Download Enterprise Capital Funds

Enterprise Capital Funds
Seminar for
Prospective Fund
Managers and
Investors
February 2016
@britishbbank
www.british-business-bank.co.uk
Overview
Ken Cooper
Managing Director Venture Solutions
@britishbbank
www.british-business-bank.co.uk
British Business Bank - What we do
An Economic
Development
Bank
A plc – 100%
owned by UK
Government
Working with 80
partners
• Aim to change the
structure of the
finance markets
for smaller
businesses, so
they work more
effectively and
dynamically
• In turn, this will
help businesses
prosper and build
economic activity
in the UK
• PLC since 1st
November 2014.
@britishbbank
www.british-business-bank.co.uk
3
British Business Bank – where ECFs fit
Start up
Mentoring and funds
to ‘be your own boss’
Scale up
Funds for high growth
potential businesses
Angel Co Fund
Matching equity investment
in smaller businesses from
business angels.
Venture Capital
Solutions
Supporting a vibrant and
diverse venture capital
market for early stage and
high growth businesses.
Providing loans and mentoring
support to help entrepreneurs
to start a business.
@britishbbank
www.british-business-bank.co.uk
Stay ahead
More funding options and
choice of provider
Investment
Programme
Supporting a greater range of
funding for smaller
businesses
Enable
Funding and capital products to
help increase the flow of finance
Help to Grow
Programme
Enterprise Finance
Guarantee
Allowing fast-growing firms to
reach their potential. It will
include debt finance with equity
elements - junior debt.
Encourages financial institutions
to lend to viable smaller
businesses lacking collateral or
track record.
4
ECF Portfolio - Key facts
19 Enterprise Capital Funds
Range of fund sizes - from £10m to £75m
Range of strategies - from SaaS and creative
industries to more general portfolios
Range of stages - seed to later stage venture
2006
@britishbbank
www.british-business-bank.co.uk
2015
ECF performance is good
ECF fund of funds is TVPI positive
Providing £660M+ of investment potential to UK high
growth businesses
Over £295M invested across more than 225 companies
Good exits & first NASDAQ listing of a portfolio company
ECF companies have attracted top tier investors in follow
on rounds
@britishbbank
www.british-business-bank.co.uk
6
The ECF Franchise
British Business Bank is a long term participant in the
venture market and a professional LP
We have backed emerging managers who are/will be
household names on the UK and European Venture stage
We have backed 7 of the 15 ECF Managers in a second
fund with more expected
ECF Fund managers are building fund management
businesses using a multiple fund model
@britishbbank
www.british-business-bank.co.uk
7
Next steps
We will continue to support good emergent fund managers
ECF programme is well funded in the coming years
Panoramic and the Funds team are here today to answer any
questions informally
If you are interested read the Guidelines and get in touch
@britishbbank
www.british-business-bank.co.uk
8
Legal Notice
No representation, express or implied, is made by British Business Bank plc and its subsidiaries as to the completeness or accuracy of any facts or opinions contained in
this presentation and recipients should seek their own independent legal, financial, tax, accounting or regulatory advice before making any investment decision.
No part of this presentation should be published, reproduced, distributed or otherwise made available in whole or in part in any jurisdiction where to do so would be
unlawful.
British Business Bank plc is the holding company of the group operating under the trading name of British Business Bank. It is a development bank wholly owned by
HM Government which is not authorised or regulated by the Prudential Regulation Authority (“PRA”) or the Financial Conduct Authority (“FCA”). British Business Bank
plc operates under its trading name through a number of subsidiaries. Neither British Business Bank plc, British Business Finance Ltd nor British Business Financial
Services Ltd is authorised or regulated by the PRA or FCA. British Business Bank plc and its subsidiary entities are not banking institutions and do not operate as such.
A complete legal structure chart for British Business Bank plc and its subsidiaries can be found at www.british-business-bank.co.uk.
Please note that British Business Finance Ltd is acting as an investor for the purposes of the ECF Programme and therefore this presentation does not require approval
under financial promotion legislation or corresponding rules.
© British Business Bank plc February 2016
@britishbbank
www.british-business-bank.co.uk
Enterprise Capital Funds:
Selection and Process
Christine Hockley
Senior Investment Manager
Venture Solutions
February 2016
@britishbbank
www.british-business-bank.co.uk
Key features of ECFs
• A “geared” return structure designed to be competitive with
other investment opportunities for the private investors
• A significant commitment from British Finance Limited “BBFL”
of up to £50m and 60% to 66% of the fund.
