Civitanova 5 06 2014(final) - Marche Innovazione · Fund Management Fund Management Angel Fund is the co-investment fund for Business Angels Clubs and Networks.Ithas been created

Workshop“How to attract investors”

Andrea Di AnselmoMETA Group

Civitanova Marche June the 5th

What to understand about investors

What to know for presenting a business idea

Presentation Index

Civitanova M. - 05/06/2014

META GroupOur mission

Knowledge Marketto

Shaping Policies Entrepreneurial Regions Investing in start-ups


Entrepreneurial RegionsEntrepreneurship Development

Shaping PoliciesConsulting Investing in start-ups

Fund Management

Feasibility studies of intervention tools such as science parks, accelerators and early-stage

financing mechanisms;Design and test of novel support

tools to boost competitiveness innovation and entrepreneurship

at regional level.

Technical assistance in the implementation of programmes and projects in the areas of research & innovation, entrepreneurship and finance.

Design of Strategies and Action plans to foster innovation and entrepreneurship including mapping the process of turning knowledge into market solutions, policy, benchmarking and accessing practices, implementation road mapping, Smart Specialisation Strategies.

Consulting


Entrepreneurial RegionsEntrepreneurship

Development

Glo

beIn

nova

tion

Plat

form

Training

Innovation ecosystem activation through actual

challenges based approaches. Solutions driven

by entrepreneurship and engaging regional vs. global

players.Developing creativity and entrepreneurship through a series of internationally recognised formats.

Entrepreneurship Development


Entrepreneurial RegionsEntrepreneurship

Development Investing in start-ups

Fund Management

Organization of the 2015 Global Entrepreneurship Conference in Milan

European wide partnership with Kauffman FastTrac® to deliver NewVenture™, TechVenture™ and GrowthVenture™ entrepreneurship courses;

Worldwide delivery of Investor Readiness format AyR™ for high growth companies;

Supporting European scientists in exploiting their results through the Research Helicopter™;

Leading the development of Creativity Camp™ in Europe.

Global Entrepreneurship

WeekKauffman Foundation European Business

NetworkCreativity Camp

International Association of Science

Parks

Entrepreneurship Development Facts and figures


Investing in start-upsFund Management

Fund Management

Angel Fund is the co-investment fund forBusiness Angels Clubs and Networks. It hasbeen created on the basis of the experienceand results reached in the USA, theNetherlands, France and the UnitedKingdom.

Science Fund represents the missing linkbetween academia and industry, providingthe much-needed proof of concept financeand business coaching to academicresearchers and would be entrepreneurs.

Ingenium is an early stage risk capital co-investment fund typically built arounda Region of a few million inhabitants focusing on Seed and Start-up but alsoconsidering expansion phase; Target: companies with high value of intangibles,knowledge intensive companies with high growth potential; Regional coherenceof sector of activity.

Spark Fund makes it possible for science parks to access venture capital bycreating a partnership among a number of them thus reaching the critical massneeded for a fund to be financially successful


Investing in start-upsFund Management

Business Angels Europe

Italian Business Angels Network Association

Ass. Italiana del Private Equity e Venture Capital

8 seed capital funds (approximately 100M EUR) currently under management across Europe

Leveraging on the relationship with international informal investors (members of the BoD of IBAN, BAE and members of AIFI Venture Capital Committee)

Unique expertise in implementing public / private seed vehicles (co-investment mechanism, compliance with state-aid rules, the pari passu principle, etc.)

Fund ManagementFacts and figures


Coaching programme on how toaccess early stages investors andbusiness angelsInvestor readiness train thetrainers workshops on how tosupport entrepreneurs inaccessing risk capital funds andbusiness angels.Ready to invest programme forbusiness angels

Consulting Entrepreneurship Development Fund Management

Feasibility studies of early-stage financing mechanisms,

accelerators and incubators;Design and test of novel tools to

support competitiveness, innovation and entrepreneurship.

Angel Fund is the Co-investment instrument forBusiness Angels Clubs andNetworks. It has beendesigned capitalising theexperience gained in the USA,Netherlands, France andUnited Kingdom.

Ingenium is a risk capital co-investment fund typically built around aRegion of a few million inhabitants focused on Seed and Start-upstages but also considering expansion, targeting companies withhigh value of intangibles and high growth potential.

Activities with Business Angels


What to understand about investors


Main contents

o The early stage investing market

o The investment phases and actors

o Differences among Early stage and VCs


The early stage investing market


Financial Market segmentation

The enterprise finance market can be divided in 4 segments:

O I Initial and unorthodox sources of funding; O II Equity;O III Debt finance;O IV Combination of equity and debtO V Public Finance


O I INITIAL & UNORTHODOX SOURCES OF FUNDINGS:

O entrepreneurs savings;O profit reinvestments;O friends and family savings;O second mortgage;O personal credit cards;O customer advance;O delay of payments;O premises sharing;O employing relatives at below

market salaries.O II EQUITY:

O seed and pre-seed capital;O business angels;O venture capital;O corporate ventures;O IPO and post IPO.

