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Tom Nastas (Thomas D. Nastas) presentation (Raising International Capital) at the 3rd Moscow Venture Forum, Moscow, 17/18 June 2009

Tom Nastas (Thomas D. Nastas) presentation (Raising International Capital) at the 3rd Moscow Venture Forum, Moscow, 17/18 June 2009

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IVI (Tom Nastas) Presentation At 3rd Moscow Venture Fair Presentation Transcript

  • 1. Show Me the $! How Russian SMEs can Raise Foreign Capital 3rd Moscow Venture Forum: Moscow Russia, 17/18 June 2009 Innovative Ventures Inc. Haslett, MI. USA Moscow, Russia Thomas Nastas Founder Tom@IVIpe.com www.IVIpe.com 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 2. Today’s Message Part I What’s Happening in the Market, VC/PE? The Good & the Bad Part II Russian SMEs: Raise Foreign Capital! Clarify Motivation & Your Reasons Why Improve Your Chances of Success Specific Actions to Take 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 3. IVI History-Direct Invest & Advisory Canada (1992) Europe (1992/94) C$100MM-Canadian Bus. Dev. Bank TP Fund, $10MM- EU, $-Financière St Dominique, Paris USA (1986) Russia (1997) The Michigan Product Dev. Fund ($5MM) HP LP, $30MM-EBRD & USAID Africa (1993/96) E. Africa $5MM, Sub- Saharan, $200MM, South Africa,$30MM, IFC/WB 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 4. About Me • Founder of IVI,1986. In Russia since 1997 • Moscow Bank, Member, Board of Directors, 2007 Ассоциация независимых • Member, Board of Directors, директоров 2008 • Moscow MBA Program, Prof of VC & Marketing, 2002/9 • Moscow, MBA Advising, 2001 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 5. Part I: What’s Happening in the Market? The Good & the Bad 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 6. Successes in the Market Since 2001 PBC Lasers & Wostec Multinationals w/R&D Labs in Russia 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 7. Limited Success in Raising Int’l $ Insight Venture Partners 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 8. Crisis in Int’l PE/VC Distributions from Funds to LPs (Investors) 100% 90% 15% 29% 80% 41% 70% R e s p o n d e n ts (% ) 6% 42% 74% 60% 50% 40% 37% 30% 65% 20% 43% 22% 10% 22% 0% 4% Winter 2004-05 Summer 2006 Winter 2007-8 Summer 2009 Source: Collier Capital Improve No change Deteriorate 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 9. Crisis in Int’l PE/VC Con’t % LPs Receiving >16% Net Returns 100% 90% 80% R e s p o n d e n ts (% ) 70% 60% 50% 40% 30% 20% 10% 0% Funds-of- North American North American European venture European buyouts Asia-Pacific venture Asia-Pacific funds/generalist venture buyouts buyouts Source: Collier 16% or more Less than 16% Capital 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 10. Crisis in Int’l PE/VC Con’t LP Plans for Investment (Over Next 3 years) 100% 9% 90% 31% 80% 70% 40% Respondents (%) 60% 50% 39% 40% 30% 51% 20% 30% 10% 0% Summer Summer Source: Collier Capital 2006 2009 Increase No change Decrease 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 11. Crisis in Int’l PE/VC Con’t LPs Declining to Invest in Last 12 Months 100% 90% 16% 29% 80% 55% Respondents (%) 70% 60% 50% 40% 84% 71% 30% 20% 45% 10% 0% Source: Collier Capital Summer Summer Summer 2005 2007 2009 Declined some re-investment requests Accepted all re-investment requests 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 12. Crisis in Int’l PE/VC Con’t Likely Valuations; 12/09 vs. 12/08 Lower by Higher by 41-60% up to 20% (4%) (6%) Remain unchanged (18%) Lower by 21-40% (33%) Source: Collier Capital Lower by up to 20% (39%) 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 13. Crisis in Int’l PE/VC Proportion of VC/Buyout Funds Unable to Raise New $ within 7 Years Venture capital firms 28% Buyout firms 23% Conclusions: less $ for VC, more competitive for LP $ & VC $: VC invest in profitable SMEs Source: Collier Capital 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 14. Part II: GoForward Plan to Raising Int’l VC $$ Issues For Entrepreneurs/SMEs: 1. Why Int’l $-location of customers & access the market for expansion vs. start-up or ego 2. Stage of development, seed vs. growth 3. Proof: Are you best in class, top 3 in your industry? 