Entrepreneurship & Innovation in Business

Transcription

1 Michael Farrell Director PKF-FPM ACCOUNTANTS LTD. Entrepreneurship & Innovation in Business Raising Finance for Innovative Products

2 Format of Workshop Overview and Importance of Innovation. Cause of funding requirement. Where to secure funding? 2

3 Does this sound familiar? Innovation = Time, Money and Risk Time, Money and Risk = Fear Therefore INNOVATION = FEAR Innovation in times of economic challenges means taking risks in a risky environment, but these risks can be managed

4 Innovation can be radical or incremental Innovation may be the development and implementation of: New/improved products or services New/improved processes, machinery, equipment or tools New/improved marketing methods or routes to market New/improved organisational structure Innovation is not just about doing R&D and inventing new products

5 Impact on Business Growth from Innovation

6 Where will your revenue come from in 3 or 4 years time? The top 10% highest performing SMEs in Europe: Understand the relationship between innovation and sustainable growth Have a strategy for innovation and define it as a key driver for profitable growth Know what their growth targets are Have an idea pipeline that is sufficient to achieve these predefined growth targets Exploit both internal and external sources to develop new ideas Innovation drives profitable growth

7 Funding Flowchart 7

8 Identifying Funding Requirement NI/ROI Funding Options Equity Financial Incentives Bank Finance Alternatives Private Investors / Business Angels Invest NI/ Enterprise Ireland Invest NI "Access to Finance Strategy": Bank Loans/ InterTradeIreland Overdrafts Crowd Funding Venture Capital Funds Family & County Enterpise Board Peer to Peer Funding Friends Vital Incubation 8

9 Types of Funding 9

10 Equity 10

11 Sources of Finance Equity Promoter s own equity Private Investors / Business Angels VC Funding 11

12 Family & Friends Early stage and start up businesses. Share capital Ordinary or Preference Shares. Loans to business. Importance of legal documentation. 12

13 Private Investors/Business Angels Key investment criteria: Proposed exit strategy. International market opportunities. Market traction. Experienced management team. Scalable business model. Steps when approaching investors. HBAN Halo Networks. InterTradeIreland Equity Investment Advisor. Clear exit strategy. 13

14 Venture Capital Funders Long term committed equity Investment for a period of 3 5 years Minimum of 20% return Exit strategy / valuation of business Average investment commences at 250k + See handout for VC funds in Ireland AIB, BoI, Western Development Funds etc. 14

15 Bank / Debt Funding 15

16 Bank / Debt Funding Enterprise Finance Guarantee Scheme UK Improve working capital position 75% Loan underwritten Loans range from 1k to 1m over 3 months to 10 years Strategic Banking Corporation of Ireland - RoI Set up in October 2014 and go live Q m funding available Provided via Traditional Banks Backed by State Funds Micro Finance Funds - RoI Loan up to 25k Interest rate 8.8% SME businesses who have been declined funding with less than 10 employees Turnover not exceeding 2m 16

17 Bank / Debt Funding Credit Guarantee Scheme - RoI Refused finance from Bank due to lack of collateral or novelty of sector technology Apply through AIB, UB and BoI 75% state guarantee to Banks against losses on qualifying loans 2% premium charge Some sectors / businesses are excluded Credit Review Office - RoI Established to review credit applications that have been refused up to 3m 17

18 Financial Incetives 18

19 Financial Incentives 19

20 Grant Assistance/INI Funding - NI Eligibility Criteria Innovation Voucher Knowledge provider s expertise in NI or RoI Up to 4k support Research & Development: Up to 75% grant (maximum of 50k) Future projects at 40% grant Propel Programme High Growth start-ups in certain high growth sectors. Training programme to develop the project. 12 workshops 20k support towards salary cost of entrepreneur. One to One Mentoring Investor ready business plan Shared workspace Support for overseas market Case Study 20

