Where to get money?Riga, 15 December 2012
About Capitalia• Capitalia is a leading investment and financial     CAPITALIA OFFICES  advisory company in the Baltic Sta...
Sources of financing company               idea           start-up     early growth          growth      mature   stage   ...
Risk and return decreases with maturity              idea           start-up     early growth          growth      mature ...
Founders, friends, family                            www.dilbert.com                                              5
Grants• Grants are like subsidies – ‘free’ money, but you have to meet their criteria• Altum (Hipotēku banka), subsidized ...
Grants (2)• Business incubators typically provide subsidized space and services, and  non-monetary benefits (networking, a...
Private investors / business angels• Business angels are generally wealthy individuals with business experience• Invest fo...
Seed funds• Invest in early stage companies, for finalizing prototypes and starting business activities• Take shares in th...
Venture capital• Invest in start-up and expansion stage companies• Take shares in the company, often more complex structur...
Other useful contacts• REA Mentoru klubs, network of business mentors | mentoruklubs.lv• Līdere, network of business mento...
What do start-up investors look for• Team   –   Core team is complete and meets the needs of the business   –   Team has p...
What do start-up investors look for (2)• Market   –   Market is significantly sizable to allow for growth potential   –   ...
How to prepare for attracting investor• Meeting with investor is like a job interview• “Elevator pitch” – 2 to 3 sentences...
Investor share                 Investment of LVL 100’000 for                 25% share means ..                 .. your 75...
What NOT to do• Inability to easily explain your start-up in 2-3 sentences• “no competition”, “no risks”, “we need just 1%...
Hockey stick               17
Hockey stick               18
Agreements with investors• Simplest form – articles of association• Additional terms in shareholder or investment agreemen...
ContactsĢirts TihomirovsInvestment DirectorT: +371 2648 0478E: girts@capitalia.lvLatvija                 Lietuva          ...
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Capitalia presentation

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How to find fund for start-up companies.
A presentation from Lotus 9 - conference about startups.
Website: http://www.aiesec.lv/lotus

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  • Absolutely excellent presentation . Almost a one stop reference manual for start ups in the Baltics. Very concise, and easy to navigate to find the sort of support which might be appropriate.
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Capitalia presentation

