Following a short hiatus due to the coronavirus, Small Business and Worth Capital have partnered to reopen the UK’s largest seed funding competition — The Start-Up Series.
The Start-Up Series competition
The Start-Up Series competition was launched in 2016 by Worth Capital, with the aim of searching for the brightest entrepreneurs with the smartest ideas to invest real cash into these promising start-ups.
From September 1st 2020, The Start-Up Series competition in association with Small Business is back and will open for applications at the beginning of every month.
Each month one or two winners will be selected to receive a prize package consisting of:
• Up to £250,000 of SEIS/EIS equity funding.
• A minimum of 2 years invaluable hands-on help from experienced mentors.
• Media coverage on smallbusiness.co.uk and other channels to promote your business.
We are on the hunt for B2B or B2C business across all sectors. As long as your business is eligible for SEIS or EIS HMRC advance assurance, then we’ll consider your application.
We’ll be impressed by innovative products or services, in high growth or underserved markets, with the potential to build a loved brand. If you can demonstrate these, you’re in with a fighting chance.
For those businesses interested in taking part in the Start-Up Series competition, please register your interest on our pre-registration page
So far, the competition has invested over £4.2m into 20 young UK businesses.
The Start-Up Series is particularly proud of the diverse spread of businesses that this funding has reached. Typically, only 9% of early stage funding goes to businesses with a female founder* and only 35% is invested into businesses outside of the London & South East ‘bubble’**.
However, the Start-Up Series has bucked these numbers, with 40% of our winners having a female founder and 60% of the funding heading outside London. Whilst the are no benchmarks published on how much of the UK’s funding goes to businesses with a BAME founder, we expect the Start-Up Series, at 19%, is better represented.
“As two immigrant female founders we feel the subconscious bias in the world of the white male oxford graduate the moment we walk through the doors of some investors,” said Randa Bennett, co-founder at VeeLoop.
“Even though Worth Capital don’t promote themselves as investors in female founders, our pre-application research quickly showed they invested in more female founders than many female only VC’s! We really liked that about them and pushed us to apply.”
How it works: Below, we’ll introduce you to Worth Capital and its team, explain the eligibility and terms of the competition, how to enter and highlight the frequently asked questions.
1. Worth Capital
Worth Capital was formed by entrepreneurs with experience in starting, growing and selling small businesses.
Along with securing investment, Worth Capital helps new entrepreneurs accelerate their growth. Founders, Paul Soanes and Matthew Cushen are experienced entrepreneurs, innovators, and marketers and, along with investing themselves, have a track record of rolling their sleeves up to help.
Worth Capital’s partner, Amersham Investment Management, is the fund manager for the Start-Up Series Fund, which invests in the winning businesses. The fund is eligible for Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) investments and is fully compliant with the rules that financial services firms have to abide by.
The Worth Capital team
Among other ventures, Paul Soanes started experiential agency iD in 1994 with just £2,000. It has since billed £100m-plus, with the likes of Unilever and Britvic on its client list.
Promotional space media owner Brandspace — another of his agencies — operated from 1,000-plus venues such as airports and railway stations and was sold to Octopus Ventures in 2008.
Matthew Cushen is a successful investor, his first investment delivered 8 x his initial stake in four years. He’s a retailer by trade, having worked with Virgin Retail and the John Lewis Partnership. He subsequently became an innovation consultant, and still advises major global businesses, including IKEA, AB InBev and Waitrose. Each month, Matthew shares his thoughts on raising funding – and other valuable advice for entrepreneurs growing their businesses – in his blog posts.
Hayley Etherington spent eight years at a leading marketing agency, working for global brands such as Nespresso, L’Oreal and Philip Morris, as well as helping start-ups to gain traction in cluttered markets. Her wealth of experience brings a diverse set of skills, also adding great value to the various start-ups Worth Capital invests in.
“Paul’s wealth of experience as an entrepreneur creates for an accomplished sounding board to refine our ideas and concepts into laser focus plans which enables us as a business to move quicker and zero in on our key objectives,” said Daniel Verblis, founder of The Moving Home Warehouse, a previous winner of the competition.
“His many years of experience and knowledge means that he gets the business almost before we do. We can tap into this wisdom when required which has been invaluable to us beyond what most start-ups would otherwise have access to which gives us the competitive edge.”
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2. Eligibility & terms
The Start-Up Series is for very early stage and growth businesses, even including pre or early stage revenue.
The investment into the winners comes from an EIS & SEIS Fund, therefore the businesses who are considering entering need to satisfy the following criteria set by HMRC:
• You must be a UK resident and run a UK-based business.
• You must be over 18 years old at the time of entry.
• Certain financial services and property businesses are unlikely to qualify.
The investment is made from The Start-Up Series Fund which is FCA-regulated. Typically, the Fund will invest £150,000 of funding allowed for SEIS qualifying businesses, and then make follow-on investments from the fund as the business grows. For more mature EIS qualifying businesses, the Fund may invest up to £250,000. This could be as the sole investor leading an investment round, or alongside other institutional investors.