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 15. Reasons Why Components of SME Success Probability Company has enough $$ 80% Mgt Capable & Focused 80% PD Successful 80% Mfging Successful 80% Competitors Behave as Expected 80% Customers Want Product 80% Pricing is Correct 80% IP Issued 80% Combined Probability of Success 17% Success Rate <10% if Probability of One Event falls from 80% to 50% 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 16. Realities of VC Investment Ex: Global Spend in Clean Tech (2006) • Corporate R&D Investment = $22 billion • Government R&D Investment = $24 Billion • VC Investment in R&D = $2 Billion Same Pattern Repeated in Most Industries: VCs Fund Commercialization Risk, not Tech 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 17. Reasons for Rejecting Russian Tech Deals 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 18. Reasons for Rejecting Russian Tech Deals 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 19. Action Item #1 for Entrepreneurs/SMEs 1. Build Demand in the Supply Chain  Link to Multinationals Interest: User Pull, Testing, Deploy & Commercialize  Solve Tech & Supply Chain Needs/New Apps  Don’t Worry about Small Volumes  Build Locally, Upgrade Later for National & Int’l Expansion Info@IVIpe.com 17/18 June 2009 www.IVIpe.com
  • 20. Where’s the Customer Pain (Need) in the Industry? 1. MORE Perf, Execution & Cost Reduction  Not GameChangers; blocking/tackling tech so customers meet business plan 2. MORE Local Content Applications  Focus on Tech Challenges for Dev. & Growth 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 21. Examples: Get Integrated into Global/Russian Projects 1. Apps for Smartphone & Social Platforms 2. In <15 months, iPhone, Blackberry, Google & Facebook (fbfund) funds invested over $55 million into 80 companies  New Companies & New Employment  New Applications for Smartphones, Google Android & Facebook  More Investment  New Ideas 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 22. Examples: Get Integrated into Global/Russian Projects 3. HP ‘Central Nervous System for Earth  Nanosensors & IT to gather, transmit & monitor data on a global scale through intelligent nano- fabric networks 4. IBM’s Smart Planet Initiative 5. Cisco & NASA: ‘Planetary Skin’ Project  Capture, collect, analyze & report environment data from satellite, airborne, sea & land sensors across Earth 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 23. Examples: Get Integrated into Global/Russian Projects 6. Russia: Shtokman, Natural Resources for Solar & Alt. Energy Business Models  Nitol Solar: Raised $500 million from Chinese & US customers, IFC & Rusnano.  Chemical division processes chlorine, caustic soda and others to produce trichlorosilane (raw material for polysilicon production)  Polysilicon Division processes raw material into photovoltaic wafers 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 24. Domestic Opts to Build Bio- Tech Supply Chain in Russia Agricultural Drugs & Medical Devices Hospitals Research, Testing, & Feedstock/Chemicals Pharmaceuticals & Equipment Medical Labs  Agricultural  Medicinal &  Laboratory  Specialty  Biological processing botanicals apparatus & hospitals research  Basic organic furniture  Pharma-  University  Commercial chemicals ceutical  Surgical, medical medical  Ethyl alcohol preparations medical, dental, research research mfg. ophthalmic hospitals  Diagnostic & analytical  Testing Organic fiber substances instruments &  Clinical laboratories mfg. equipment research  Biological institutions  Medical  Fertilizers products  Irradiation laboratories & apparatus & diagnostic  Pesticides and imaging other agricultural electromedical chemicals equipment centers 17/18 June 2009 Product-Oriented www.IVIpe.com Service-Oriented Info@IVIpe.com
