Bridging the Valley of Death

- Industrial Technologies 2012by Ulla Brockenhuus-Schack 19.6.12

Introduction

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SEED Capital in brief

• The largest early stage venture fund in Denmark.– Government pre-seed funding €8-9 million / year – Traditional venture funds

• € 240 million (DKK 1,8b) under management• 70 portfolio companies• 11 positive exits and 1 IPO• Attracted more than 320 million € (DKK 2,4b) to

portfolio companies over the last 7 years• Team of 20 of which 14 investment professionals with

relevant domain knowledge

The Challenge: Crossing the valley of death

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Investment landscapeTechnology

creation

Market-Focused Business and Product

developmentCommercialization

Governement & pre-seed

Seed & Business angels

Venture Capital StockTypical

investors

Time

Cash flow

Public Sector Private Sector

Sales

Valley of Death

Innovation Incubators: Goverment funded pre-seed investors

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Innovation Incubators in Denmark

• 6 Innovation Incubators have annual budget of €28m

• Purpose: Help universities and innovative entrepreneurs to select and commercialize high potential inventions and to assist them to grow and get further funded

• Invest up to € 800.000 in a single company applying traditional ‘venture capital methods’

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Applied Science

Startups

Innovation Incubator funding

Additional Capital

Growth

Additional capital

Taxes

New

Science

Innovation IncubatorCircle of life

Government funds to Innovations Incubator

is repaid 10 times

The SEED Capital business model - in cooperation with DTU Symbion Innovation A/S

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We work from research to venture

DTU Symbion Innovation

Government financed pre-seed funding

Yearly investment budget of € 7m (+50 mDKK)

Up to € 0,8m (6 mDKK) per project

Dedicated team of 10 Investment Managers

SEED Capital

6 partners responsible for DSI and 4 Venture Funds

Pre-emptive investment rights from DSI

Up to € 9m (68 mDKK) per project

Research Pre-seed Venture Capital

ResearchDTURISØKU / KU-lifeITUAAUSDUAUHSGTS: i.e. Delta & Bioneer

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to test team, IPR, technology development, market etc. and secures time to establish syndication for VC funding

A unique selection process

DTU Symbion Innovation

Deal Sourcing

Business Due

DiligenceReview

Deal Sourcing

Business Due Diligence

Review

SEED Investment

SEED Capital

SEED(option)

IM investment

6-18 month “live” Due Diligence

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How we select investments

500 business proposals

100+ meetings

12-15 DTU Symbion Innovation investments

3-4 SEED Capital investments

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Investment sizes

DTU Symbion Innovation

Primary investm

ent

DTU Symbion Innovation

Secondary investment

SEED Capital

Time

72%

40%

0,5 mio. €

0,3 mio. €

0,8 – 9 mio. €Public funding

Private funding

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Closely linked to Denmarks largest Incubator - Accelerace

14** - Survey from 2010* - inkl. Gazellegrowth, Bio, Spin-

off

155 companies emerged from

Accelerace

97% are still active

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Partners

OperationalEntrepreneurialExecutiveInvestmentConsultingTransactionBoard Private Equity

Experience

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We are never better than our organization• Investment team

– One location– Domain knowledge– Clear goals and incentives– Investments management procedures well

established – 12 module VC training program developed in-house

+ EVCA courses

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Strong international syndication

• Abbott US• Accel LN• Aravis CH• Astellas US/JA• BioFund FI• Captricorn B• Coloplast• Conduit UK• DeNovo US• EGJ DK• Faurecia F• Ferd N

• InnFond• Inventages CH• IVS/Northcap• Lundbeck Foundation• Merck Serono CH• Navistar US• Nestle CH• Nordea Foundation• Northzone• Novartis Venture • Novo SEED• Novo Ventures DK

• Pferd N• REW DE• Seventure FR• Solvay B• Sunstone• TMP US• Vecata• Vækstfonden• YasudaJP

• Business angels (50+)

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Case:

• Technology removing NOx from diesel emission. • Building on legislature now being passed in US

and EU on NOx emission control.

Technological foundation developed at DTU

Innovation Incubator investment

SEED Capital Investment

2010Partnership with Navistar

2011Partnership with Faurecia

2004

Results

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DKK 2.4 bn Private Funding (9x)

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009 2010 2011

DK

Km

Danish VC's International investors Founder team

Business angels Other (Venture debt, NRE ao) SEED Capital

Symbion Capital Innovationsmiljø (IM)

7%2%

25%

32%

8%

15%

0%11%

Total 2005 - 2011(2.400 mDKK)

Note: Exluding funding to Symbion Capital portfolio worth 1 b DKK (primarily Evolva)

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Documented strong performance

• DSI very strong performance compared to other Innovation Incubators

• Outperforms other Innovation incubators on capital attracted by a factor 9

• Shows highest return on investment

• From 2007 to 2010– Portfolio turnover grew from € 110.000 to € 400.000 – Portfolio employees grew from 3 to 7

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Significant value has been built in notorious difficult segmentJan 2005- Juni 2011(mDKK)

Antal Cost Proceed /fair value

Gev./Tab

Exits:

Sold Co’s w multipel >1x 11* 16 79 +63

Sold Co’s w multipel 0,5x-1x 4 8 6 -2

Sold / closed Co’s w multiple <0,5x 73 99 5 -94

88 123 90 -33

Active Co’s:

Co’s with Funding from SEED 16 48 89 +41

Other active Co’s 49 104 104 0

65 151 192 +41

Total 153 274 282 +8

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Contact details

• Ulla Brockenhuus-Scahck• Managing Partner• SEED Capital Denmark• Diplomvej 381• DK-2800 Kgs. Lyngby

• T: (+45) 2082 8374• ubs@seedcapital.dk

Thank You