21 Grant Assistance Enterprise Ireland - RoI Eligibility Criteria High Potential Start up Innovation Voucher - Up to 5k support Via Knowledge Centre 100% Funded Research & Development: From 150k to 600k Small Fund & Large Fund Competitive Start up Fund Open to Female Entrepreneurs, Up to 50k 26/11/2014 E-Marketing Improvement Grant 50% of costs up to 35k to approve online presence Strategic Consultancy Grant Hire Consultant to move business forward up to 35k New Frontiers Program Via DKIT Entrepreneur Development Program 15K Funding to scope out Business Plan Case Study 21

22 Grant Assistance ROI - LEO Louth Enterprise Office Web Portal offers excellent Online Guide Feasibility Studys up to 20k funding Priming Grant get business up and running up to 80k Business Expansion Grants again up to 80k Mentor Training County Enterprise Fund loans for projects up to 25k Case Study 22

23 InterTrade Ireland - All Ireland Fusion Program All Island Technology Transfer Programme Pairs University with Companies Cross Border 12/18 Month Projects Process Improvement Accelerator Vouchers up to 1,200 Case Study 23

24 Dundalk Institute of Technology - RoI Business Incubation Centre: Regional Development Centre Range of Programs & Activities; R&D & Technology Transfer Entrepreneurial Development Programs Applied Research Sectoral & Regional Development Initiatives Networking with Agencies both locally and internationally Knowledge Transfer Support Vital Program Honeycomb Creative Works 24

25 Vital Program - RoI Distinguish between developing the Idea and bringing to market How does it work? Identify & Validate ideas for commercialisation Identify SME s/entrepreneurs to develop Access to Technology Transfer and Licensing Opportunities Fast Track route to market via mentoring and priming capital if required. 25

26 Honeycomb Creative Works - RoI Cross Border Program aimed at Digital Content Sector Honeypot Fund Build Contacts between SME s and Digital Sector Ongoing Training re Skills Development Seed Funding and Investment Programme Sectoral Studies to keep up to date with new industry requirements 26

27 Horizon 2020 SME Instrument All Island Via EU Fund - 3 Billion to be provided by 2020 Number of Streams Business Feasibility Grants 70% up to 50k Business Innovation Development 70% up to 2.5 Million Business Coaching and Innovation Support 27

28 Southern Regional College - NI Business Incubation Centre: Greenshoots Skills & Training Support Work based customised training 75% funded Business improvement techniques > 75% funding available Employer Support Programmes Innovateus 100% funded Digital Seed website support/digital platforms 35 hours one to one mentoring Knowledge Transfer Support KTP up to 60% costs covered - 17k per annum An employee for 1 3 years ESP Fuse Employer Support Programme 30 hours support for innovation and skills 3k support 28

29 Enterprise Agencies - NI Regional Start Initiative Loan Funds Business Boot Camp Enterprise Agencies Social Entrepreneurship Programme Exploring Enterprise 2 Programme Tradelinks 29

30 Alternative Sources of Finance 30

31 Access to Finance Strategy - NI 31

32 Alternative Sources of Finance - NI Invest NI Access to Finance Strategy: Small Business Loan Fund: Growth Loan Fund NISPO: Co-Fund NI: Delivered by Clarendon Fund Managers Techstart NI 32

33 Northern Ireland Spin Out (NIPSO) Initiatives Five Main Funds: Investment Readiness Programme Workshops aimed at management team with high growth businesses. How to prepare for investment. How to utilise the investment to best effect. V.C. and Business Angel readiness. Invest Growth Fund 7m V.C. fund. Funding rounds range from 50k 250k. Match funding required of 30% May also invest in young Innovative Enterprises: Less than 50 employees. Innovative product. 33

34 Northern Ireland Spin Out (NIPSO) Initiatives Invest Growth Proof of Concept Fund (now closed) Establish commercial potential of a concept resulting from in house research. Mini grant 10k (initial). Standard grant 40k (later stage proof of concept activities) Queens University Belfast Innovation Fund (QUBIF) 1m V.C. fund Invest in Proof of Concept, pre-commercialisation spinout companies from QUB research base. Funding rounds 50k 200k. Ulster Innovation Fund (UIF) Same as QUB fund for UU research base. 34

