Venture Capital and Start-up Financing Presentation.pdf · Flipcart Paytm Ola Grab Go-Jek B i l l i o n Source: World Bank, TechCrunch. ELECTRA PRIVATE EQUITY FUND @ERG -30 January

Venture Capital and Start-up Financing

@ERG - 30 January 2018

Wali-ul-Maroof Matin

Private Equity Fund:For high growth non-listed portfolio companies with at least 2 years ofoperational history

Venture Capital Fund:

NO LOAN

Types of Alternative Investment Funds


Venture Capital Fund:For Start-ups with less than 2 years of operational history or GreenFields or Emerging Early-stage undertakings

Impact Fund: For projects with the intention to generate measurable and beneficialsocial or environmental impact in addition to financial returns.

The paradigm shift

1st Industrial Revolution

• Steam

2nd Industrial Revolution

• Electricity

3rd Industrial Revolution

• Computer

4th Industrial Revolution

• Internet of


• Steam Engine

• Rail Road

• Electricity

• Assembly line

• Computer

• Semi Conductor

• Main frame

• PCs

• Internet

• Internet of Things (IoT)

• Artificial Intelligence

• Big Data

1760-1840 Late 19th-early 20th

Century1960s-1990s NOW

Value

Venture Capital

Private Equity

3rd Party sell

Share Buyback

IPO


ExpansionFully Operational

First commercial Deals

Product Development

Business Planning

Concept/ Research

Ready for IPO

Angel Investor

Seed Financing

Capital

Stages

How does Venture Capital work?


2 Deal Sourcing • Banks, NBFIs and HNWI

5 Exit• IPO, 3rd Party

sale, Share buyback Trusts (Act 1882).

Registration (Act 1908).

Fund

1 Fund Manager Initiates

6 Distribution• Investors

Fund Life-Cycle


• Banks, NBFIs and HNWI

3 Investment in portfolio companies

4 Value addition• Business process

engineering• Financial balancing• Governance establishment

Registration (Act 1908).Not listed.

Specific Tenure.

• Corporate Governance

• Mentoring and Grooming

Money +


• Technology Certification

• Promotion and Marketing

100% equity

Inclusion of Alternative Investments leads to a more

Efficient Portfolio.

Value Addition vis-à-vis Risk

85% Equity 15% Alternative

85% bonds, 15% Alternatives


Higher Return for the same

amount of risk

100% bonds

Venture Capital In Asia

$1,709

$297

$932

$0

$500

$1,000

$1,500

$2,000

Bill

ion

GDP (2016)

VC Funding Raised By Companies

$7.30

$6.00

$7.00

$8.00


India Singapore Indonesia

VC Funding to GDP (%)

0.43%

0.08%0.18%

1.38%

0.19%

0.00%

0.50%

1.00%

1.50%

Flipcart Paytm Ola Grab Go-Jek

$1.40

$3

$4.10

$1.80

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

Flipcart Paytm Ola Grab Go-Jek

Bill

ion

Source: World Bank, TechCrunch

ELECTRA PRIVATE EQUITY FUND


Electra Private Equity PLC, Reports and Accounts 2014

One year Return 39.7%

Who will invest?

Institutions High Net Worth IndividualsInstitutions

Of

Home and abroad

High Net Worth Individuals

Exit Strategy

Always start at the end before you begin.

Exit Ways

•Initial Public Offering (IPO)• Qualified Investors'’ Offer by Small Capital Companies 2016

•Strategic Sale


•Strategic Sale

• Merger & Acquisition

IPOs in Bangladesh

11,634

9,894 10,775

1617

14

1110

10

12

14

16

18

8,000

10,000

12,000

14,000

No

. of

com

pan

ies

BD

T M

n


7,008

3,893

0

2

4

6

8

-

2,000

4,000

6,000

2013 2014 2015 2016 2017

No

. of

com

pan

ies

BD

T M

n

Total fund raised through IPO (Left) Number of IPOs (Right)

51,400 crore, 8%

Performing vs non-performing advances


Source: FSD, Bangladesh Bank

584,600 crore, 92%

DSE Index 10 years: movement in our own market

BDT 426,132 CroreMarket Cap:

M. Cap to GDP:

21.5%

27 November 2017

Qualified Investors’ Offer by Small Companies Rules 2016

• Smaller than 300 million

• No track record needed

• Minimum paid up capital : 50 million Taka


• Minimum paid up capital : 50 million Taka

• Minimum Fund rising: 50 million

• Book Building and Fixed Price, both allowed

• Market Maker Required !!

10 YEARSExchange Rate

A risk of receiving foreign currency for long term VCs

@ERG - 30 January 201827 November 2017

• Amount of Investment

• % of Stake

Keys Issues in Start-up Investment


• Valuation method• DCF• Relative Valuation• VC Method

DCF Method


Relative Valuation Methods

• Earnings Multiples• Price/Earnings (PE) ratio

• Value/EBIT

• Value/EBIDTA

• Value/Cashflow


• Value/Cashflow

• Enterprise Value/EBIDTA

• Book Multiples• Price/Book Value of Equity Per Share

• Revenues• Price/Sales Per Share

• Enterprise Value/Sales Per Share

VC Method

Amount of InvestmentPost Money Valuation =

% of Stake


Pre Money Valuation = Post Money Valuation - Investment

Foreign Investors

Value before

IFCBill & Melinda Gates Foundation

Business Mobile Payment System Pharmaceuticals

Brummers and Partners

Reality


Value before Investment

Return to Investors

BDT 41.4 Crore

Value after investment

BDT 2,570.2 Crore (2015)

62x

BDT 66.1 Crore

BDT 622.5 Crore (2016)

9.4x

Source: Brac EPL research report (2015), Daily Ittefaq, DSE Monthly review, Popular Pharmaceuticals Prospectus (2016) and MCL research

Investor: SEEK (Australia)

Investment: BDT 385 mn

Investor: Y Combinator

Investment: BDT 9.6 mn

Investor: Money in Motion, Brac Bank

Investment: BDT 480

Start-ups in Bangladesh



Exchange: 25% ownership for a valuation of BDT 1.5 bn (by SEEK)

Others: 90% of current market share & recent profit stood at BDT 69 mn

Investment: BDT 9.6 mn

Valuation: around BDT 700 million with a revenue or around BDT 350 million


Exchange: with 36.5% ownership (MiM) for a valuation of BDT 24.8 bn


Documents

Venture Capital and Start-up Financing Presentation.pdf · Flipcart Paytm Ola Grab Go-Jek B i l l i o n Source: World Bank, TechCrunch. ELECTRA PRIVATE EQUITY FUND @ERG -30 January