Waterfall
Private
Investment
@britishbbank
www.british-business-bank.co.uk
• 3% prioritised return to BBFL
• Repayment of capital to BBFL and private investors
• Distribution of a fixed share of profit to BBFL – remainder
shared between private investors and the fund manager
• Investors must invest on a commercial basis
• Private investment must be new money in to the equity
gap
11
The Strings - ECF restrictions
•
Initial round size and total investment limits focused on “equity gap”
•
Equity component with a significant prospect of a material capital gain
•
Unlisted SME either pre-commercial sale or within 7 years of first
commercial sale or is launching a new product or into a new
geography requiring investment > 50% of preceding 5yrs average
annual turnover.
•
Investment must be for the benefit of the UK economy
•
Investment must be a ‘qualifying trade’
•
Fresh capital only except in specific and limited situations
Full details of the restrictions are in our Guidance for Prospective Fund Managers
@britishbbank
www.british-business-bank.co.uk
12
Assessment Criteria
Four broad areas of assessment:
Strength of investment team, relevant experience and
expertise
Investment strategy
Sources of private capital
Financial terms
The programme is competitive with only the strongest proposals
being taken forward.
Successful proposals must also offer the best overall value for
money in meeting BBFL’s objectives.
@britishbbank
www.british-business-bank.co.uk
13
• Iterative process, keeping contact until
‘investment ready’
• We may start ‘light’ due diligence,
including referencing and consideration
of track record, experience of team etc.
• Formal ‘5-pager’ comes later
No annual targets
• Call, email or come and see us for initial
feedback
Rolling process
Early contact welcome
The Application Process
2-4 funds per annum
@britishbbank
www.british-business-bank.co.uk
14
The Application Process – Common sticking points
Team
Track Record
Terms
Strategy
Private Investors
@britishbbank
www.british-business-bank.co.uk
New team demonstrating they can work together effectively
Existing team demonstrating they have the bandwidth to
deliver a new fund
Portfolios that are largely unrealised
Whose deal was it?
“We’d like some feedback on our commercial terms.”
“Me too”, no differentiation or obvious links to team’s skills
Conflict of interest
“We don’t want to fund raise until we know you are in.”
Private investors with motives other than commercial return.
15
The Application Process – Common sticking points
NO SURPRISES !
@britishbbank
www.british-business-bank.co.uk
16
Current Appetite
• Quality of WIP is excellent which reflects increased venture
returns
• Much longer tail of quality proposals for everyone we invest in
• Limited number of teams we can work with and invest in
Strength of proposition remains paramount
Looking for ‘stand out ‘ proposals
@britishbbank
www.british-business-bank.co.uk
17
Is an ECF right for you?
• ECF’s structural requirements and restrictions must fit with
your investment strategy
• No minimum or maximum fund size – managers need to
demonstrate that the proposed fund size is appropriate to the
investment strategy
• Maximum ratio of BBFL participation set by type of company
that the fund will focus on
Further details at:
http://british-business-bank.co.uk/ourpartners/enterprisecapital-funds/
@britishbbank
www.british-business-bank.co.uk
18
Still interested??
Read the Guidance and if you still think an ECF is for you get in
touch!
@britishbbank
www.british-business-bank.co.uk
19
Legal Notice
No representation, express or implied, is made by British Business Bank plc and its subsidiaries as to the completeness or accuracy of any facts or opinions contained in
this presentation and recipients should seek their own independent legal, financial, tax, accounting or regulatory advice before making any investment decision.
No part of this presentation should be published, reproduced, distributed or otherwise made available in whole or in part in any jurisdiction where to do so would be
unlawful.
British Business Bank plc is the holding company of the group operating under the trading name of British Business Bank. It is a development bank wholly owned by
HM Government which is not authorised or regulated by the Prudential Regulation Authority (“PRA”) or the Financial Conduct Authority (“FCA”). British Business Bank
plc operates under its trading name through a number of subsidiaries. Neither British Business Bank plc, British Business Finance Ltd nor British Business Financial
Services Ltd is authorised or regulated by the PRA or FCA. British Business Bank plc and its subsidiary entities are not banking institutions and do not operate as such.
A complete legal structure chart for British Business Bank plc and its subsidiaries can be found at www.british-business-bank.co.uk.
Please note that British Business Finance Ltd is acting as an investor for the purposes of the ECF Programme and therefore this presentation does not require approval
under financial promotion legislation or corresponding rules.
© British Business Bank plc February 2016
@britishbbank
www.british-business-bank.co.uk