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  • El Nido  Eco-tourism VCs
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    1. 1. Venture Capital for SMEs Joel Santos President Entrepreneurs School of Asia
    2. 2. What do entrepreneurs usually need to grow the business?
    3. 3. Grow from small to medium or from medium to a large enterprise CAPITAL
    4. 4. Options to raise Capital: <ul><li>Banks </li></ul><ul><li>Angel funding </li></ul><ul><li>Venture capital funding </li></ul>
    5. 5. What are Angel Funds and Venture Capital Funds? <ul><li>Capital provided by a third-party investor for financing of new or growing or struggling enterprise without the need for collateral </li></ul><ul><li>Process of reducing perceived risk to the lowest possible level. </li></ul><ul><li>Results in a partnership with an outsider </li></ul>
    6. 6. Venture Capital <ul><li>Ideal for enterprises that are considered “risky” for the bank loans </li></ul><ul><li>VCs are selective in investments </li></ul><ul><li>Rule of thumb, 1 in 100 opportunities </li></ul><ul><li>Usually in fast-growing, high-potential industries </li></ul>
    7. 7. Venture Capital Stages
    8. 8. Early Stage: Php 1M- Php 10M <ul><li>Seed Capital : Primarily for product development and market research. </li></ul><ul><li>Start up Capital : Company has complete business plan, initial marketing begins. </li></ul><ul><li>Company is ready for business , but no commercial sales yet. </li></ul>
    9. 9. Expansion Financing: Php 10M – Php 100M <ul><li>First Stage : Funds for full scale manufacturing and sales. </li></ul><ul><li>Second Stage : Essential working capital for growing receivables, inventories, and payables. </li></ul><ul><li>Third Stage Funds for major expansion, new products. </li></ul>
    10. 10. How does it work? <ul><li>VC evaluates investment </li></ul><ul><li>VC invests ( stock equity or a combination of equity and debt obligation ) </li></ul><ul><li>VC hope to be able to sell their equity in 4 to 6 years, at or after an exit event: harvesting. </li></ul><ul><li>Through a payback formula, initial public stock offering (IPO), or plans for a merger/buyout by a major company </li></ul>
    11. 11. 6 Questions of VCs <ul><li>How much can I make? </li></ul><ul><li>How much can I lose? </li></ul><ul><li>Who says this will work? </li></ul><ul><li>Who else is in the deal? </li></ul><ul><li>How big is the market? </li></ul><ul><li>How do I get my money out and when? </li></ul>
    12. 12. What VCs/ investors look for in general <ul><li>Business Plan </li></ul><ul><li>Good Management Team </li></ul><ul><li>Track Record </li></ul><ul><li>Good Cash flow </li></ul><ul><li>Financial target </li></ul>
    13. 13. A Good Business Plan <ul><li>Should address the concerns of an investor: </li></ul><ul><ul><li>Upside potential </li></ul></ul><ul><ul><li>Downside risk </li></ul></ul><ul><ul><li>Potential dilution </li></ul></ul><ul><ul><li>Liquidity issues </li></ul></ul><ul><ul><ul><li>payback formula, initial public stock offering (IPO), or plans for a merger/buyout by a major company. </li></ul></ul></ul>
    14. 14. Management Factors <ul><li>Can the current management maintain a sustained effort? </li></ul><ul><li>Is the entrepreneur a leader? </li></ul><ul><li>Does the team have extensive Market familiarity? </li></ul><ul><li>How much ROI/ROE can I get in 5 to 7 years? </li></ul>
    15. 15. Every VC has his own criteria for investing
    16. 16. My criteria as a Venture Capitalist for SMEs
    17. 17. High Growth Led by Passionate Entrepreneurs Minimal investment for big impact Why invest in SMEs? SMEs: Engine for Country’s growth
    18. 18. FIC-Southeast Asia FUND DESCRIPTION <ul><li>$ 4M (Php200M) from Canada </li></ul><ul><li>Investments for growth with </li></ul><ul><li>Php10M-Php20M per company </li></ul><ul><li>5-7 year time frame </li></ul>
    19. 19. Tourism
    20. 20. BPOs
    21. 21. What do we want in return? <ul><li>30% ROE per annum </li></ul><ul><li>Seat in the executive board </li></ul><ul><li>Option to appoint managers in critical areas </li></ul><ul><li>Veto power in major decisions </li></ul><ul><li>Exit in 4-7years </li></ul>
    22. 22. As a Venture Capitalists we would want to be partners in growing the business. <ul><li>Strategic Management </li></ul><ul><li>Expertise in Industries </li></ul><ul><li>“ Door opener” </li></ul>
    23. 23. Examples of Venture Capitalist focusing on SMEs
    24. 24. Iron Capital <ul><li>Headed by Nori Poblador </li></ul><ul><li>Company targets are BPO, Consumer Goods, Education, Tourism, Healthcare </li></ul><ul><li>Investment size per company: </li></ul><ul><li>Php 5M - Php20M </li></ul><ul><li>Contact details: </li></ul><ul><li>[email_address] </li></ul>
    25. 25. Enviroventures <ul><li>Headed by Marietta Fondevilla </li></ul><ul><li>Company targets are environment related products and services </li></ul><ul><li>Investment size per company: </li></ul><ul><li>Php 10M – Php15M </li></ul><ul><li>Contact details: </li></ul><ul><li> </li></ul>
    26. 26. Looking for a venue to meet Angel Investors?
    27. 27. <ul><li>Facilitated by Ed Isidro </li></ul><ul><li>Monthly Forum to meet angel investors </li></ul><ul><li>6 projects are presented every forum </li></ul><ul><li>7am every last Thursday of the Month in AIM </li></ul><ul><li>Next forum scheduled for August 31’06 </li></ul><ul><li> </li></ul>Phil. Venture Capitalist Investment Inc. (PVCI) Forum
    28. 28. For investment proposals: <ul><li>[email_address] </li></ul><ul><li>Entrepreneurs School of Asia </li></ul><ul><li> </li></ul>