PWC Teach at #NHSClinEnt PitStop 7 on the Financial Journey of a Startup

Adnan Zaheer and Lynell Peck are both Finance Partners at PWC.


Adnan was the formal financial director at Arena Flowers and Smart Pension. He is experienced in building up small businesses into medium-sized ones. Now both working for PWC.

Lynelle trained as a speech and language therapist but then pivoted to accounting.

Most companies don’t have a great system for fulfilling their legal obligations financially.

Filing late impacts your company in terms of fines. It also impacts your companies credit rating and it can also damage your own personal credit rating.

The monster can grow very big, very fast and sometimes it can get really really ugly.

When should you hire a finance director?


Adnan would advise that you get a finance director earlier on rather than later.

Tony suggested getting an accountant – otherwise, mistakes will be made. You need someone to keep you on the straight and narrow. It will keep you from getting into trouble.

You cannot withdraw dividends unless a company is making a profit. The articles of the company will stipulate what one can and cannot do from the start, however, these have to be within the law.

They would recommend you find someone who you can talk to and build a relationship with over time. However, if you want your company to grow rapidly then you will need a bigger firm.

PWC will be launching an application for SME’s soon.

Randeep Grewal then talked about cash flow from the back of the room. Does your business generate cash flow in a positive way? (ie. the working capital is negative eg. Tesco). He again emphasised the importance of a decent finance director.

Adnan again – SEIS and EIS schemes are enormously helpful in stimulating investment in SME’s in the UK.

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All you need is an assurance certificate. SEIS is up to 150k. EIS is £100k – 5 million. There needs to be UK taxpayer in there to get the tax relief. SEIS – people can even invest in themselves. You have to incorporate within 2 years to get SEIS.

There are also R&D tax credits – particularly web/system development side. If making a loss in that year you can get up to 33.5% money back on your web development. If you make a profit you get 22.5% back. Nifty is PwC’s platform for this.

You have to offer a pension to your employees. (Auto-enrollment). There should also be benefits packages.

Regulatory audits have to be done when you have more than 50 staff. Due diligence, tax health checks, cyber-security health check, restructuring support and risk assurance / corporate governance all need to come in after this.

Finally, people need to tax-plan for their business exit.

Types of Finance Advisor

Book-keepers manage payable accounts at about £10-12/ hour. A management accountant will probably be at least partially qualified and can do some analysis – put it into a reporting form (ie. cash flow forecast.) Accountants will be fully qualified and chartered.

Finance directors come in 3 different types:

  • Accountants – who will do tax and reporting.
  • Strategic Partners – sit on the board and have relationships with external investors.
  • Catalysts – they do the ops and strategy but they also drive the business (normally they are number 2 to the CEO.

My finance partner (PwC app) helps you with all the different levels here. They also have My Lawpartner, My Tax partner.

Raising money


Thanks Anna Vital for this


  1. In the beginning you with incorporate. Then you will raise family and friends money, angel – SEIS or EIS, crowdfunding, startup loans, grants, (innovation grand, r&d tax rebates, Innovation Vouchers, Regional Growth Funds, Mayor of London etc.). Pension-led, incubators and accelerators.
  2. Next around the time of Series A: Business angel investors, family offices/corporate venturing, VC (professional option), Crowdfunding, Business Growth Funds, Loans (Bank, Asset financing, invoice financing, Mezzanine Finance [where the debt turns into equity if it is not paid], Bank Referral Scheme).
  3. Finally in additional rounds or either as the company nears exit: Private equity, VC, Debt Finance (from  both banks and non-banks), Mini-bonds (Loans from small-scale investors), Alternative debt financing.)

Will they invest?

  1. Debt is cheaper than equity – investors will lose interest later on.
  2. Previous success
  3. The investor’s confidence is high (market forces have a massive effect).
  4. Investors will look for the right team, idea and execution and exit plan.

You have to pre-plan – it takes 9 months for the average round to be closed.

Get someone impartial to do the negotiating for you – as the entrepreneur, you are too close to the project to get the best deal.

Paul Gaudin – Accountancy and Numbers #NHSClinEnt

You need to know your numbers. Build the foundations as though you are building a skyscraper (ie. Rock Solid).


Background and statutory obligations

Take directorship responsibilities extremely seriously. If you get it wrong it can be extremely costly. Meet your statutory, fiduciary (legal responsibilities as mandated in company law) and tax obligations. To ensure you are making profits, to plan, to raise capital, to grow and to value the business.


Be careful. In different countries there are different structures that exist. Limited countries must have statutory accounts. Audit thresholds – your company may qualify if it has two of the following: annual turnover more than £6.5 mill, assets more than £3.26 mill and 50 or more employees.

Cash accounting models are probably best for most health-tech businesses. You must submit your accounts to companies house within 9 months of the accounting reference date.

Accounts systems and processes

You need someone who likes bookkeeping and cares about it. They need a clear understanding of the key information required to run the business. They need a system to produce clear information on which to base decisions and to monitor performance. Make sure you get on really well with them. Select a system that grows with you: Don’t leave this it will always come back and bite you.


