Equity investment is the investment of cash into a business in return for shares in that business. The equity investor therefore becomes a shareholder. Equity investment is not a grant and it is not a loan. Providers of equity are typically either venture capital funds, private equity funds or private individuals. The CCF is a venture capital fund.
Venture capital financing is suitable for businesses which need finance to fund high growth potential. Unlike debt financing, typically no annual repayments are required, thereby allowing the business to reinvest excess cash into operations. Venture capital investors will only profit if the business is successful, which gives a common objective to management and investors alike. The CCF will also reserve the right to a seat on the Board of the business (see above) in order to monitor progress and provide timely advice. Before deciding which type of funding best suits your business, we recommend that you seek professional advice.
The British Venture Capital Association has a comprehensive website and a number of free guides that explain more about venture capital and private equity. A good place to start is their pamphlet 'A Guide to Private Equity'.
Every £1 invested by the CCF requires matching funding from the private sector. The matching funding must be invested at the same time and on the same terms as the CCF investment. For example, if the CCF wants to invest £75,000 the deal can only go ahead if at least £75,000 equity is invested from private sources. Private sources might be an individual 'angel' investor, friends and family, other venture capital funds or even corporations. However, for regulatory reasons, (a branch of European law called 'State Aid') the matching funding cannot come from another public source.
If you can, but we will help you if not. The CCF can contribute a maximum of 50% of any equity funding round into your business and hence our investment must be matched from another private source. This could be equity investment from your own savings, other private investors ('business angels') or venture capitalists. However, for regulatory reasons, (a branch of European law called 'State Aid') the match funding cannot come from another public source.
The CCF has a network of co-investors that we will use to find matching funding for any investment that we make. However, we are particularly attracted by companies that are able to secure 50% of their required investment on their own behalf and this can significantly speed up the time it takes to receive funding from the CCF.
Although a maximum of £500,000 can be invested in any one company, we expect our initial investment to be not more than £75,000. We may invest in ‘tranches’ – we may, say, invest a total of £225,000 in one company, but this investment will not be made at once, rather in three tranches of £75,000 over 18 months and contingent upon the investee company hitting certain milestones.
We will work with our investee companies to help them secure follow-on funding from other sources and, in addition, will sometimes provide follow-on funding ourselves. The CCF can invest a maximum of £500,000 in any one company.
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Yes, the CCF will support eligible companies from outside Greater London if they are moving in to the area. We may also be able to suggest a suitable office location as part of a creative hub. To check if your business is located in Greater London use the postcode checker.
The CCF can invest in seed, start-up and early-stage businesses. This covers a broad range of business stages. In practice, we can invest in a business which is exists only as an idea in a business plan, and can also invest in a business which has been operating for five years and needs capital to expand its operations.
Yes, but as with all other investments, they must meet demanding evaluation criteria and we must be confident that they will generate a significant financial return to the fund within 3-7 years.
The CCF investment process consists of three steps: business plan appraisal, due diligence, and completion. Once a business plan is submitted we will appraise it and, if we would like to investigate the business further, we will invite the founders to meet us to discuss the business in more detail. We then aim to adopt a swift, relatively informal approach to due diligence (the way in which we investigate potential investments and come to a decision whether or not to proceed). Similarly, we aim to use standard term sheets and legal agreements in order to make completion as quick and easy as possible.
Our aim is to respond to initial inquiries within five working days, but this will inevitably depend on the volume of investments under consideration. On average, you should allow 8 - 12 weeks from our initial meeting with you to receiving an investment, but we will try to expedite the process wherever this is possible.
There are two types of cost incurred when raising equity capital through the CCF:
We actively seek to minimise these costs wherever possible (e.g. through providing relatively standard legal action so that as much of our investment as possible remains within your company to help your business to grow.
For an overview of typical costs associated with venture capital investment use the British Venture Capital Association website.
We want to help you to grow your business. We will threfore typically require the right to appoint a non-executive director to the board, whether it be a member of our team or an experienced independent director. However, we will not always exercise that right and will provide support as part of our investment monitoring process.In addition, the CCF is prepared to help investee companies find suitable non-executive directors.
Yes. We have an application form that you can fill out to register your initial interest and are happy to accept completed forms in lieu of a full business plan. However you choose to apply, please remember that we receive a high volume of proposals and are only able to invest in a small fraction of the very best opportunities. In order to maximise your chances of success, it is important that your proposition is presented in a clear, concise manner.
If you need help writing your business plan or filling in the CCF application form, please contact the CCF at email@example.com.
Yes - providers of finance all have their own criteria and although you should examine carefully the reasons why you may have been refused in the past, this does not mean we cannot help. The CCF can also provide support in choosing which type of finance is best suited to your business and then help prepare your business to best position itself to apply for finance. To find out more please call us on 0870 909 6333.
We will do our best to give constructive reasons why we have decided not to invest and, where appropriate, will direct you to other sources of funding and support. We have many relationships with other members of the finance and venture capital community as well as with the wider Creative London network (see Links) .
Please use this website as a first point of reference where possible. Alternatively you can email firstname.lastname@example.org or call 0870 909 6333.