FAQ'S

What is the SWAIN process for Companies?

How much does it cost an Investor?

How much does it cost a Company?

How long does it take to find an investor?

What is investor readiness? How important is it? and Who provides it?

Financial Services Act - what is it?

Critical success factors in attracting equity capital 

Common mistakes 

What do deals look like? 

What is the SWAIN process for Investors?

What is the SWAIN process for Companies?

The first introductory contact with SWAIN is often made by phone and frequently follows either a referral or a web search. Businesses are invited to register on the SWAIN website, which requires them to provide outline details of their activities and their needs and to submit (usually by email) a copy of their business plan in their own format.

Initially our principal aim is to understand the Company's circumstances and needs as well as something of the entrepreneur. 

The Company's web registration is comprised of four parts: Contact Information; Profile; Engagement Agreement and finally Director's Declaration.

The Profile allows us to obtain an initial understanding of the business and how much finance is required. 

The Engagement Agreement is a contract between you and SWAIN and the process provides for electronic signoff. You will be sent an email which will provide the full wording of the agreement and you will also have access to a link into a PDF version of the engagement letter which is more suitable for printing.

The Director's Declaration requires you confirm the integrity and completeness of the information you have provided to us and the basis on which you have done so.  In addition you will be asked to confirm that there are no personal circumstances e.g. bankruptcy proceedings which would be relevant to a prudent investment decision. Naturally the responses are confidential.

Once you have registered with SWAIN then we are in a position to work with you to help you find investment. We will review your Business Plan and provide some feedback to you. If you do not have a business plan prepared we are able to provide a Business Overview form which will allow you to set out the key components of your proposal.  In our experience the most effective business plans are no longer than 25-30 pages, and contain a concise Executive Summary. Integrated financial projections incorporating profit, cash and balance sheet statements are highly desirable. We are happy to receive Draft plans but require all plans to be sent electronically.

Non-disclosure agreements:
We are quite comfortable in entering into an NDA. We always use our own simple but mutually binding NDA.

Following our desk appraisal we will provide some feedback to you based upon our assessment of the likely attractiveness of your proposal to our investment base. Should we decide to proceed our feedback is usually followed by a series of meetings and your possible attendance at a SWAIN Investment Clinic.  

Investment Readiness

As this dialogue progresses you may decide to carry out refinements to your business proposal and may engage with advisors and consultants as well as ourselves to assist you.  It may be the case that no further preparation is necessary in which case your proposal can be introduced to our investors however in our experience this is unusual. The fundamental objective is to prepare an 'Opportunity Outline' - the document provided to investors which allows them to understand the key aspects of the business and the investment proposal.  

We are able to provide a bespoke evaluation tool 'Sindex' which informs this process. 

Introduction to Investors

Our typical approach includes:

Listing your business on our website (limited to 3 months);
Circulating your opportunity to our investor base via E-mail;
Including any updates as the business advances or makes progress with the deal;
Offering you the opportunity to attend and present at one of our regular Investment Forums.

How much does it cost an Investor?

Investor’s fees

Currently, SWAIN charges a one off Enrolment fee of £180 plus VAT

How much does it cost a Company?
 
Introduction Phase £400.00 plus VAT
This includes an Opportunity Outline being circulated to SWAIN’s investors and a Web Listing of the opportunity for 3 months on the SWAIN website (up to 3 Updates on deal progress are included). Finally an opportunity to attend one of SWAIN’s Investment Forums.

Subsequent presentations £150.00
In some circumstances companies may be invited to present at subsequent meetings. In most cases there will be an additional fee as above.

Success fees
Investment success fees will be due for all investments as defined below, at a fee of 5% of the investment. VAT is applicable for the success fee.

How long does it take to find an investor?

This question is impossible to answer. ‘Gun to tape’ times have ranged from less than a month to over a year!!

What is investor readiness? how important is it? and who provides it?

At its simplest it is the process whereby businesses prepare themselves for the presentation, evaluation and negotiation cycle which leads to an equity investment.

Businesses who have prepared thoroughly and taken professional advice in advance of the process are likely to benefit in the following ways:-

·          The preparation will manifest itself in a focussed, elegant pitch concentrating on relevant investor-orientated issues;  

·         A strategy for negotiating valuation will have been devised;  

·         The Due Diligence process will be easier and shorter;

·         The investigations and negotiation processes will be more structured

·         The likelihood of deal being completed will increase.  

