Find the best type of finance for your business
November 3, 2009 by EEDA Press
David Gill from St John’s Innovation Centre and the panel of experts give advice on finding the best type of access to finance for businesses during the recession. David first gave an overview of the Understanding Finance for Business programme.
David Cleevely, Cambridge Wireless, entrepreneur, business angel and former government advisor gives an overview of the differences between angel and Venture Capitalist funding and benefits of both:
- First decision you have to make is about whether you go for VC or angel investment – one is not a substitute for another
- VC is about big investment, big share and big profits and for very ambitious businesses. Angels are hobbyists, their like for the company may not be based on profits and are for businesses less ambitious and who require smaller cash injections
- Typical investment from an angels is between £500k and £1.2m. VC starts at a minimum of £2m, but on average is between £5-10m, or even £20
- A key statistic to remember is that angels in UK lend more three or four times than VCs in the UK.
Andrew Moss, NatWest, on the latest in the banking world, what finance is available and how banks can present themselves. NatWest has a £250m regional lending fund for the East of England:
- Key message from Andrew was that banks are open for business during the recession, so it’s even more important to maintain an ongoing and honest relationship with your bank manager
- Don’t leave your approach to last minute, for eg if there is a cashflow problem speak to the bank manager at earliest opportunity
- They are best people to advise businesses to manage cashflow, manage risks, take advantage of opportunities
- The priorities for the banks are to look at the quality of business and quality of management and that there are robust systems in place as well as looking to see if the plan is sensible considered achievable
- Also that the company maintains really good relations with stakeholders including the bank
- Specific help is in the form of the Enterprise Finance Guarantee scheme which was introduced January – NatWest has leant £240m so far.
Stuart Evans, EEDA board member and entrepreneur on using grants to build a business.
- Grants are valuable but not a free lunch, there are tricks to learn in order to get and keep them
- Must not underestimate the effort in getting a grant and keeping it
- Purpose of the grant and funding organisation is to support good businesses facing market failure
- Even higher standards are required now on the application form during the recession – read the fine print – for eg, there might be a requirement to keep the business in the region
- Check credentials of any consultants you might employ- some are good and some not so good.
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