O III DEBT FINANCE:O bank credits: short or long term

loan, unsecured or micro loans;O commercial debt;O public/semi-public loans;O bonds;O factoring – leasing – franchising;

O IV COMBINATION OF EQUITY AND DEBT : MEZZANINE

O V PUBLIC FINANCE:O grants;O reimbursable advances;O guarantees.


The investment phases and actors


Knowledge intensive companies need (a lot of)

money!

Different stages of business idea development require different source of

funding!


Early stage risk finance (and more)

Early Stage Financing

Pre-seed up to0,5 $ Mln Seed up to

1-2 $ Mln

Start up5/10 $ Mln

Second Round10/12 $ Mln

Expansion Capital10/50 $ Mln

Turnover

Cumulative Cash Flow

Business Angels

Venture Capital

Product definitionNo turnover

Product Completion

Initial commercial feedback

Venture Capital

Product Consolidation

Structuring of commercial channels

Strategic Partnerships

Continuous ideas/concepts/products innovationConsolidation of the organisation

Partnerships and acquisitions

Proof of concept funds

Seed funds


FINANCIAL CYCLE (and more)

Expansion CapitalSecond round

Later stage (Venture Capitalist)

Start upSeedPree-Seed

Early stage (Proof of concept funds, BAs, Seed Funds, Venture Capitalist)

Scope

Company life-cycle

Identification of Market potential

Pre-businessplan

PrototypingAnd product development

Businessplan

Commercial-scale manuf.

And sales

Company established but not invoicing

Structuring commercial channels

Building up turnover

Continuous ideas/concepts/products innovation

Making Profits


Differences between

Early Stages and VC investors


…All money is not the same!!!

(Christian Saublen, Eurada)


Different forms of finance do not have the same aims.

Motivations and criteria of funding parties vary according to

i) the life cycle of the business idea andii) the level of risk linked to it.

This explains the Anglo-Saxon expression « All money is not the same ».


Each financial partner has its own expectationand

Its own requirements and evaluation criteria

(see paper “All money is not the same” EURADA pg 16)

Need to Know


Financial tools (early stage financing) for knowledge based ventures

o Proof of concept funds

o Business Angels

o Seed funds


Early stage investors – evaluation approach

Proof of concept

O Innovativeness (+)O IPR – Valorisation of research resultsO Entrepreneurial spirit


Business Angels(informal investors and Spin-off corporate venturing)

O Atmosphere of trust between individuals andpositive feeling, confidence (+)

O Possibility of hands on interventionO Credible business plan in the eyes of the Business

AngelO Availability of exit routeO Return on investment (capital gain)



Seed capital fund

O Team (+)O Clear, defendable Business modelO Intellectual capitalO Growth potential (High)O Availability of exit routeO Return on investment (capital gain)



Venture Capitalist

o A young, small venture, still needing moneyo A well run-in teamo Fast growing marketso Scalable productso Client list & track record (+)o Return on investment (capital gain)o Minority shareholding position

Private equity – evaluation approach


Buy-out

o Consolidated companies with a well defined portfolio of clients and products

o Assets (+)o Well known sectorso ROI: 2-3Xo Control position

Mainly debt capital

Private equity – evaluation approach


What to know to present a business idea to investors


What we need to understand for successfully presenting a business ideaWhat early stage investors look at(requirements for investment ready businesses)

How to pitchTips for successfully presenting the business idea to risk capital investors


O You need to be an entrepreneurO You need to have a business not an inventionO You need to have a core teamO You need to have a clear view of financial resources

needed

Make money is not the only motivation but ishow shareholders measure success

Key elements seed investors look at

Need to Know


Issues of concern for an investor(to be well understood by investor ready entrepreneurs)

O Want their money backO Want more (much more) than they putO Want to know whenO Want to measure the opportunity/risk

Need to Know


5 keys to succeedO TeamO TeamO TeamO ProductO Market

A poor team ruins a great project

Need to Know


The team(A manager is not an entrepreneur)

RequirementsO Ability to deliverO AmbitionsO ExpectationsO Serial entrepreneurs

(If “new” have the “proper board”)

Need to Know


TIPS

O Have a simple and transparent structure(this is why universities can represent a problem, they are never simple and transparent, better a license agreement)

O Have milestones


Common “weaknesses”

O Too little market ambition(no willingness to go global from day 1)

O People think too small(be ambitious but do it by milestones)

