This document provides information for entrepreneurs seeking to raise seed investment in London. It discusses the importance of scaling startups to achieve success and the need for investment to enable scale. It outlines characteristics of scale-focused startups and the lean startup process. It also discusses proving business model fit through customer development and metrics. Sources of funding at different stages are listed, including the importance of tax breaks like SEIS. Finally, it provides tips for successful angel investing. The overall message is that investment can help startups scale fast to solve big problems, but entrepreneurs must demonstrate product-market fit and a business model with potential for growth.

1. Financing Entrepreneurs - Raising your first
round of seed investment in London
.
.
John Spindler CEO of Capital
Enterprise

2. Why start because….?

3. …the world is changing…

4. ..So now is the time to..

5. …to start you need..
• But to move fast, learn
quickly, maximise
customer value and
capture the market
opportunity you may
need investment to…

6. “There is an opportunity gap when the scope for growing income at a very fast
rate is limited for those who have too little to invest , but expands dramatically for
those who can invest a bit more.”- i.e. to win requires scale
Banjaree &Duflo- Poor Economics
….SCALE

7. Scale focused start-ups are…different
• Ambitious: want to be worth at least
£20M+ in 3 years.
• Solve a big problem for target
customer .
• Build on or leverage new technology/
business model innovations
• Acquire and exploit as many “Unfair
Advantages as possible”- team, key
partners, resources etc
• Move very FAST
• Are Rare (less than 2% of all start-ups
even try)

8. To create them there is a Process!
Advance in Stages… ..using the Lean Start-up Method

9. ..So a Start-up in want of investment
needs..
• Team, Tech & resources that is
FIT for the task of creating an
awesome company
• Product that is the best
solution FIT for the target
customers problems.
• Business Model that is FIT to
be scaled.
• Smart Ass Team
• with a Kick Ass Product
• With a Business model that can
“capture” a Big Ass Market
( Jeff Clavier 3 Ass-es rule)
+ Capital Efficient to Scale.

10. Smart Ass Team is… Balanced
• Hipster (Designer)
• Hacker (Developer)
• Hustler (Distributor)

11. Kiss Ass Product… has evidence that it solves a
customers problem

12. A Big Ass market … is fine but you need to
find an initial Beachhead.

13. …which means you need “Business Model” innovation
http://www.youtube.com/watch?v=QoAOzMTLP5s

14. Business Model Innovation Examples
• Subscription – Salesforce – cost of customer acquisition, lifetime value and churn
• Market Place – Alibaba – average transaction, commission on transaction
• Lead Generation – AllStarDirectories – traffic, form data, price per lead
• Productizing a Service – MOZ – adding scale to a service business. This includes building
tools and business process automation over time into a scalable model.
• Transaction Fees – Flattr, KickStarter – average transaction fee, commission
• Commerce – AmazonSupply – Physical Goods – wholesale, cost of goods, retail, average
margin, physical good
• Combinations – Multisided markets – hardware sensors, software services with data
analytics. These are usually manifested in more mature startups vs. startups at launch.
• Non-profit – UP Global – generate the majority of our revenue from corporate and
foundation sponsors.

15. ..why you and why now?

16. …because you have some Killer “unfair
advantages” such as..
• Team – That is “Fit for Purpose”!
• Technology that is relevant and hard to replicate..
• Knowing your first 5 customers personally..
• Completed Customer Development- Knowing your target customers and
understanding what they want.
• A “personal brand”/ credibility that means something to your early adopting
customers..
• Access to a Uncontested Channel to market..
• Access to “Hard to get” resources or an ability to “steal” them…
• A funded runway… “ Time to Learn”
• A roadmap so you undersatand key tasks, milestones and metrics to achieve..