You need information flow to and from the various disciplines in the business, so that managers all understand their role in delivering the business plan and when their area, or another, is causing imbalance.

You need to create balance. Fix the cracks. Take the team away every 3 months to try and iron out differences and maintain relationships. It’s perfectly normal that people get upset.

Board responsibilities and reporting

The board is there to set the ends. To define what the company is in business for. It is the job of the executive to decide which means those are best achieved. You need to have a good executive structure with rules and codes of conduct. There are key elements of good reporting structures: CIMA reporting structure to boards.

The best board decisions will be driven by customer data. What is going wrong? Then you need to have a quarterly management information review. What are the competitors doing? Is our revenue strategy working? How are the customers feeling?

Then use the data to drive the business plan.


Directors must manage risk – do you have a disaster recovery plan? You must have one! You must have the correct insurance – PL, PI, EL, Life, CI, Medical. Do not store data near electricity sources.

You should have a full shareholders agreement tied in to your articles. Have a plan for critical illness. Workplace pension scheme if you employee people.

Tight purchase and sales contracts which protect you from currency fluctuations an a range of potential issues. You must comply with the data protection legislation in all your local markets.

Business Models

This is simply ‘how you plan to make money’

Synchronise your main client and distributor, discounting, freemium, up-sell, cross-sell etc.


Deploy a responsive and multi-channel strategy with different pricing models delivered against a common RRP, develop a loyal test consumer group to give immediate responses to product, innovation and pricing. Partner with a market leader to generate revenues to get the business started.

The 1 page business strategy. OGSM Mark Van Eck.

Banking and Investor Relations


This is a really important relationship – they can give you connections and discounts in all different sectors and industries. When you go international you need really strong investor relationships.

For the lender they are interested in balance sheet.

Secured lending or asset backed. Factoring.

Investors – runway – income and available working capital, proof of concept. NPV (Net Present Value).


Financial Modelling

Build a spreadsheet. Sales A, Cost of Sales – B. D2c, distributor, international, licence, franchise. Production cost, sales and marketing, human resources, operating profit. share capital and liquidity ratios.


Balance Sheet

Fixed Assets, Liquid Assets, Share Capital, Liquidity Ratios – a lender will look at all these. Current, Acid, Cash ratio’s.

EBITDA – 3 to 15 times multiple of this. Net profit + Interest + Taxes + Depreciation + Amortisation.  You need STRONG legal advice here.

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Watch out for ‘earn-outs’ – check for anything like this in a contract.

Be careful when being approached for your business to be bought out.

Great accounts and Great due diligence are KEY! When you get someone ready to buy or invest YOU need to be ready as well!

If you are an entrepreneur now you are probably ‘disintermediating’ a process. The data is all connecting. The data is coming into the hands of the patients.

Investing and Tax options

SEIS (seed enterprise investment scheme) and EIS (enterprise investment scheme) are tax incentives for those investors who are willing to take a risk on smaller/riskier trading companies.

These tax breaks are to try and plug the gap for smaller enterprises.


SEIS means an early stage company can raise up to £150,000. EIS is available to larger/more advanced companies and can follow and SEIS investment.

There are detailed qualifying criteria. The tax breaks are very good particularly for the seed stage investments but they HAVE to be in exchange for equity.

Deductions from income tax equal to 50% deduction from their income tax bill. They have to be for shares. Annual investment limit is £100,000. For EIS it is up to a million at 30%.

If the shares have been held for over 3 years then capital gains tax does not apply. If they make a loss that loss can be used to set against the income tax bill.

SEIS: The only capital at risk from £100,000 is actually £17,500


Under EIS: £38,500 from the same size of investment.

They have to be invested in new businesses. SEIS is capped at £150,000 total or £100,000 a year. For EIS the cap is £1 million per investor up to £5 million a year. Total cap is £13 million. Excluded activities include: property development, care homes, hotels, and any company that does not own (home grown) the greater part of the value of the IP. Patents/Trademarks/Software all need to be in the company from an early stage in order to protect against this.

It is hard for founders to get these tax breaks in their own companies. This is because if they own more than 30% of the company they can’t be considered. The founder therefore would have to accept going down to a 30% shareholding which is anathema to most founders.


EMI (Equity management incentive) options. These are share options only open to employees of the company. There are maximum limits. The company has be independent; Growth assets of no more than £30 million and less than 250 employees on a less than full time equivalent basis; You also have to have a qualifying trade and the business has to have a qualifying establishment (country).

You need a written agreement, HMRC registration, employee declaration, notification of option grant within 92 days, valuation.


EMI is popular because it has some significant tax advantages – you pay no income tax on the grant.

Automatic entrepreneurs relief gets you 10% tax relief if there is >1 year between the sale and acquisition of the shares.

Restricted shares and growth shares are other options. ESS is another option (Employee shareholder status). These shares are given in exchange for giving up certain statutory employment rights. They are tax free up to £50k on acquisition. However, you do pay income tax on up to £2k.

When the value of the shares is low (ie. seed stage) these kinds of shares can be very valuable.

However, EMI is the most tax efficient if you qualify for it. In the other contexts one has to balance up the risks and benefits of various different options.