Environmental Enterprise and Innovation (MA)

Lecture 9

Sources of Funding

Accessing Funds

• Personal funds or family and friends

• Grants

• Banks

• Business Angels

• Venture Capitalists

• Corporate Venturing

• Public Markets

Accessing Funds

• Family and Friends

– Plan ahead and for every eventuality

– Divorce can be ugly!

Grants

• Rules and Regulations

• Check eligibility

• Is it suitable

• Read the small print!

Grants

• Smart• Technology Studies

– Grants of up to £2,500 towards the costs of expert reviews against best practice.

• Technology Reviews– Grants of up to £5,000 to help identify technological

opportunities leading to innovative products and processes.

Grants

Smart

• Micro projects– Grants of up to £10,000 to develop low cost prototypes

of products and processes involving technical advances and/or novelty.

• Feasibility– Grants of up to £45,000 to undertake feasibility studies

into innovative technologies

• Development– Grants of up to £150,000 undertake development

projects. Exceptional grants up to £450,000.

Grants

• Phoenix Fund

– Entrepreneurs in disadvantaged areas

– Emphasis on job creation and building local communities

• Development Fund• Community Development Venture Fund

Grants

• Enterprise Grants– Capital investment, e.g. equipment, plant, machinery,

patent rights

• Small businesses • 15% gross of fixed capital costs up to a maximum grant of

£75,000.

• Medium • 7.5% gross of fixed capital costs up to a maximum grant of

£75,000.

Grants

• Regional Selective Assistance Grants– Discretionary scheme, relocation, expansion– Check with regional Government Office

• Early Growth Fund– Encourage risk capital funding of start-ups– £50,000

• Regional Venture Capital Fund– Provide venture capital– £500,000

Where To Go

• Government Departments e.g. Department for Trade and Industry

• Regional Development Agencies

• Government Offices

• Small Business Service

• Business Links

Banks

• Popular choice for business

– Familiarity – Ease– Cost– Flexibility

Debt Finance

• Loans• Agreed interest rates• Agreed time• Usually secured• May not be suitable for start-up

• Overdrafts• Linked to working cashflow• Interest only charged on time overdrawn• Short term

Loans

• Small Firms Loan Guarantee Scheme

• Unable to get conventional loan • Scheme will guarantee 70% of a loan.• £5,000 to £100,000

• Apply through Banks

Debt Finance

• Leasing– No need to pay payment– Monthly fees

• Hire Purchase• Finance Lease• Contract Hire

Debt Finance

• Factoring– Flexible loan based on company sales– No additional assets required as security– Involvement of a factoring company

• Fees and interest charged• Arrangements quick and easy to set up

Equity Finance

• Benefits– No repayment– No interest rates– Not tied to assets

• In Return– Share of business

• Business Angels• Venture Capital• Stock markets

Equity Finance

• Business Angels

– Private investors– Act individually or as a group– £25,000 to £1m– Cash and experience

National Business Angels Network

Equity Finance

Venture Capital

• Long term commitment

• Looking for:– High growth prospects– Ambitious management team– Unique selling point

Equity Finance

Corporate Venturing• Investment by large companies into

smaller businesses

• Financial benefits

• Strategic alliances

• Mutually beneficial

National Endowment for Science, Technology and the Arts (NESTA)

Funds for:

Research and development

Securing intellectual property rights

Business establishment and development for companies or individuals inventing or innovating novel technology.

£5,000 - £50,000

R&D Tax Breaks

• Tax credits for small to medium sized companies carrying out research and development

• Increased tax relief for qualifying non-capital research and development expenditure from 100% to 150%

• Payable research and development tax credit for companies that are not in profit. This equates to £24 for every £100 spent on research and development

Shell LiveWIRE

• Promoting enterprise among 16-30 years olds

• Information and advice

• Annual Awards

The Prince's Trust

• Support for 18 0 30 year olds

• Financial and business support

• Up to £5,000 start-up loans

Financial Support

• Many options

• What do you need the funds for?

• If and how will you repay?

• Think carefully