35 Co Fund NI 16m Equity Fund Must have secured the interest of a Private Investor. SME in manufacturing and tradable services sector. Source primary investors (Halo, HBAN). Work with companies to introduce to Private Investors. Work with companies going forward for follow on investment rounds. 35

36 Tech Start NI Equity Fund of 1.5m to invest in spin outs Funding 50k 250k Proof of Concept Fund of 7.6m Grants of up to 40k to commence technology. Investment Awareness Programmes Help entrepreneurs to establish a technology business 36

37 Growth Loan Fund 50m debt financing initiative Create/safeguard 2,000 jobs over 10 years Loans from 50k to 500k, average of 250k 5 year term interest from 8% to 12% Target of 50 loans per annum Profit share 2% of projected profits Unsecured debt, no personal guarantees 37

38 Small Business Loan Small and micro businesses 5m debt financing initiative 1k to 50k established businesses 1k to 15k start up businesses Evidence of bank funding refused 5 year term, interest from 8% to 16% Possibility of unsecured debt 38

39 Start up Loans Company UK Start up loans Government funded Business plan Low cost unsecured loan if plan approved Payback period 5 years Fixed interest rate Capital repayment holidays are available 39

40 Crowd Funding - UK Attract a crowd of investors Investors take small share in business Online funding target Funding ranging from 100 to 20k If successful, fee of 5% - 10% of funding secured Fee to include legal, due diligence, share nominee fees Crowdfunder, Kickstarter (creative and social projects) Crowdcube (start up and business expansion) Seedrs, Crowdbnk (start up) 40

41 Peer to Peer Lending All Ireland Online lending platform (Auction) Lending to previously unrelated individuals or peers Credit checking tools of varying complexity For strong business propositions subject to credit committee approval Lowest cumulative cost of funding succeeds 14 days to accept offer Government to allocate 100m in non bank funding channels Minimum t/o of 100k Typical loans 5k to 1m over 5years Funding Circle, 20m Linked Finance Irish Company 8% for 3 years 41

42 East Border Region Programmes ASPIRE To help small businesses to develop by employing a graduate to deliver a specific initiative or project on behalf of that business. Project aimed at company becoming more innovative, profitable and sustainable in the long term. iota Support a range of new and existing micro-enterprises and small businesses, to contribute to balanced and sustainable development through the process of business innovation. PLATO EBR Programme Offers owner managers a business support forum where they can network and discuss business ideas with larger SMEs Parent Companies. STEM II Project Work with businesses to help identify cost savings in Energy, Waste and Water. Also assists businesses in the process of implementing an Environmental Management System (EMS). 42

43 Where are you headed (Leader or Follower)

44 Innovative or Evaporate Martin Naughton 44

45 Information Sources Silicon Republic National Innovation Showcase networking event hosted by Irish State Agencies 2/12/14 Finance and Support your Business InterTradeIreland website SRC website Enterprise Ireland LEO s NIPSO Invest NI - Halo Network - Regional Development College DKIT - Horizon

46 Questions? Newry Office PKF-FPM Dromalane Mill The Quays Newry Co. Down BT35 8QS Dungannon Office PKF-FPM Howard House 30 Northland Row Dungannon Co. Tyrone BT71 6AP Belfast Office PKF-FPM 1 3 Arthur Street Belfast Co. Antrim BT1 4GA Dundalk Office PKF-FPM PKF-FPM Penthouse Suite Block 5 Quayside Business Park Dundalk Co. Louth T: F: T: F: T: F: T: F:

47 Disclaimer We have made every effort to ensure that the information provided in this seminar is accurate, but we cannot accept responsibility for the consequences of any action you take in reliance on its contents. If following the seminar you have any matters which you would like to discuss, please contact Michael Farrell at 47