Frequently Asked Questions
Below is a list of our Frequently Asked Questions, along with answers. We hope you find them useful.
- What type of company would be attractive for investment?
- Am I located in the West Midlands Region?
- What sectors will the ACF invest in?
- How is Advantage West Midlands involved?
- How to apply?
- Do I need a business plan? – What would you expect to see in it?
- How much capital can be provided?
- What return is the fund looking for and what happens to the profits?
- How much equity does the fund expect?
- What is the expected time gap between investment and exit?
- What form does the investment take?
- To what purpose can the company apply the investment?
- How long does the decision making process take?
- Is Advantage Creative Fund regulated by the FSA?
- How much will the investment cost in fees?
- Is the information provided retained in confidence?
- Who are the fund investors and how much has been invested?
- Who makes the investment decision?
1. What type of company would be attractive for investment?
Companies ideally suitable for investment would be:
- A start up enterprise or an established company
- Capable of achieving sustainability in profitability
- In a growing rather than declining market
- Have a business which is robust to economic downturn
- Located in the West Midlands
2. Am I located in the West Midlands Region?
Advantage Creative Fund only invests in creative industries companies located in the West Midlands Region, or those that are prepared to move there. The region is made up of;
- West Midlands Metropolitan Area
3. What sectors will the ACF invest in?
Advantage Creative Fund is a region-wide venture capital investment fund set up specifically to help grow creative businesses in the West Midlands. It is the largest creative industries development programme in Europe and shares the definition of Creative Industries promoted by the Department of Culture, Media and Sport, which is:
Those activities which have their origin in individual creativity, skill and talent and which have a potential wealth and job creation through the generation and exploitation of intellectual property. This sector of the economy includes:
- The Arts and Antiques Markets
- Designer fashion
- Interactive Leisure Software
- Performing Arts
- Television and Radio
We have invested in a diverse range of creative companies, if you are not sure whether your business meets the definition for creative industries then please call us for an informal discussion on 0844 567 0035.
4. How is Advantage West Midlands involved?
Advantage West Midlands is the Regional Development Agency for the West Midlands and has sponsored the creation of several venture capital funds, each recognised by a name preceded by the word “Advantage”. While Advantage West Midlands has provided major financial support and considerable assistance in getting the fund started, ACF is an independent company and the Regional Development Agency has no influence over the individual investment decisions made. back to top
5. How to apply?
The first step in proposing an investment opportunity to ACF is to complete and submit a statement of interest online. This will give us a basic outline of your proposal and ensure that we have a few pieces of necessary information to begin our consideration. back to top
6. Do I need a business plan? – What would you expect to see in it?
Yes. In order for us to assess your application efficiently, we need a comprehensive business plan describing your business. We are a virtual company which requires the business plan to be an electronically submitted application. Click here to access a checklist we will be using to make sure we have all the information we need before we start work on analysing your application. This will also save you time by ensuring that all the points are covered. back to topWecan help you prepare your business plan and get your business ready for investment. Call us today on 0844 567 0035.
7. How much capital can be provided?
We can invest from £10,000 up to £250,000.
8. What return is the fund looking for and what happens to the profits?
Advantage Creative Fund shares in the risks and profits that the company incurs and expects a commensurate return for the risk taken through a profitable exit from every investment. This is achieved by selling its shares for a capital gain. We have a policy of selling back our shareholding to the owner managers.
The Fund is non-profit-distributing, with all the profits being retained within the fund to make further investments in creative businesses. As a Community Development Venture Capital Fund it has the objective both of making commercial returns on its investments and of assisting disadvantaged sectors – in this case creative industry businesses. back to top
9. How much equity does the fund expect?
The fund never takes a majority shareholding. The investment level is calculated on the individual merits of the investment proposal and an assessment of the risk involved. back to top
10. What is the expected time gap between investment and exit?
The ACF objectives are to achieve a profitable exit from every investment by selling its shares for capital gain, at a price based upon the profits made, within 3-7 years from the time of investment. back to top
11. What form does the investment take?
The investment amount will be in return for an equity stake in the business which will typically be made up of a mixture of redeemable ordinary shares and redeemable preference shares. Venture Capital is risk finance and therefore we take an equity stake in the companies with the aim of providing us with a proportionate reward for the risk we are taking. back to top
12. To what purpose can the company apply the investment?
The company can apply the investment to the purposes which have been agreed between us that meets the needs of the business. Details of which would be contained in the business plan. back to top
13. How long does the decision making process take?
All proposals will be subject to our normal due diligence processes, but we will be able to deal more quickly and simply with smaller investments than with larger ones.
Completion is intended to be achieved within fourteen weeks however no two investments are the same and in some cases may take longer or shorter than indicated.
A typical process and timescale prior to investment is as follows:
- Initial Contact (Weeks 0-1) Initial contact may be made by effecting an introduction via the online submission of your statement of interest. Typically after the initial enquiry we will request that you send us a business plan.
- Assessment (Weeks 1-4) If your business plan and application meets our criteria we will arrange a meeting with you. We will then decide whether to undertake initial due diligence.
- Negotiating an investment (Weeks 4-6) If we wish to proceed we will provide you with details of the terms of any possible investment. If you agree with these we shall seek approval for an investment from our investment committee.
- Formal Offer Letter (Weeks 6-7) If the investment is approved we will make a formal offer to you. This will be subject to various terms and conditions that need to be satisfied prior to completion.
- Legal Process (Weeks 7-11) If you accept our offer and agree to the terms and conditions included we will put in place legal documentation including Shareholders Agreement and amendment to the Articles of Association.
- Due Diligence (Weeks 7-11) We will undertake further due diligence including an accounting investigation, references and market reports if appropriate.
- Completion (Week 12) Legal completion with funds invested. If at any stage we decide not to proceed then we will let you know as soon as possible.
14. Is Advantage Creative Fund regulated by the FSA?
No. ACF is not currently regulated by the Financial Services Authority. back to top
15. How much will the investment cost in fees?
Completion fees on deals are dependant on the amount of capital invested. This is a one off payment. There are business support and monitoring fees which range from £100 to £500 plus V.A.T. This depends entirely on the size of investment and is a fixed monthly charge. back to top
16. Is the information provided retained in confidence?
Yes. All directors and officers of the fund are bound by a standard confidentiality agreement back to top
17. Who are the fund investors and how much has been invested?
- Advantage West Midlands - £3.2 Million
- Arts Council England - £200,000
- European Regional Development Fund – 2.5 Million
18. Who makes the investment decision?
The Advantage Creative Fund has an investment committee who make the final decision. This committee is made up of the following;
- Mark Spinner – Non Executive Director
- David Edmonds – Fund Manager
- Julian Hare – Investment Manager
- Mike Arch – Investment Manager