Confidentiality
Costs
Innovators
Investors
Managers
Miscellaneous
Proof of Concept Projects
Shares

Confidentiality

What about confidentiality of information?
Only those registered have access to the Innovations posted. Access is via unique user name and password, controllable by you the user. In addition no project commences without Non Disclosure Agreements (NDAs) being exchanged. Strict control is maintained on both the access and on going projects ensuring strictest confidentiality is retained.

Who can see what on the Innovation Exchange?
Innovators can see only their own Innovations and Projects, nothing else.

Managers can see all the posted Innovations that are still available to be selected. This includes those in which Investors and other Managers have expressed interest but have not yet agreed to work with the Innovator. Managers can also see all their own Projects whatever their status.

Provided they access the Exchange through an authorised website, Investors can see all the posted Innovations that are still available to be selected. This includes those in which Managers and other Investors have expressed interest but have not yet agreed to work with the Innovator. Investors can also see all their own Projects whatever their status.

My CV contains personal information that I do not wish to be shown to Innovators or investors?
All personal and contact details are removed from CVs.

Are all parties, i.e. Investors, Innovators, Managers and Introducers all subjected to the same code of ethics and confidentiality?
Yes. Everyone involved from the outset is required to sign NDAs and no information is accessible by any un-authorised individuals. Once projects commence further project specific NDAs are required.

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Costs

What does it cost to post an Innovation?  
The fee for posting an Innovation onto microFunding through the Innoventique Innovation Exchange is £40.00 + VAT. You will get a £5.00 credit from microFunding itself to use against a future Innovation if your Innovation fails to find a manager.

What does it cost to produce a Proof of Concept project specification?
After the Manager has selected an Innovation from the list of Innovations, there may be some costs depending on what is needed to be done to create a viable Proof of Concept Project. It is expected that most Managers will fund this themselves.

What does it cost to find funding for a Proof of Concept Project?
The fee for raising the funds to run the Proof of Concept Project will vary. Any fees charged by Angel networks to raise Funding are additional and are outside microFunding. Who pays this will have to be agreed between the Innovator and the Manager.

There will be no further costs for the Innovator or Manager once the Project has been funded.

What about Legal and Project costs?
When the Manager specifies the Proof of Concept Project, he costs in a standard £2,500 for professional costs. This covers Legal (£1,500), accounting and audit (£500) and project supervision (£500). These will be part of the Project costs, and funded through the investment.

What if I don't want a 'standard' agreement?  
There are no hard rules that you must have a standard agreement, but there are clear advantages in having one.

Firstly, you will be covered by microFunding's terms and conditions, which means that a good part of the legal paperwork has already been done and agreed to.

Secondly, and possibly of far more significance, the standard costs are guaranteed only for standard arrangements. Variations will possibly be expensive, and the cost will have to be underwritten personally by Manager, Innovator or Investor.

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Innovators

At what stage of development can an idea be registered?
It does not matter whether an idea posted is just an idea, or an idea for a potential patent, or an idea for further research, or fully developed and patented. The important caveat to this is that the more fully developed an idea, the more likely it is to attract a potential manager, and raw ideas are quite unlikely to be taken up.

Can a University post an idea?
There is no reason at all why Universities should not post 'spin out' ideas, they are very likely to be successful. It is likely that a University will make a case for the '30-30-30' rule to be interpreted liberally, as it will probably have developed the idea further than normal and will feel justified in claiming additional roles for itself beyond just 'Inventor'.

Can the Innovator reject a Manager or vice versa?
Yes, this can be done by either party. The Innovation then remains on the website with an open status, ‘awaiting manager’.

How do I know my Innovations are being looked at?
We keep statistics of all visits to all Innovations. An Innovator can see how many people have looked at his Innovation and will also be able to see anonymous comments raised by managers and investors.

Why haven't Managers selected my Innovation?
Either the title of your Innovation or the description is not exciting enough. Or perhaps the Innovation is not regarded as viable. You may wish to consider using an 'expert' to assist you with the posting.

Will Innovators be involved in the Projects and Businesses?
Well - how long is a piece of string? It is entirely up to the Manager who selected the Innovation: he has control of the process. Often Innovators will be needed as Technical Consultants, certainly in the early days. But if the business is to succeed to its best potential, the management has to be the best possible. Management will be recruited on merit, not by shareholding. So while some Innovators may find themselves helping in a senior role, most will be relieved to find that they can let the competent and skilled management team get on with making money for them, while they go and invent something new for the next project!

If for any reason the Project is not a 'success', what happens to the IPR, and the data around that assessment?
Should a Project fail, all property associated with the Invention and Project reverts back 100% to the Inventor who is free to continue to try to exploit it.

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Investors

Neither Innoventique Ltd nor microFunding Ltd are authorised to conduct investment business. References below to 'microFunding' and 'Exchange' mean the microFunding process as adopted by authorised intermediaries and accessible only by certified investors through authorised sites.

Do I have be a member of an Angel network?
No, you can be a member of a network, or an independent investor. Either way you must be able to certify yourself as 'High Net Worth' or 'Sophisticated' under the meanings of the Financial Services and Markets Act (2000).

