For the Innovator

• The Innovation is put on as a ‘New Invention’.

• The Innovator describes his Innovation in terms intended to excite the interest of an Entrepreneur but without (at this stage) disclosing any secrets.

• When he is happy with his description, the Innovator posts the Innovation so that it becomes visible to Investors and Entrepreneurs.

• The basic Posting fee is £40 + VAT, and is payable through Paypal when the Innovation is posted.

• If you prefer that our journalists write the entry for you, you will still need to write the initial description on the Exchange. We will then contact you in order to fully understand the idea, and write a description for you. When you are happy with the result, the Posting fee is £100.00 + VAT.

• Please note that the hosting arrangement and any contractual obligations are with microFunding Ltd. Innoventique is solely responsible for helping with writing the posting. microFunding collects fees on Innoventique's behalf, sends you its VAT invoice, and accounts for Innoventique. If you need a VAT invoice from Innoventique please request one.

• The Innovation is viewed by many Investors and Entrepreneurs, and possibly identified as having significant commercial potential by a skilled and sector-experienced Entrepreneur.

• The Innovator is given feedback on the levels of activity and interest in his Innovations, both absolutely and also relative to all postings on the site.

• Any Investor or Entrepreneur can give written feedback directly on the posting. This is visible only to the Innovator, not to other Entrepreneurs or Investors.

• An interested Investor or Entrepreneur expresses interest on the website.

• Should any Innovation fail to attract interest from any Entrepreneur or Investor within a reasonable time, it is archived in the Exchange Library. It remains viewable on demand by any Investor or Entrepreneur.

• The Innovator receives a £5.00 credit against future postings for each Innovation that is archived.

• The Innovator gets a copy of a Innovation-specific Confidentiality Agreement signed by the Investor or Entrepreneur, a copy of the Investor's or Entrepreneur’s CV and the Investor's or Entrepreneur's Reason for Interest.

• The Innovator decides whether or not to meet the Investor or Entrepreneur, and re-confirms his agreement to the microFunding Ltd terms and Conditions by replying to microFunding's email with the words '(project number) AGREED' in the SUBJECT line.

• If the Investor or Entrepreneur also agrees, he is introduced to the Innovator by email.

• The Innovator and Investor or Entrepreneur contact each other and agree whether or not to work together under microFunding's® Terms.

• There is no limit to the number of Investors or Entrepreneurs who can express interest or to whom the Innovator can request introductions.

• Each party MUST independently advise microFunding by email of their decision without delay.

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For the Entrepreneur

• The Entrepreneur applies to the Exchange with a copy of his professional CV. All personal and contact details are removed from the CV and files it for future use. He self certifies his credentials, and references may be required.

• The Entrepreneur is given a unique password to log on to the Exchange. The Entrepreneur reads and agrees to the Terms and Confidentiality.

• The Entrepreneur visits the Innovations pages in order to identify Innovations that might be of interest.

• Every time an Entrepreneur visits the List Innovations pages, this is logged to provide overall activity feedback, and

• Every time an Entrepreneur opens the details pages of an Innovation, this is also logged so Innovators can get feedback about the activity and interest their Innovations are generating.

• The Entrepreneur is invited to add his own feedback on the Postings

• Entrepreneur identifies a Innovation as having significant commercial potential

• The Entrepreneur registers his interest in an Innovation on the website and explains his Reason for Interest. He signs a new Innovation-specific Confidentiality Agreement and re-confirms his agreement to the Terms and Conditions by replying to microFunding's email with the words '(project number) AGREED' in the SUBJECT line.

• The Innovator receives a copy of the Entrepreneur’s CV, from which all personal and contact details have been removed, and the Entrepreneur's reason for interest. The Innovator also re-confirms agreement with the Terms and Conditions.

• If both wish to meet, the Entrepreneur is introduced to the Innovator.

• The Innovator and Entrepreneur contact each other and agree whether or not to work together. Each must independently advise microFunding by email if they agree.

