British Business Angels Association Conference

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British Business Angels Association Conference
Current Challenges for Raising Equity for Small
Businesses
Professor Russel Griggs OBE Imes Group
Ltd. Chair CBI SME Council
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What the customer wants The VCs View on Life -
Operating Model

• Screening Finding deals and evaluating which
  ones are good
• Structuring placing a value on them,
  negotiating and agreeing management motivation
  tools
• Monitoring overseeing the venture and guiding
  the management to success, including info
  systems, milestones, and making adjustments.
• Exiting Selling the company or your bit in it
  and how long you want to wait.

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What the customer wants The VCs View on Life -
Operating Model

• Screening Finding deals and evaluating which
  ones are good
• Structuring placing a value on them,
  negotiating and agreeing management motivation
  tools
• Monitoring overseeing the venture and guiding
  the management to success, including info
  systems, milestones, and making adjustments.
• Exiting Selling the company or your bit in it
  and how long you want to wait.

Are Angels any different?
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The Companys view Historic Challenges

• A good marketable project Does it look like one
• Good People in your business
• Your value of the business
• How much you want to raise
• What you are prepared to give up to do that
• Knowing what you want in the future more
  investment
• How much interference you are willing to put up
  with
• What type of investment do you want

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Current Challenges

• The Credit Crunch

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Current Challenges

• The Credit Crunch Is there money still out
  there?

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Current Challenges

• The Credit Crunch
• Property Prices

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Current Challenges

• The Credit Crunch
• Property Prices In the end will falling
  property prices hit harder than the credit crunch?

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing Is the value you can get dropping as
  the risk equation reduces generally?

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing
• Business Costs

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing
• Business Costs Rising across many parts of your
  business and increasing uncertainty.

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing
• Business Costs
• Profitability

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing
• Business Costs
• Profitability If increased costs cannot be
  passed on then profitability will fall and thus
  put pressure on cash and value.

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing
• Business Costs
• Profitability
• State of the Equity Markets

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing
• Business Costs
• Profitability
• State of the Equity Markets Volatile to say the
  least! Are Junior markets suffering worse?

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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing
• Business Costs
• Profitability
• State of the Equity Markets
• Cost of Raising Capital

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What you can claim for Tax when raising a loan

• Arrangement Fees with banks
• Fee or commission for a loan guarantee
• DTI fees for investing surplus cash in a
  liquidation
• Brokers fees on purchases or sale of existing
  securities
• Legal fees on the transfer of a security
• Cost of making interest payments
• Early redemption penalties
• Solicitors fees in pursuing a debt defaulter
• Abortive expenditure in attempting to bring a
  loan relationship into existence
• Premiums for insurance in relation to loan

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What you can claim for Tax when raising Equity
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What you can claim for Tax when raising Equity
Is that Fair and Equitable?
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Current Challenges

• The Credit Crunch
• Property Prices
• Pricing
• Business Costs
• Profitability
• State of the Equity Markets
• Cost of Raising Capital

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Current Challenges
Too many rocks and too many hard places
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Current Challenges
Too many rocks and too many hard places
But lets not all go out and shoot ourselves!!!
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The Current Dilema

• Demand is holding up in many sectors so the
  numbers still look fine in many sectors.
• So growth is still there and we all need to
  pursue it.
• So the numbers tell you one thing but your
  stomach hints at something else.
• Which do you listen to?
• More importantly which one do your investors
  listen to?

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British Business Angels Association Conference
Current Challenges for Raising Equity for Small
Businesses
Professor Russel Griggs OBE Imes Group
Ltd. Chair CBI SME Council