Mary-Alice Stack, Director ArtCo Projects, Arts Council England Creative Industry Finance Seminar Series Session 4: Tuesday 27 November 2012

Creative Industry Finance Seminar Series Tuesday 16 October 2012 Down to Business - when does a creative idea become a business, and how? Tuesday 30 October 2012 An introduction to grant funding for creative businesses Tuesday 13 November 2012 The ins and outs of loan finance for creative businesses Tuesday 27 November 2012 A slice of the pie – equity investment for creative businesses

What do we mean by equity finance? “A means of raising funds to support the development of a business through the issue of shares in return for money” Benefits Money doesn’t need to be paid back Investor may bring added value to the business through their knowledge/ contacts etc Risks Loss of control - investor may influence the direction that the business takes in order to maximise the potential return on their investment - once you’ve issued shares in your business, you may not be able to control how these are subsequently traded

Importance of equity finance for creative enterprises Only viable source of funding for production based enterprises (films, theatre, opera) where Significant upfront costs are required to finance the production over a period of months/years Revenues will not be generated until the production is complete Investment is highly speculative (no guarantee that the production will be a hit, however well made) Only viable source of funding for start-up/early stage businesses that require capital investment where A significant capital injection is needed to bring the product/service to market The product/service is highly innovative, and therefore the market for it is not yet established (ie high risk) The company has no track record and cannot raise funds through other sources

What is an investor looking for? Growth potential – the business must be scalable Market opportunity – is there a market for the product/service? Protection of assets - is their any IP in the business, and how will this be protected? You – who are the people behind the business? Are they “investable”? Have they got the drive, commitment and skills necessary to take the business forward? Return on investment – how much money can I expect to make from the sale of my shares in X years time, if all goes to plan? Risk – what is the likelihood of this business failing to achieve it’s financial projections?

Terminology Equity Stock Shares Angel investor Venture Capital investor (VC) Valuation Due diligence Exit strategy

Peter Tullin & Simon Cronshaw Founding Partners

Further information/useful links Seed Enterprise Investment Scheme Seedrs Creative Arts Investment Network Advantage Creative Fund (West Midlands) The North West Fund

Any questions? Mary-Alice Stack Director, ArtCo Projects Arts Council England 14 Great Peter Street, London SW1P 3NQ Tel: