buy? 3. Do more than collect hits on a website 4. MAKE A RETURN… © Finance Tree ltd, 2013

VC portfolios… 10 Investments 4 Fail 4 Living dead 2 Stars © Finance Tree

EXITS…. The only ways out Trade sale Buy-back IPO or other stock market listing Sale on to other investors. And… the only other “Exit” is…. ? 27 © Finance Tree ltd, 2012