• At his own time and reputation risk the Entrepreneur specifies and costs a ‘Proof of Concept’ Project; note the charges for Legal, Audit and Project administration, and the preferential charge out rates of the preferred suppliers. VAT must not be forgotten; all Projects will be VAT registered and net VAT reclaimed, but it is important in the cash flow.

• The ‘Proof of Concept’ Project is written using the microFunding® Project Planner. This is the definitive Project plan, and also acts as the basis for the presentation to Investors.

• The Entrepreneur decides how or through which Investor organisation to raise the funding needed for the 'Proof of Concept' Project.

• For details of Business Angel Network posting fees, see individual Business Angel funding sites.

• The Entrepreneur and Innovator must agree between them who is to pay any 'fundraising' fee.

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For the Funder

• 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.

• The Exchange is designed to provide Investors with reduced risk for greater reward, and is targeted specifically at two main types of Investor:

• Investors who have substantial funds available and who wish to back exciting early stage businesses. By buying into the Proof of Concept Projects, these investors risk very modest sums. They are backing the experience, judgment and skill of the Entrepreneur who has already – at his own risk – put considerable effort into the Project purely because he sees its potential for profit. These Investors will follow their initial Project stage funding with the larger sums needed to make profitable businesses from the successful Projects.

• Investors who have smaller sums available and who are prepared to take the higher risk associated with early stage investing in return for the early and potentially high rewards available from selling their investment rights in successful Projects to Investors with more substantial available capital.

• The investment unit in Proof of Concept Projects is £2500, and all Projects will require funding in multiples of £2500.

• While it is recommended and likely that each project will have a number of different Investors, this does not preclude a single Investor from funding an entire project.

• Investment in Proof of Concept Projects is by means of 'Cancellable Transferable Loans which carry Investment Rights'.

• It is expected that each Project will be funded by several Investors

• Investors register with the Exchange and agree to the Terms and Conditions which include a strict Confidentiality clause.

• Registered Investors may view the Projects and are invited to add comments which will be visible only to the Innovator.

• Investors who are not registered on the Exchange may still see Project opportunities when they are listed on affiliated Funders' websites.

• Interested Investors invest either in Projects preselected through the Exchange or by searching affiliated Funders' websites for attractive Project opportunities. Upon finding such a Project, the Investors follow the Funders' standard procedures to express interest.

• Angels interested in an Innovation or Project Summary will be required to agree to (or re-confirm their agreement of) the Terms and Conditions, and sign a specific Confidentiality Agreement.

• Only after receipt of the above requirements, interested Angels will be introduced to the Innovator or Entrepreneur.

• If enough Investors are interested, sufficient funds are raised and standard subscription agreements are completed by B P Collins solicitors.

• It is highly recommended that the Investor reads the standard subscription documents and understands how the stages of investment are structured.

• Investors do not receive shares in the Project at this stage, but do get priority rights to subscribe to the next stage.

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When the Proof of Concept Project is Funded

• A new Company with 1000* authorised shares of £1.00 each is formed for the Project.

• IPR assigned to the new Company.

• At this stage 300* shares are issued to the Innovator and 25 shares to microFunding Ltd for a nominal sum. No other shares are issued at this time.
  The Entrepreneur opens the Company bank account and registers for VAT; all else is done by BP Collins and / or Peter Upton.

• Innovator Entrepreneur and Investor(s) agree to and sign the standard subscription agreement prepared by B P Collins solicitors for the standard fee of £1,500 + VAT.

• Any variations from the standard terms will be charged extra, and these additional costs will have to be guaranteed.

• The Entrepreneur and microFunding Ltd each nominate one director of the new Company; at this point, Investor(s) are advised that being a company director will prejudice their EIS tax relief. Investors nominate one director after their shares have been issued.

• The interests of the Entrepreneur and of the Investor(s) are guaranteed by the subscription agreement under which microFunding Ltd has a shareholder veto against rule changes.

• The Project is run by the Entrepreneur. He is wholly responsible for the Project specification, delivery, timing and personnel; he is answerable to microFunding Ltd for performance.

