The research workshop series got off to a flying start today with the Funding in Digital Creative and Media industries workshop hosted by Pannone, skillfully anchored by Mark Critchlow from Ford Campbell.
Over seventy people turned up to listen to the panel and expert views on the day. On the panel were Fred Mendelsohn from AXM, Mike Perls representing MC2, Envestors and the MPA, Paul Taylor from Vision and Media and Chris Sheffield the seriously serial entrepreneur in the digital sector.
Fred is responsible for the new NWDLF £15m digital media and creative fund, and Chris is spending a lot of time in China and has recently established the “Instant Hit” fund for start up and venture capital projects working with the Sue Woodward and the Sharp project.
It was a very experienced panel to talk about this exciting sector and the prospects for funding, investment and fees for financial professional and business advisors
DMC is a dynamic, fast moving investment area. But as Fred explained, the challenge for investors is often to second guess the growth potential of propositions. Investments are predictive investments and very much venture capital based rather than investments into an existing model suitable for private equity. Not every new business will be the next Facebook and not every game the next Tomb Raider. The proportion of high growth gazelles is a tiny fraction of total start ups. Start ups in DMC can be lifestyle businesses with limited growth ambition and potential as in every business sector.
As is true of so many micro businesses, more than anything new start ups require assistance and advice as much as, if not more than, investment and finance. Start ups have limited business experience and need advice from experienced managers and advisors. The challenge for advisors is to find a satisfactory fee model which may involve roll up or equity options rather than time and line billing. If successful the payback can be substantial but if not the write off doesn’t have to be substantial. Self help and feedback groups would be a welcome addition to the city eco system.
The sector has great growth potential as Mark explained there are some forty gaming companies in Greater Manchester and 12,000 students on campus. Projects such as Media City, the Pie Factory, the Hive and Media City present a great opportunity to enhance the city reputation in the sector.
Funding is a challenge but the pro.manchester research indicates the bulk of funding for start ups is derived from friends, family and founders, business angels and shadow investors and secured bank lending. Only a small proportion around 5% is from formal venture capital investment.
The visible angel network is but a small proportion of the total shadow investor market and research in the USA confirms the bulk of the angel investment is not confined to High Net worth Individuals. Much more on this will emerge from the research report.
Next week is the second in the Innovation and Enterprise workshop series an introduction to Venture Capital and Private Equity, at Eversheds on the 9th of September over a hundred delegates have already booked a place. Jonathan Diggines, (EV), Gary Tipper (Zeus) and Doug Stellman from YFM will be on the panel. It will be another interesting episode in the pro.manchester workshop series in Innovation and Enterprise. JKA
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