British Business Bank

Transcription

1 British Business Bank InterTradeIreland Venture Capital Conference 2018 Patrick Magee & Mark Sims 07 th March 2018

2 The British Business Bank 2

3 British Business Bank - our impact 3

4 Our Impact In Northern Ireland 24.1mn Finance to Northern Irish SMEs currently supported through our national programmes (excludes Start Up Loans) 628 Number of Northern Irish SMEs currently supported through our national programmes (excludes Start Up Loans) 5.4m Value of Northern Irish loans supported by the Start Up Loans programme since Number of Northern Irish loans supported by the Start Up Loans programme since

5 NI s 2 universities, pro rata, spend the highest amount on R&D of all universities in the UK. They created 93 spinouts/start-ups since

6 Northern Irish Companies Backed By British Business Bank BrainWaveBank - Allows anyone to measure and track their cognitive health at home, taking just a few minutes everyday. This low cost approach helps transform our understanding of brain health and cognitive illness so that people can live longer, healthier, more connected lives. Cyberlytic - Intelligent web application security that applies cognitive machine learning & risk analytics to detect, prioritize & prevent web attacks. Modius - A headset worn for a few hours a week which stimulates the part of the brain associated with metabolism and fat storage. The headset generates a low-level electrical pulse that is interpreted by the brain as a signal to become leaner. 6 6

7 Visiting Delegates 7 7

8 Economic Growth that will help the UK 8

9 Where The Venture Programmes Fit Start up Mentoring and funds to be your own boss Providing loans and mentoring support to help entrepreneurs to start a business. Scale up Funds for high growth potential businesses Angel Co Fund Matching equity investment in smaller businesses from business angels. Venture Capital Solutions Supporting a vibrant and diverse venture capital market for early stage and high growth businesses. Help to Grow Programme Allowing fast-growing firms to reach their potential. It will include debt finance with equity elements - junior debt. Stay ahead More funding options and choice of provider Investment Programme Supporting a greater range of funding for smaller businesses Enable Funding and capital products to help increase the flow of finance Enterprise Finance Guarantee Encourages financial institutions to lend to viable smaller businesses lacking collateral or track record. 9

10 ECF and VC Catalyst programmes Enterprise Capital Funds - ECF Support early stage fund managers Venture Capital Catalyst - VCC Catalyse venture and growth SMEs 60% Geared return structure capped BBB upside Bank will commit up to 50m and 60% to 66% of the fund Must benefit the UK economy via injecting fresh capital into equity gap in qualifying trades 1 Emerging and first time fund managers Pari Passu with other private investors and fully commercial Bank will commit up to 50m and 10% to 33% of the fund (49.9% exceptionally) Invest significantly more in UKbased SMEs than the BBB s investment into fund Strong management team with track record and relevant sector / stage experience 1. Excludes sectors such as farming, financial activities, hotel industry, leasing, commodities 10

11 Key Features Of ECFs A geared return structure designed to be competitive with other investment opportunities for the private investors. A significant commitment from British Business Finance Limited BBFL of up to 50m and 60% to 66% of the fund. Waterfall 3% prioritised return to BBFL Repayment of capital to BBFL and private investors Distribution of a fixed share of profit to BBFL remainder shared between private investors and the fund manager Private Investment Investors must invest on a commercial basis Private investment must be incentivised into the market by the ECF structure 11

12 The Strings - ECF Restrictions Initial round size and total investment limits focused on equity gap. Equity component with a significant prospect of a material capital gain. Unlisted SME either pre-commercial sale or within 7 years of first commercial sale or is launching a new product or into a new geography requiring investment > 50% of preceding 5yrs average annual turnover. Investment must be for the benefit of the UK economy. Investment must be a qualifying trade. Full details of the restrictions are in our Guidance for Prospective Fund Managers 12

13 Assessment Criteria Four broad areas of assessment: Strength of investment team, relevant experience and expertise Investment strategy Sources of private capital Financial terms The programme is competitive with only the strongest proposals being taken forward. Successful proposals must also offer the best overall value for money in meeting BBFL s objectives. 13

14 The Application Process Common Sticking Points Team New team demonstrating they can work together effectively Existing team demonstrating they have the bandwidth to deliver a new fund Track Record Portfolios that are largely unrealised Whose deal was it? Terms We d like some feedback on our commercial terms. Strategy Private Investors Me too, no differentiation or obvious links to team s skills Conflict of interest We don t want to fund raise until we know you are in. Private investors with motives other than commercial return. 14

15 Portfolio Companies Breakdown Scotland 3% Industrials, 9% Finance, 5% Media & Marketing, 7% Leisure & Retail, 8% Northern Ireland 1% West Midlands North West Wales 1% South West 6% 3% 4% 1% North East 2% 5% 51% 11% Yorkshire & Humber South East 15% Outside UK, 85% UK East Midlands 13% London Business and Professional Services, 12% Technology/IPbased businesses, 50% Science, 10% 15

16 Venture Capital Fund Of Funds Portfolio Active Investor In VC Funds Since Second Most Active Venture LP Globally In AUM 2.5bn Track Record Of Backing New & Emerging Managers Sector & Stage Agnostic Focus On The Best Opportunities Strong UK Anchor Run Rate Of c. 300m Per Year Across The Two Programmes BBB Programme # Funds BBB ( m) Fund size ( m) # Portfolio companies ECF , VC Catalyst , Total ,

17 Venture Capital Fund Of Funds Performance BBB Programme TVPI IRR Post 2010 IRR ECF 1.38x 8.76% 14.94% ECF OLP 1.65x 13.37% 22.05% VC Catalyst 1.19x 16.42% Average Annual Return, 10 Years to Sept % 22.05% 20% 16.42% 15% 10% 9% 6.90% 5% 2.30% 0% NASDAQ RUSSELL 2000 MSCI Europe BBB ECF OLP BBB VCC Based on realised and unrealised performance. Past performance is not a reliable indicator of future results. Public market indices are as of the Cambridge Associates Q Report; Buyout & Growth Equity Index & Selected Benchmark Statistics. BBB ECF OLP & VCC are from the Post 2010 figures. 17

18 Funds Supported By The ECF 18

19 Funds Supported By The VC Catalyst 19