Winners of the competition will be giving away equity in their business in exchange for investment from the Fund, so it’s important that you and any other shareholders in the business are comfortable with this. In addition to the Fund equity, Worth Capital will take up to a 7% share option in your business. All terms of the investment deal will depend on the maturity of your business and will be negotiated with you individually if you reach the later stages of the competition.
You do not have to pay to enter the competition, but certain investment fees will apply if you were to win. These fees can be paid for from the investment.
Full terms and conditions can be found on the monthly competition entry page when the competition opens each month.
“The Start-Up Series felt like a good fit for us. We liked that the platform was accessible and open to many types of businesses and it was clear that there was wide range of companies in the portfolio. This indicated to us there was a good level of experience and support across industries, just what you need for building a brand on and offline,” added Ed Bird, co-founder at Bird Sunglasses, another previous winner of the competition.
3. How to enter
From September 1st 2020, the competition will be open from the 1st — 14th of every month for online applications and we’ve made it deliberately easy to enter.
• All applicants:
We initially ask for just a few details, and a two-minute video and/or a two-page document telling us about your business. We purposely don’t ask for too much information to begin with – we want to see how quickly and easily you can get us excited about investing in you and your start-up.
• Selected qualifiers:
If we like what we see, you’ll progress to the next round where, as a Qualifier, you’ll be asked to complete a more detailed online application. That’s when we’ll really dig into the detail and ask questions on your team, financials history/projections, market and more. Our judges will regroup and review all Qualifiers before deciding who we like the sound of. The competition then moves off-line, and we’ll arrange interviews with those who have made the shortlist. We give each qualifier feedback after this stage.
• The few finalists:
The final stage of the competition gets more intense. We’ll invite the founding teams of the finalists to meet with us for half a day for a ‘deep dive’ (this may take place virtually depending on the restraints caused by Covid-19). This is where we’ll get to know one another, understand more about your market and proposition, stress-test your business plans, identify where Worth Capital can help and discuss the terms of the investment.
If we conclude we’d be able to help and would like to invest we make a commercial recommendation to the Fund Manager. They will review our recommendation & carry out further due diligence. Once this has all been passed, the investment can be made.
A further competition winner, Andy Roberts, founder and CEO at Weekly10, commented: “Our deep dive with Paul and Matthew was a highlight of the competition for us. During the four-hour meeting not only did Paul and Matthew get a good understanding of the business, we received detailed feedback and insight based on their extensive business experience.
“Co-founder Alistair and I came away with some great ideas on how we could refine both the product and our business model, which regardless of whether we won the competition would give the business a real boost.”
If you feel that your business has what it takes to win the Start-Up Series competition, please register your interest on our pre-registration page.
4. Frequently asked questions
How soon after entering do winners receive the investment?
We make investments from the Start-Up Series Fund into the winners in tranches which usually consists of 3-4 businesses at any one time. This allows investors to receive a diversified mini-portfolio of investments. We aim to close a tranche at least 3 or 4 times a year, however this depends on the cash coming into the Fund from investors.
Are your terms negotiable?
Yes and no. Terms such business valuations and the Worth Capital option depend on the maturity of the business and the level of funding required, all of which will be discussed with applicants during the later stages of the competition. However terms such as the investment fees are set at an industry standard and are unlikely to be negotiated.
Why does Worth Capital take up to a 7% option in the winners?
This is the incentive for Worth Capital to be involved, and it is structured to keep Worth Capital’s interests aligned with their investors and the businesses that are funded. Everyone benefits from using Worth Capital’s experience to grow the businesses towards a valuable exit. Note, this option is negotiated, it will be higher for the earliest stage businesses and can be lower for more valuable maturing businesses.
I just want the cash investment, do I still have to pay for mentoring?
Yes. We make a promise to our investors to keep close to all investee companies for the first couple of years of their growth. We keep an eye on how the investment is being spent and roll-up our sleeves when help is needed. Therefore, the terms of the investment mean that someone from the Worth Capital team takes a Board seat in each investee company. The terms of this directorship may be negotiated with much later-stage, EIS businesses (for example if there is already an experienced non-executive director involved). The value of having Worth Capital involved, should be clear by the end of the competition process, if it’s not then they wouldn’t look to invest.
How do I know if I am SEIS or EIS eligible?
Even if you have not yet been granted SEIS or EIS Advanced Assurance from HMRC you can still apply to the competition, but it’s up to you to ensure you meet the criteria before you enter. We are unable to give advice on this for each applicant, therefore we recommend that you check the likelihood of getting Advanced Assurance with either your accountant, a handling agent or HMRC themselves.
Will I receive feedback on my application?
Due to the volume of applications we receive each month, we are unable to provide feedback to each applicant at the entry stage. However, if you’re selected as a Qualifier and go on to submit a Qualifier application, which sees you put in more effort, you’ll be provided with feedback as to how we viewed your business idea and its attractiveness to investors.
* Source: The Deal, Beauhurst, February 2020
** Source: HMRC Enterprise Investment Scheme, Seed Enterprise Investment Scheme and Social Investment Tax Relief, May 2020.