We will be pleased to introduce you to leading organizations with whom we have either worked previously or know of as recognized exemplars in their field (our preferred style is to recommend at least three alternatives and suggest that you work with organization with whom you feel most comfortable). There is no charge for this service.

We have produced the SWAIN Guide to Investment Readiness which has been highly acclaimed, and provides an excellent summary of the issues. This is available either as hard copy or downloaded from our website.

An excellent book which we would also recommend is The New Business Road Test by John Mullins (Financial Times publication).

Financial Services Act

No précis on this topic would be complete without reference to this legislation. It is vital to take professional advice on this matter. It can be a serious criminal offence to promote investment opportunities in an inappropriate way.  See www.fsa.gov.uk for further details.

Critical Success Factors in attracting equity capital

 A successful company will always have more than half of the following attributes:-

·         Strong and experienced management team

·         Strong defendable strategic assets

·         Strong USP

·         Sells into a growth sector

·         Is scalable, commercial and realistic

·         Has well researched and demonstrable market demand

·         Already generates revenues

·         Offers a ’must-have’ rather than a ‘nice-to-have’ product

·         Produces high profits and strong cash flows

·         Is committed to a credible exit strategy

·         Offers its customers a strong value proposition.

Common mistakes

Not allocating sufficient time or energy to what is often a very debilitating, frustrating, energy-sapping and time consuming process;

Skimping on professional advice fees;

Not following investor interest up quickly and enthusiastically;

Lacking real commitment to investigating, formulating and executing a realistic exit strategy;

Seeking an investment at an unrealistic valuation

Taking an unstructured approach

Underestimating the whole exercise

What do deals look like?

 ·        The typical equity holding is in the region of 20%

·         The typical valuation (post money) of a business is less than £1m

·         The mean equity content is approx. £120,000

·         Most businesses raise their capital in a mix of equity and loan capital

A few final thoughts…

If after having read and objectively considered all the gloom and pitfalls above, you still feel that you would like to progress with an equity solution do remember:-

Equity is not a soft option, it’s certainly not easy to obtain and it’s definitely not cheap.

If you’re still interested and think that you’ve got what it takes – we’d like to meet you.

What is the SWAIN process for Investors?

Website registration

The investor registration comprises four steps: Contact Information; Investment Profile; Engagement Agreement and finally Self-Certification.

Contact information will allow us to get in touch for an initial discussion.  Most of our subsequent communications to you will be via email, although we will often call you to remind you of forth coming events. We are also making more use of texts as an automated reminder. Companies will be normally be given your email address as the first point of contact once you have requested further information.

The investment profile helps us to understand the sort of businesses you are interested in. You will always receive summary information on the businesses being introduced via email, but the more specific information helps us to determine for instance whether you might be interested in a “sector specific” event. We naturally keep all this information confidential.

The engagement agreement is a legal contract between you and SWAIN and the process provides for electronic signoff.  You will be sent an email which will provide the full content of the agreement and you will also have access to a link into the PDF version of the engagement letter which is more suitable for printing. 

Since March 2005 'The Financial Services and Markets Act (2000)' requires that Business Angels wishing to receive promotions from firms must be self-certified as either High Net Worth Individuals or Sophisticated Investors. In order to safeguard both the interests of our investors and investees SWAIN will only make introductions to investors who have provided a signed certificate. The certificates are only valid for one year so please re-certificate when you receive a reminder on the main page of your SWAIN account. If you have any concerns about the implications of self-certification, then you are advised to take professional advice. To self-certificate online you must firstly indicate whether you are a High Net Worth individual or Sophisticated investor.

Post-registration activities

Once you have completed the website registration process then one of the SWAIN team will contact you. In the first instance we will have a short discussion with you by phone to answer any of your questions and to gain further understanding about your background and the sort of opportunities you are seeking. Typically we meet with investors for a face to face discussion about their experience and their aspirations for investments. It is helpful, although by no means compulsory if you can provide us with a CV.

Once we have been through this process then assuming you still wish to become a member of SWAIN you will be invited to join the network. Once you have settled the enrolment fee then you will enjoy full access to the website and will get the chance to attend our Introduction forums and other “investor only” events.