Why a Transferable Cancellable Loan with Investment Rights? Why do Investors not simply receive shares at the Proof of Concept (PoC) stage?
In some cases the PoC stage will identify that the Innovation is not viable, and this could happen well before the end of the project. Under these circumstances the Investor can get all of the balance of his funds back, as a shareholder he would not get back more than his % share of any residual funds in the company - and it could be taxable. A Transferable Cancellable Loan gets round this difficulty.

Why is the Loan Cancellable?
If the Project fails to convince, the company is still owned by the Innovator and still holds the IPR. microFunding 'sells' its 25 shares back to the Innovator and the Investors' Loans are cancelled - so the company remains solvent, the Innovator can walk away with his IPR, and no-one is left with any additional costs or problems.

Why is the Loan Transferable?
An Investor might choose not to follow up his initial loan with equity funds. Assuming that the deal is nonetheless worth doing, he has a couple of months in which to sell his loan (with its right to invest) to the highest bidder. Existing loan holders have right of first refusal, but only at a market price. It is possible he could make a quick profit in this way, and is why the Loan is Transferable.

Without shares, how are the investor's interests looked after?
The small shareholding issued to microFunding Ltd is enough to guarantee fair play all round as the subscription agreement contains all the checks and balances needed.

Why does the Loan have Investment Rights? Do Investors have to invest more after the PoC stage is successful?
The PoC stage is not intended to create businesses, but is designed to eliminate failures early at minimal cost and highlight likely successes. Successful PoCs will be excellent guides towards superb Business Plans, and the process ensures that both Managers and Investors agree what, if any, extra funding is needed to create the desired profitable outcome. How the extra money is raised is not prescribed. Shares are not issued to the Investor until the extra funding is raised, but having the Right to subscribe for the shares, and being able to sell that Right, is what it's all about.

Why are Investors not Directors of the company at PoC stage?
Whether or not they are existing shareholders, company Directors cannot obtain EIS tax relief on investments they make into their company. So Investors are not asked to nominate a director until after the PoC stage is successful and any further funding arranged with shares issued.

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Managers

Why do you need a declaration for manager applications?
To ensure that those Managers who put themselves forward to help create businesses from Innovations are in practice able to do so.   We are dealing with Innovations that may not yet be protected but upon fruition could be worth a lot of money. Innovators and Investors are cautious and rightly so.

What is the declaration about?
The declaration confirms the applicant's character. In addition we need confirmation of the Manager's experience, knowledge and capability of taking businesses from concept to successful exit.

Can a University become a Manager?
Most certainly, if a University believes it has the necessary resources, in Management and/or in Research, to bring an idea to commercial fruition either on its own or in partnership with an external Manager.

Can the Manager reject an Innovator or vice versa?  
Yes, this can be done by either party. The Innovation then remains on the website with an open status, ‘awaiting manager’.

Why does the Manager get options, not shares?
It is anticipated that most Managers will wish to use their shares to recruit and motivate an excellent management team. This can create tax difficulties with actual shares, but with Options this difficulty is avoided.

Without shares, how are the Manager's interests looked after?  
The small shareholding issued to microFunding Ltd is enough to guarantee fair play all round as the subscription agreement contains all the checks and balances needed.

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Miscellaneous

Where are the potential investors?
Currently we are linked to several Investor Networks such as Angels Den and Angel Investment Network, and their investors have access to the Innovations and Projects.

Are other investors able to participate in this process?
Most certainly, we are always looking for additional investors. To become an investor please click here.

Is this process restricted to the UK only?  
All the inevitable legal paraphernalia that surrounds concepts such as company formation, use of Law etc. has been based in England, and will remain so at least until all the systems and processes have been bedded down. So all the Projects must be UK based. A Manager can be based outside of the UK provided he is prepared to travel to the UK and be subject to English Law for the Projects. Clearly this is more likely to be relevant for those non-resident Managers who do live nearby in Europe, but such practical considerations are up to each individual. An Innovator can be anywhere, but of course, at a practical level they both have to agree to work with each other, so it's less likely for either to be someone from around the world!

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Proof of Concept (PoC) Projects

How are the PoC Projects supervised?
microFunding itself supervises each project to ensure that it stays on track, and a fee is charged to the Project for this. An Auditor ensures that the money is spent as per the Project specification, and provides Investors with any tax certification they might need for their tax returns.

Who says whether a Project is successful?
Both the Project supervisor (microFunding itself) and the Manager report directly to a Panel of three comprising microFunding, the Manager and an Investor. Whether or not the PoC Project has succeeded in demonstrating commercial viability is determined by the Panel.

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Shares

What is the '30-30-30' Rule?
This is a 'rule of thumb' used traditionally in Business Angel investing where there is no realistic business valuation possible: it's transparent and as fair as possible.

Can the ''30-30-30' Rule ever be changed?
Yes - if the circumstances are right, in either or both of two standard ways where all the ingredients of the agreement are standard except for the way the shares are split:

The '30-30-30' share is in return for equal risk. If it turns out that the opportunity is best commercialised through licensing, neither Manager nor Investors will have taken as much risk. So the share then changes by mutual agreement, up to as much as '60-15-15' in favour of the Innovator.

The '30 - 30 - 30' is shared between roles, not people. It is very possible - perhaps even common - that some people will qualify in different roles. This means that the Innovator who partially funds his own opportunity, or the Manager who puts in some money too, will qualify in more than one '30'. In this way, individuals can sometimes get more than a 30% share of the equity.

A third way would be if a non-standard agreement is wanted by the parties, see costs.

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