17. Sources of Start-up Help for Tech Entrepreneurs
Information:
• Capital Enterprise; www.capitalenterprise.org
• Meet-up - http://www.meetup.com
• Mobile Academy- http://themobileacademy.org.uk/
• Makers Academy- http://www.makersacademy.com/
• GoGowo- http://www.gocowo.com
• Skills Matter- http://skillsmatter.com/
• Start- up Britain - http://www.startupbritain.org
• British Library- www.bl.uk/bipc
• Google Campus- http://www.campuslondon.com
• General Assembly- https://generalassemb.ly/locations/london
• Innovation Warehouse- http://www.theiw.org
• IC Tomorrow - https://connect.innovateuk.org/web/ictomorrow
• UCL Decide- https://www.ucl.ac.uk/decide
• Start-up Weekend- London- http://london.startupweekend.org/
• Launch 48- http://launch48.com/
• Start-ups on Air at Google Campus- https://
docs.google.com/spreadsheet/viewform?formkey=dEpuYlRFRFJ6SUVDdHVLRms3YmdBcmc6MQ
• Hubventurelabs - http://hubwestminster.net/hubventurelabs
• 3 Beards- http://www.3-beards.com/
• Tech Hub- http://www.techhub.com/events/
• Dreamstake- http://www.dreamstake.net/events
• Capital List Get Together- http://www.capitallistblog.co/our-monthly-monday-get-together/

18. Idea to Tech Business- Three Chasms.

19. Market
BusinessTechnical
Start-up challenges… raising money
to “prove”…
Do the Target
Customers care..?
Does the product
work…?
Can team deliver
and business make
money…?

20. Proof of Concept?
Does it work? Does anyone care?

21. Funding Product Development & BETA Testing
Grants & Awards General
• Technology Strategy Board ( R&D Funding) - http://www.innovateuk.org - http://www.innovateuk.org/content/competition/grant-for-rd-single-business.ashx
• Knowledge Transfer Networks- www.innovateuk.org
• IC Tomorrow- https://connect.innovateuk.org/web/ictomorrow
• NESTA- http://www.nesta.org.uk/
• London European Enterprise Network- http://www.een-london.co.uk
• E Funding for SME R&D - http://www.eurostars-eureka.eu/what.do
• EU Funding for R&D collaborations: http://ec.europa.eu/research/participants/portal/page/calls
• Knowledge Transfer Partnerships funding support- http://www.ktponline.org.uk/ktp-what-will-it-cost-my-business
• J4B- Portal for grant finding http://www.j4b.co.uk
Translation/ Follow on research funds.
• www.rdfunding.org.uk/bulletin/queries/Search.asp?TheCloseMonth=July&TheYear=2011.
• http://www.rcuk.ac.uk/kei/ktportal/Pages/Followon.aspx
• https://ktn.innovateuk.org/web/145175/overview
• http://www.ahrc.ac.uk/FundingOpportunities/Pages/BrowseOpportunitiesOld.aspx
• http://www.ahrc.ac.uk/Pages/default.aspx
• http://www.theculturecapitalexchange.co.uk/

22. Crowdfunding ( Reward)
Crowd funding Platforms-
Reward based Crowdfunding platforms- will help you
to raise funding to build a proto-type and market
test a great idea or product.- Great for pre-selling
cool tech hardware.
• www.kickstarter.com
• www.indiegogo.com (USA)
• www.peoplefund.it
• www.sponsume.com
• https://www.buzzbnk.org
• www.pleasefund.us
• www.wefund.com
• www.pozible.com
• www.crowdfunder.co.uk
• http://spacehive.com
• https://www.banktothefuture.com

23. Funding the Runway…?
• How much/ little money is
needed to build and test MVP/
demonstrate viability. ?
• Usually required to fund co-
founder “Ramen” salary
• Going to need a Budget, Cashflow
forecast and “burn rate”

24. Need Less than
£10K to Launch a
business
No Funds
Grant-
www.j4b.co.uk
Unemployed?
New Enterprise
Allowance Scheme
Self Fund
Borrow
Write a simple
Business Plan & 12
month cashflow
Community
Development
Finance Institution
Start-Up Loan Bank
Need less than £20K to get to Build and test MVP?
- Sources of Grants- www.j4b.co.uk
- Competition funding £1000 issued to 10+ businesses per month- http://www.shell-livewire.org
- Princes Trust http://www.princes-trust.org.uk/need_help/enterprise_programme.aspx
- £1000- £20,000 Enterprise Loans for Under 25’s- www.startuploanslondon.co.uk or www.startuploans.com
- New Enterprise Allowance Scheme – Check who delivers the scheme in London by e-mailing Capital Enterprise.
- Community Development Finance Associations- http://www.cdfa.org.uk - Also check out North London Community Finance
- ELSBC Access to Finance – Business Plan support for those looking to raise up to £10K
• Soft loans for Creative Businesses- http://www.creativeindustryfinance.org.uk/