  • 25. Action Item #2 for Entrepreneurs/SMEs 2. Benchmark Your Tech to Competitors & Alternative  Often & Early  Define Strengths & Weaknesses  Test Under Different Operating & Customer Conditions  Invest to Overcome Deficiencies 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 26. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 27. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 28. The Standard? 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 29. Competition is Every Where 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 30. Multiple Sources of Competition 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 31. Build the Basics 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 32. Action Item #3 for Entrepreneurs/SMEs 3. Create Relationships & Leverage Existing Ones  Get Integrated into Supply Chains of SMEs that have raised Russian or Int’l $, e.g., Acronis, Parallels, Ozon, Enforta, Volga Gas, Air-in-Space  Prove your contribution to their business  Participate in Int’l Biz Plan Competitions to Develop Awareness & Mkt. Reaction 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 33. Action Item #4 for Entrepreneurs/SMEs 4. Target Int’l Funding Orgs’ for $  For R&D, Testing & PD Funding  USIC, CRDF, ISTC, EU Eureka/EuropeAid  In-Q-Tel (CIA VC fund) & Red Planet (US Army) if you have US presence & in their target for investment Attract $ from Russian groups like Rusnano to start. Build relationships with RVC (РВК) 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 34. Concluding Remarks 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 35. Don’t Give Up 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 36. Believe in Yourself/Accept Rejection  Oldest VC Firm, investing since 1911  Deals Rejected: Apollo Computer (acquired by Hewlett Packard) BVP's Felda Hardymon was offered a small position in the company's last private round, and rejected it: too small a position, he thought, at too high a price. In less than a year it was worth 17x more. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 37. Believe in Yourself/Accept Rejection  Deal Rejected: Check Point In 1994, Gil Schwed pitched his idea to BVP's David Cowan, who said that Gil would never get distribution in the US. The next year, Check Point got a huge Sun OEM deal and sold $25M of firewall 17/18 June 2009 software. www.IVIpe.com Info@IVIpe.com
  • 38. Believe in Yourself/Accept Rejection  Deal Rejected: eBay "Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass." 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 39. Believe in Yourself/Accept Rejection  Deal Rejected: Federal Express Incredibly, BVP declined on Federal Express seven times. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 40. Believe in Yourself/Accept Rejection  Deal Rejected: Google Cowan’s college friend rented her garage to Sergey & Larry their 1st year. In 1999 and 2000 she introduced Cowan to “these two really smart Stanford students writing a search engine.” Students? A new search engine? In the most important moment ever for a Bessemer rejection, Cowan asked her, “How can I get out of this house without going near your garage?” 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 41. Believe in Yourself/Accept Rejection  Deal Rejected: Paypal David Cowan declined on the Series A round. Young & unproven team, regulatory problems, and, 4 years later, a $1.5 billion acquisition by eBay. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 42. Believe in Yourself/Accept Rejection  Deal Rejected: StrataCom (acquired by Cisco) Felda Hardymon: "[Sierra's] Pete Wendell asked if I'd like to invest in Stratacom, which was doing a 'fast packet switch.' I gave him a blank stare." 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 43. Technology In Many Places! Just Look & Define Slaughter Raising Genetic Engineering & Breeding Butcher Distribution, Storage & Retail Locations Processing- Ham, Kielbasa Delivery 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 44. Download at www.IVIpe.com News 2007 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
  • 45. Thomas D. Nastas Tom@IVIpe.com www.IVIpe.com Tel. 7.985.923.47.27 Innovative Ventures Inc. Moscow, Russia Haslett, MI USA 17/18 June 2009 www.IVIpe.com Info@IVIpe.com