Saturday, 14 September 2013

Building for Exit: Entrepreneurs' Guide to Grants, Getting Investment and Grasping the Law

by Dipam Patel, Analyst at Amoo Venture Capital Advisory

In any business, it is important to manage and mitigate risks and that is even more apparent for start-ups looking to grow and build towards a point where they can exit; it is a fight to the finish. Start-ups must use all the resources available to them including grants and investor networks combined with a thorough strategic plan right to the exit stage. Last nights’ event (#LegallyFunded), which was organised by NaviStar Legal, had specialist guest speakers in each of these fields who shared a lot of insight. Attendees questioned said they got a better understanding of these crucial aspects as well as how to create a roadmap to success.

Raising Finance and Securing Grants
When looking for finance it is important to consider why the finance is required. This should be understood clearly and built into any financing pitch/plan.

Grants can be a particularly lucrative form of building plans for the future, they act as a cheap (and majority of the time free) form of financing that requires no repayment. For this reason they don’t increase risk within the business or dilute any existing shareholder equity. Ventures looking to drive innovation and creativity within their industry particularly will have options to gain funding through grants. The ‘Technology Strategy Board’ (TSB) is one such organisation that offers funding for a number of specific reasons for example ‘Feasibility Studies’ or ‘Collaborative R&D’. The 7th EU ‘Framework Programme for Research and Technological Development’ has provided 52bn EUR between 2007-13. The new edition ‘Horizon 2020’ plans to grant 80bn EUR between 2014-20. The intention of this programme is to strengthen industrial leadership in innovation within the EU. The key message from Paulina Sygulska, from GrantTree (@GrantTree) was, when it comes to grants, remain ‘switched on’ and open to obtaining grants. “Do your research thoroughly, to position your venture to really exploit the opportunities out there”.

Business Strategy
Within any start-up, entrepreneurs should place a large emphasis on creating a proactive business strategy, which is simple but also interesting and memorable enough to engage all members as well as ensure buy-in from those involved within the venture. Deri Llewellyn-Davies from Business Growth International (@thestrategyman) talked about how Business owners often are myopic in their thinking and strategy, focusing only primarily on sales and operations. It is your responsibility as a business owner, even at an early stage to think about succession, to create a strong management team and group of employees. Ensure that your legacy does not die with you, by implementing it into the blueprint of your organization.

Legacy and Sale
As Nzube Ufodike (@Nzube) from Amoo added, an exit does not necessarily mean your participation in your business instantly terminates. It can be when a transition to a different phase of growth has occurred. This new phase generally comes with less ownership and strategic control of the business by the founders or management team. As well as understanding strategic planning, a company should plot more detailed growth plans. With this respect two of the experts covered both financial and exit planning. Philip Sutton from Broadstone explained that a business should understand what their specific financial goal is from this business and plan towards these goals even at an early stage. More specifically a conscious effort to make financial predictions and plans to further visualise and monitor financial objectives. Or by a similar token, good exit planning can give any potential investors the confidence that they will recoup their capital whilst helping the business owner’s focus on adding value to the business as it grows. Popular exit options are IPOs and Trade Sales.

Legal Overview
Jo Rogers (@JoRogersUK) from Navistar Legal (@NaviStarLegal), was the primary focus and organiser of the event, presented this topic. She presented legal insight for start-up ventures. Naturally these types of ventures are likely to experience problems and risks that many other businesses would not. In addition to this to grow and develop a start-up will have make appropriate legal considerations. NaviStar Legal’s advice provides a basis by which businesses can make decisions that will minimize any legal liabilities.

Amoo's closing remark to the audience was that a business owner should look to build a solid network of advisors much like those presenting, who can help all aspects of the business, whilst pointing out opportunities and risks that might not be apparent.

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