25. Proving the Key Assumptions and hitting
milestones
• Human Resources - Hiring key people that will make a huge impact on your organization (not just employees for
workload purposes, but like a shit-hot marketing person, for example).
• Product – MVP- Beta- First Pivot-Full Launch- On-going Iterations
• Market – Market validation. As in, first customers, or first paying customers, etc
• Funding – Maybe some money being committed to a round that the investor in question can lead or participate in.
Other examples of milestones include*:
• Proof that you can work together as a team, usually historical evidence
• Proof that you can build something, i.e. working prototype
• Proof that it’s useful to someone – first users and clients
• Proof that you can talk to investors – every financing round, even small ones
• Proof that you can talk to audiences – 10000 followers or 1000 users…
• Proof that the initial team is able to attract talent
• Proof that ecosystem agrees with your ideas – bringing respected industry advisors partners on board
• Proof that there is market – £1M annually/ Proof that the market is big! – £25M annually and beyond
• Proof that you can manage your finances – cash-flow positive operation
• Proof that you can scale – Bessemer’s 5C’s

26. Idea to Tech Business- Three Chasms.

27. Accelerators help by ..
Offering early Stage Entrepreneurs…
• Fellow Community of entrepreneurs &
supporters
• Runway support & funding (£15-£100K at
standardised investment terms. )
( 3-6 months on average)
• Physical Space & Facilities
• Mentors ( 1st Industry- 2nd Investors)
• Help to Rapid Field Trail with users &
customers.
• Demo days- Introductions to Investors/
customers
…so that they can test..
• Product- Assess Functional use/ improve
design & UX
• Market Reaction- interest/
usage/revenue - AARRR
• Revenue/ profit Potential-
pricing, market timing, LTV/CCA
• Business Model- “To Pivot or Not To
Pivot”
• Investor reaction- interest and
valuations
• Team- ability to work together and deliver.

28. Accelerators In London
http://www.f6s.com/
https://capitallist.co

29. Investment Readiness Test

30. Are you Investment Ready?

31. Part 4
The Funding Process

32. Idea
Problem/
Space
Exploration
Design/
Prototype
Beta Test
Adapt/
PivotX2
Launch
Bootstrap- FFF
Innovation Awards
Start-up Loans
Crowdfunding i.e. Kickstarter
Seedrs/ Crowdcube
SEIS
Super Angels/
Angel Groups
Early Stage VC’s
Start- Up Funding road –map.
MVP Factories
Hackathons/ Hatcheries/ Meet-ups.
Accelerators
Accelerators

33. 1
Idea
Stage
2
Commitment
Stage- Secure
Co-Founders
3
FFF funding
round –Build &
Beta Test
Minimum Viable
Product
4
Seed Investment
Round (Angels +
Early VC’s)
- Prove Business
model & acquire
metrics to prove
scalability
5
Series A Round
(Angels, VC’s &
Strategic Investors)
– Go for scale, build
out team,
technology-
EXECUTE
6
Exit
(Average 7 years
and after many
rounds) – Trade
Sale or IPO
££££££££££££££
How Start-Up Funding Works ?-
Why 100% of Nothing is worth Less than 10% of something big

34. Investment Essentials
Round Amount Purpose London Pre-Money
Valuation Guideline
Source of Investment What investors
like to see
Pre Seed £25K-£150K
(SEIS eligible)
Assemble Team/ Build & Test
MVP/ Proof of Concept R&D
Zero- £500K Own Money/ FFF/
Crowdfunding/ SEIS Funds/
TSB
Unfair Advantages
Seed £150-£350K BETA Test/ Launch into
Beachhead/ Proof of Product
Solution Fit
£500K-£1.5m Business Angels/
Crowdfunders/Seed VC's/
Co-Investment Funds
SMART Team- Early
Evidence of Product/
Solution Fit- Validating
customers/ users
Super Seed
(Bridging
round)
£500K- £1m Working Business
Model/Proof of Product/
Market Fit/ Demonstration of
Growth
£1.5M-£4m Super Angels/ Seed VC's Product Solution FIT
Proved- Early
Indications of Product-
Market Fit ( i.e.
revenues)
Series A £2m-£15M+ Scale £8m- £50m VC's/ Family offices and
Corporate Ventures
Revenues & METRICS
proving scalability.