• Neither Innovator nor Investor have the right to be directly involved in the Project or subsequent business, and will be involved only if the Entrepreneur at his sole discretion so decides.

• It is possible that the Entrepreneur will require the Innovator to provide at least technical advice and support in the short term.

• The Project is supervised by microFunding.

• microFunding reports to a Panel comprising an Investor nominee, the Entrepreneur and microFunding Ltd whose task is to determine whether or not the Project has succeeded in 'Proving the Concept'

• The Project is audited by Peter Upton, Chartered Accountants.

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If the Panel determine that the Concept is not Proven, then:

• No further shares in the Company are issued and microFunding Ltd transfers its 25 shares back to the Innovator.

• In this way the Innovator owns 100% of both Company and IPR and the Company has no liabilities arising from the Project.

• As it is very possible that an opportunity will come up against a fatal flaw before all funds have been committed, all residual funds in the company are returned to Investors as partial repayment of their 'cancellable' Loans.

• The balance of the 'cancellable Loans' is cancelled.

• The Auditor provides Certificate which Investors may wish to use with HM Revenue.

• If the Concept is Proven, it is probable that it will become commercially profitable. The route to this profit will be either by creating a trading business to exploit it or through Licensing.

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If the Panel determine that the Concept is Proven and a trading business is the optimal route,

• The Proof of Concept report to the Panel provides an excellent basis for the future Business Plan, which is duly completed by the Entrepreneur.

• Business Plan is circulated to the Company's Loan Investors.

• Each Investor individually decides whether or not to take up his right to invest further.

• The Standard terms are that exactly 300 shares in total are available for Investors. Investors can negotiate that all or part of the additional funding be in the form of a loan.

• The additional funds can be sought elsewhere; if this is in the form of shares and involves diluting the existing shareholders, an EGM must be called. Note that the Innovator is, at this stage, still the only major shareholder with a vote.

• If an Investor chooses not to take up his Rights to invest further, the Transferable Loan with its investment rights can be sold on the open market, possibly for a significant gain. Co-Investors have right of first refusal at the market-determined price.

• The loan(s) are repaid and the moneys immediately re-subscribed as part of the additional funding.

• 300* shares are issued to the Investor(s).

• 300* shares are retained for the Entrepreneur's share Options.

• Up to 30 shares are retained in the form of options for introducer fees,

• and up to 45 shares are retained in the form of options for contingencies
  neither the introducers' nor the contingency options may ultimately all be issued.

• if additional funds are in the form of 'new' shares, these are authorised and issued.

• if appropriate and required, EIS is applied for.

• Standard shareholder agreements are completed by B P Collins.

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If the Panel determine that the Concept is Proven and Licensing is the optimal route

• The successful Project will provide an excellent basis for a Business Plan. This is prepared by the Entrepreneur and circulated by the Panel to existing Loan Investors.

• The Panel determines that no further investment is required, or is considered trivial, or is sought by way of conventional Grant or debt.

• The loan(s) are repaid and immediately re-subscribed for equity.

• 150* shares are issued to the Investor(s).

• 150* shares are retained by the Entrepreneur in the form of options.

• Up to 30 shares are retained in the form of options for introducer fees,

• and up to 45 shares are retained in the form of options for contingencies
  neither the introducers' nor the contingency options may ultimately all be issued.

• (if appropriate and required) EIS is applied for.

• Standard shareholder agreements are completed by B P Collins.

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Once the Business is Funded

• The Entrepreneur’s role now starts in earnest.

• The Entrepreneur may elect to use his Share Options to recruit and motivate an excellent team.

• His main reward for succeeding in this process will be when he can sell his shares. This means that the Entrepreneur is very motivated to create a favourable exit in as short a time as is realistically possible for as high a value as possible.

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Dividend Policy

• No dividends will be paid to shareholders until after an exit has been realised.

*Subject to the Standard Subscription Agreement not being varied by mutual agreement.