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21st April 2008 - Commercialisation Fund up to £60K

Commercialisation Fund

The Commercialisation Fund provides repayable finance to small and medium-sized enterprises for
proof-of-concept and commercialisation activities that enable a new business idea to gain first
revenues and market traction.

The Fund's main aim is to facilitate the progress of business ideas
that demonstrate clear potential for high growth in the market place.

The Commercialisation Fund can cover costs such as technology validation by a third party,
developing or testing a demonstrator, protecting intellectual property, commercial and marketing
advice and market research.

The Fund offers two 'phases' of investment -

The first is dedicated to ventures with a proof-of-concept requirement.
The second is dedicated to ventures seeking finance for later-stage commercialisation work leading to market entry.

Each phase offers funds up
to a maximum of £30,000, or up to £60,000 to cover both phases.

Who can apply?

Small and medium-sized businesses based in the South East of England (excluding London)
employing fewer than 250 employees. A company's 'base' is defined as the principal place of
business and where the benefits of any funding would materialise. It is not enough for a company
simply to register their office in the South East. Individuals may apply to the Fund but must
incorporate a limited company prior to any funding being released.

What are the main criteria?

Phase 1 of the Commercialisation Fund is for applicants that need to prove the technical ability or
performance of a new idea or innovation.

The maximum amount that may be applied for is £30,000.
The applicant must be able to demonstrate the following:

• the idea addresses a clear market need
• the idea is novel and offers clear points of differentiation
• there are clear barriers to entry preventing the idea from being easily copied
• a credible plan that shows the idea can be commercialised within 24 months.

Phase 2 of the Commercialisation Fund is for applicants that have a viable product and require
funds in order to gain market entry. The maximum amount that may be applied for is £30,000.
The applicant must be able to demonstrate the following:

• the idea or technology has been validated
• the routes and channels to market are understood
• the management team possesses the required skills and experience
• a credible plan that shows the idea can be commercialised within 12 months.

An application may be made for either one of the phases outlined above or for both.

This project is co-financed by SEEDA and the European Social Fund and operates in partnership
with the SEEDA Enterprise Hub Network.

What are the repayment terms?

The Commercialisation Fund is a contingently repayable award. It will typically recover its
investment via repayments based on revenues generated through the successful
commercialisation or exploitation of the product or service.

Repayment terms will be determined on a case-by-case basis, but may be summarised as follows:
• The total amount repayable will be at least 150% (but may be up to 200%) of the funds
invested. For example, if £30,000 is approved at 175%, the beneficiary will be expected to
re-pay a total of £52,500.
• The level of repayment from gross sales will be at least 5% (but may be up to 10%) every
six months.
• If a company is subject to a buy-out or cash-rich sale to another organisation, the Fund
would receive 3% of the sale proceeds in addition to the amount repayable.
• If a company secures commercial funding (e.g. bank finance, business angels or venture
capitalist) it may repay the award at a discounted rate of 125%, or FSE may convert the
investment into equity or the parties may agree to continue with a royalty re-payment
method.
• Repayment is capped at a maximum 7 year period from the date of the Award Letter. No
further repayments will be due after the end of the 7 year period.
Finance South East reserves the right to amend the standard repayment structure according to
individual circumstances which may, on occasion, involve consideration of an equity option in lieu

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