35. Importance of Tax breaks
• EIS
• SEIS
• ECF’s
• Co-Investment Programmes

36. Seed Enterprise Investment Scheme-SEIS is a tax break launched in April 2012 for UK tax payers to
encourage them to buy shares in start-up companies registered in the UK
The Facts:
• SEIS investors can input £100,000 in a single tax year rising to a maximum £150,000 over two or more tax years
in to a single company
• Investors cannot control the company receiving their capital
• Investors pick up 50% tax relief in the tax year the investment is made, regardless of their marginal rate.
• In the 2013-14 tax year, tax payers can roll 50% of a chargeable gain in the tax year in to a SEIS with a full capital
gains tax exemption (another 14%)
• The business must be a start-up company -registered in the UK within 2 years of claim.
• The company must not employ more than 25 workers.
• The company must have assets of less than £200,000.
• The company has to trade in an approved sector – generally not in finance or investment, for example, a
property company raise capital as a SEIS.
SEIS is…… “a game changer”?

37. Thinking like an Angel!
Why Do Angels Invest? Where to find them?

38. Key to being s Successful Business Angel?
• Good Reputation – “Track Record”
• Great Source – “Having good introducers”
• Good Selection – “ Sticking to what you know”
• Adding Value- “ Offering more than
money to increase the chance of
success”
• Ability to Follow on Successes/
Walk Away from Failures.
• Getting Value – “ Getting a Good deal at all
stages”

39. Investors Dilemma
• Even the best performing investors find over 60% of
investments return to zero.
• Average time for investments to mature is 7-10 years
• Most investors want exits in 3-5 years
• Most can only invest for 1-2 rounds
• If investing someone else's money (e.g. VC’s)then
they make their money from arrangement fee,
management fee and % of the capital gains ( e.g. 2
and 20 % rule).

40. Valuations & Dilution rates
Dilutions
– (N.B. Never take a down round and always avoid
ratchet clauses)
• Bootstrap
– Accelerators 5-10%
• Seed
– Round 20-25% (+ 10% option
pool)
• Series A
– Round 20-25%
Crunchbase Valuations

41. Capital List –
The Minimum Viable Introducer
“ Showcasing and connecting
Entrepreneurs to champions and
investors”
beta.capitallist.co

42. Send a slide deck and get introducedhttp://www.slideshare.net/slidesthatrock/how-to-pitch-a-vc-redesigned
Ten slides. Ten is the optimal number of slides in a PowerPoint
presentation because a normal human being cannot comprehend
more than ten concepts in a meeting—and business angels are very
normal. If you must use more than ten slides to explain your
business, you probably don’t have a business. The ten topics that an
investors cares about are:
1. Summary and call to action/ what do you want?
2. Problem
3. Your solution
4. Business model
5. Underlying magic/technology
6. Marketing and sales
7. Competition
8. Team
9. Projections and milestones
10. Status and timeline
Send to : magdalena@capitallist.co

44. Airbnb pitch deck
http://www.businessinsider.com/airbnb-a-13-billion
1

45. 7 Types of Early Stage Investors in London
Market
1. Crowdfunders/ Platforms
2. Tax Relieve Seeking SEIS/EIS Funds
3. Government Backed ECF’s
4. Traditional Angel Syndicates
5. Super Angels
6. VC’s
7. Strategic Investors ( Corporate Venture)

46. Seed/ Early stage Investment Platforms
Crowdfunders.
www.crowdcube.com
www.seedrs.com
www.f6s.com
Angel Platforms
- www.angel.co
- www.syndicateroom.com