O A Business is different from an R&D project


VCs invest in 1% of what they see

O 20% results in a total lossO 20% succeedO 60% survive

Need to Know


Main evaluation criteria of fund managers

Need to Know


o Formal screening criteria

o Strategic screening criteria

o Qualitative screening criteria

The Fund screening criteria

Need to Know


Formal screening criteriasome examples

o Location….

o Sector

o Age of the company

o Level of investment


Strategic screening criteriasome examples

o presence of an intellectual capital management strategy (IPR ….)

o presence of a market ready product/ service

o a good percentage of IRR

Need to Know


Qualitative screening criteriasome examples

o Overall Clarity and coherence of the Business plan

o presence of all the main section of the business plan

o coherence in between the sections;o the way each section is presented (clarity)


The main elements of the Business Plan are:

O Business idea and Business model

O Company

O Product/service

O Market, customers, competitors

O Company strategy

O Organization and management

O Financial forecast

Need to Know


1) Is the team of sufficient breadth, balance and quality to make its ideas happen? 2) What roles will the team members play in the venture? 3) Are the team members fully devoted to the venture and their roles in the group? 4) Will the ego of the founder(s) get in the way of success?5) Is the team focused on its target market? 6) How long will it take from the current stage of development to bring this to market? 7) Can this venture achieve a leadership position in its market? 8) What is the business model? 9) Is the business defensible from competitors? 10) Is the business opportunity as presented both highly attractive and clearly realistic? 11) What is the amount of up-front capital investment required?12) Does the team have a clear plan for using the investment money received? 13) What is the expected time and amount of pay-off to investors? 14) Why is this business going to be around and a real world winner in 5 years?

Screening Questions

Nice to Know


How to pitch

Tips for successfully presenting the business idea to risk capital investors


PITCHING:to clearly and convincing present your businessproposition in a fewminutes


A good pitch is

As important asthe technology or

the solution you are proposing

Why is it so difficult?


Entrepreneur:

O Loves his business idea (“The best business ideas in the world”)

O Knows very well the productbut not so much investor expectations

O Aims at developing asuccessful product

O «There are not enough investors willing to finance businesses”»

Investor:

O Looks at the business idea as“a project”

O Does not care about the product/technology but about doing a profitable investment!

O Wants to get the a 10x exit

O «There are not enough“investment ready projects”»

Entrepreneurs and investors have differentpoints of view and interests


a) Message & Structureb) Visual story

c) Delivery


MESSAGE

What did we learn at the elementary school?


A good “composition” (presentation) contains:

O IntroductionO Key contentO Conclusions


1) Why are you pitching

What is your objective?

Message - Get Prepared


2) Who is the audience?

– Who are they ?– Why are they here?– What do they look for

(screening criteria)?– How can you best “reach”

them?



3) What are you looking for?

– how much– to do what



10 slides (10 minutes pitch) containing all is needed to :

– Let a third person understand the business– (no science: what, not why)

– Explain the business model and exit strategy

– Convince the audience that what is offered is what is asked for

PITCHING Structure


PITCHING Structure

Introduction to the business opportunityAchievement to date

TeamProduct / Service

TargetMarketBusiness Model

Economic and Financial objectivesInvestment plan

Why investing in us?

STRUCTURE - Need to Know


Visual storyDelivery


The first 30 seconds are crucial you have to make an impact by presenting

O What problem you are going to solve

O Your value proposition (how does you solve such problem?)

O Why you are the right team to achieve the result

O Why your company is the best deal for investors

Need to Know


Investors want

O PassionO PerseveranceO “Profits”

O Ability to deliverO Ambitions


O An effective communication is based on:

7% What you say (Content)38% How do you say it (Style+Voice+Attitude)55% Body Language

Remember…


Key elements

O VoiceO Body languageO Eye touchO AttitudeO PresenceO Use of the space


O Avoid slow start (first 30 seconds are crucial)

O Say only key things

O Do not speak too fast

O Use short clear sentences

O Use pauses

O Talk to the audience

O Respect time

Need to Know


Exercise!!!


An example of pitch

http://www.youtube.com/watch?v=kzcQtXA5Gc8

http://www.youtube.com/watch?v=MhKxPn_g_40


DISCLAMER: This document has been produced with the financial assistance of the IPA Adriatic Cross-Border CooperationProgramme. The contents of this document are the sole responsibility of META Group Company, service provider of MarcheRegione, and can under no circumstances be regarded as reflecting the position of the IPA Adriatic Cross-Border CooperationProgramme Authorities.

Output identification code: LP_supporting_guide_how-to-pitch_WP6.3

City of Šibenik

Documents

Civitanova 5 06 2014(final) - Marche Innovazione · Fund Management Fund Management Angel Fund is the co-investment fund for Business Angels Clubs and Networks.Ithas been created