47. “Pay to Play” Funds.
Top SEIS Funding Syndicates
1. Jenson Solutions-
www.jensonsolutions.com
2. Ingenious Media-
www.ingeniousmedia.co.uk
3. Ascension Ventures-
http://www.ascensionmedia.com/ascension-ventures.php
4. Start-up Funding Club-
http://www.startupfundingclub.com/
5. Ascot SEIS – www.ascotwm.com
Top Traditional Angel Syndicates
1. London Business Angels:
http://www.lbangels.co.uk/
2. E100 (LBS)
3. Oxford Angels: http://
www.oxei.co.uk
4. Cambridge: http://
cambridgeangels.com
5. Envestors- www.envestors.co.uk
6. Angels Den- www.angelsden.com

48. Super Seed Investors
• Playfair Capital- http://playfaircapital.com
• Angel Lab- http://angellab.co.uk/
• Kima Ventures- http://www.kimaventures.com
• Boundary Capital - www.boundarycapital.com
• Venerex ( Fashion Tech- see Capital List)
• Jam Jar Investments- http://jamjarinvestments.com
• No 1 Seed - www.number1seed.co.uk
• Warner Yard Associates - http://www.warneryard.com/
• Angel List Syndicates – www.angel.co

49. Active Seed VC’s in London.
Big 5
• Accel Partners: Stage agnostic, see their portfolio here.
• Balderton- Stage Agnostic- See there portfolio here
• Index Ventures: Stage agnostic, see their portfolio here.
• Wellington Partners: Stage Agnostic, see there portfolio here
• Octopus Ventures: Early to mid-stage, see their portfolio
here.
ECF’s/ Public funded.
• Notion Capital – SAAS and Cloud specialist- See portfolio
here
• Passion Capital: Early Stage, see their portfolio here.
• Sussex Place Ventures- Early stage -
• Episode1: Early Stage Software Companies
• Longwall – Oxford Based – Science backed Start-ups focus
Cool Cats
• Profounders: Early and mid-stage, see their portfolio here.
• Amadeus Capital: Early and mid-stage- just launched new fund.
• Piton Capital: Early and mid-stage specialize in market places.
• DN Capital : Early and mid-stage, see their portfolio here
• DFJ Esprit: Early to mid-stage, see their portfolio here.
• Spark Ventures : Stage Agnostic- See there portfolio here
• White Star Capital- Early stage – See portfolio here
• Arts Alliance: Minimum investment £500K in Media related tech- see portfolio here
• EC1 Capital: Early stage, see their portfolio here
• Connect Ventures- Early stage and very cool.
• Hoxton Ventures – New and focus on seed with next move to USA.

50. Specialist Funds
Social/ Tech for Good
- NESTA - www.nesta.org.uk/investments
- Unltd – www.ubltd.org.uk
- Big Society Capital- http://www.bigsocietycapital.com
- Sources of Social Finance- http://www.bigsocietycapital.com/finding-the-right-investment
- Bridges Venture Fund http://www.bridgesventures.com/social-entrepreneurs-fund
- Big Issue Investment- http://www.bigissueinvest.com
- Social Finance- http://www.socialfinance.org.uk
- Social Investment Fund- http://www.thesocialinvestmentbusiness.org
Women
- Stargate Capital- Trapezia- http://www.stargatecapital.co.uk/trapezia_1.aspx
- FSE- Incito- http://thefsegroup.com/investors/business-angels/incito-ventures/
- Aspire Fund - http://www.capitalforenterprise.gov.uk/files/Aspire%20Information%20Leaflet%20(v%202)%20Flyer%20brochure.pdf
Green
- Bridges Sustainable Fund- http://www.bridgesventures.com/sustainable-growth-funds
- Ingenious Media- Cleantech Fund http://www.ingeniousmedia.co.uk/investments/investment-opportunities/clean-energy
- Carbon Trust- http://www.carbontrust.com/about-us/our-investments
- Low Carbon Accelerator- http://www.lowcarbonaccelerator.com
- CT Investment Partners- http://www.ctip.co.uk
- Wellington Partners- http://www.wellington-partners.com/wp/index.html

51. Corporate Players

52. Investment State of Play 2013
Deals Under £0.5M
• SEIS Deals £6-7m per month - 82
Deals p.m - £72K Average
• EIS & SEIS - £600M in New
Companies in 2012-13.
- Estimated 1,116 New Companies
received EIS/SEIS investments in 2013.
Deals Over £0.5m

53. Thank You
Contact: info@capitalenterprise.org