  1. 1. Where to get money?Riga, 15 December 2012
  2. 2. About Capitalia• Capitalia is a leading investment and financial CAPITALIA OFFICES advisory company in the Baltic States, TALLINN specializing in working with small and medium sized businesses.• Largest non-bank micro lender in the Baltic States, venture capital and mezzanine investment manager.• With offices in Latvia, Lithuania and Estonia, RIGA employs 10 investment and finance specialists.• Financially supported more than 200 companies with total managed loan and venture capital investment of over LVL 10 millions. VILNIUS• Market-leading experience mergers and acquisitions, valuation and financial advisory to small and medium sized businesses. 2
  3. 3. Sources of financing company idea start-up early growth growth mature stage founders, friends, family and grants private investors/ business angels, seed fundssources of venture capital funds financing alternative loans (mezzanine) public markets, commercial banks 3
  4. 4. Risk and return decreases with maturity idea start-up early growth growth mature founders, friends, family 0-∞ and grants private investors/ 30-100% business angels, seed funds 20-50% venture capital funds alternative loans 15-30% (mezzanine) 10-20% public markets, or less commercial banks 4
  5. 5. Founders, friends, family www.dilbert.com 5
  6. 6. Grants• Grants are like subsidies – ‘free’ money, but you have to meet their criteria• Altum (Hipotēku banka), subsidized loans for start-ups | altum.lv – loan up to LVL 54’000, with grant up to LVL 5’600• Nodarbinātības Valsts Aģentūra, funding for unemployed | nva.gov.lv – LVL 2’000 + 6 month salary• Lauku Atbalsta Dienests, funding for agriculture and similar | lad.gov.lv – various grants depending on type of business• Atsperiens, funding program by Riga Council and Swedbank | riga.lv – up to LVL 8’000• Ideju Kauss, business plan competition | idejukauss.lv – prize fund LVL 10’000• Investment and Development Agency of Latvia, various grants | liaa.gov.lv 6
  7. 7. Grants (2)• Business incubators typically provide subsidized space and services, and non-monetary benefits (networking, advice) – University business incubators, technology transfer centers – Creative Andrejsala, in Riga | creativeandrejsala.lv – TechHub, in Riga | techhub.lv – MADARA inkubators, in Riga | madaracosmetics.lv – Rīgas reģiona biznesa attīstības inkubators, in Ogre, Limbaži, Tukums | rrbai.lv – Jelgavas Biznesa Inkubators, in Jelgava, Jēkabpils, Aizkraukle, Dobele | jic.lv – Mangus, in Cēsis, Madona, Lielvārde | magnus.lv – Valmieras Biznesa un inovāciju inkubators, in Valmiera and Gulbene | vbii.lv – Rēzeknes biznesa inkubators, in Rēzekne, Daugavpils, Balvi, Preiļi | idejuviesnica.lv – Līvānu Inženiertehnoloģiju un inovāciju centrs, in Līvāni | liic.lv – Kurzemes Biznesa Inkubators, in Liepāja, Kuldīga, Saldus | kbi.lv – Ventspils Augsto tehnoloģiju parks, in Ventspils and Talsi | vatp.lv 7
  8. 8. Private investors / business angels• Business angels are generally wealthy individuals with business experience• Invest for shares in company, often offer hands-on help• Usually flexible on exit horizon• Pardodbiznesu.lv, the largest website for attracting investments and selling companies | pardodbiznesu.lv• Connect Latvia, connecting entrepreneurs and investors | connectlatvia.lv• Seed Forum, connecting entrepreneurs and investors | seedforum.org/latvia• Latvijas Privāto Investoru Asociācija, business angel network | biznesaengeli.lv• Industry experts and successful entrepreneurs 8
  9. 9. Seed funds• Invest in early stage companies, for finalizing prototypes and starting business activities• Take shares in the company• Often anticipate further investment rounds• Imprimatur Capital Seed Fund (up to EUR 100’000) | icfm.lv• New funds about to be established via Latvian Guarantee Agency | lga.lv 9
  10. 10. Venture capital• Invest in start-up and expansion stage companies• Take shares in the company, often more complex structures• 4-6 year exit horizon• Imprimatur Capital Technology Venture Fund (up to EUR 1 mil) | icfm.lv• BaltCap Latvia Venture Capital Fund (up to EUR 3 mil) | baltcap.com• AB.LV Private Equity Fund 2010 | ab.lv• Noninstitutionalized venture capital: – Capitalia | capitalia.lv – ZGI Capital | zgi.lv – Eko Investors | ekoinvestors.lv• New funds about to be established via Latvian Guarantee Agency | lga.lv 10
  11. 11. Other useful contacts• REA Mentoru klubs, network of business mentors | mentoruklubs.lv• Līdere, network of business mentors | lidere.lv• Jauno Uzņēmēju Centrs, free business consultations | jaunaisuznemejs.lv• Startup Sauna, tech project accelerator | startupsauna.com• Garage48, tech project ‘hackathon’| garage48.org 11
  12. 12. What do start-up investors look for• Team – Core team is complete and meets the needs of the business – Team has prior experience in the field – Personality chemistry factor – Team works philosophies that investor encourages (ethics, diligence, frugality)• Product and business operations – Product/service and business model is understandable – Business is scalable – Ability to pivot – Competitive advantage is clear and hard to replicate 12
  13. 13. What do start-up investors look for (2)• Market – Market is significantly sizable to allow for growth potential – Competitive environment is favourable• Finances – Investment is enough to reach important milestones – Potential return compensates for risk – Clear exit strategy 13
  14. 14. How to prepare for attracting investor• Meeting with investor is like a job interview• “Elevator pitch” – 2 to 3 sentences of what you (plan to) do and how, what is the market, how you make money• 2 page maximum for a written pitch• Business plan is not necessarily written, but definitely thought through (note: business plan is usually a requirement for grants or funds)• Financial forecasts – better “rough” than too detailed, but key cost drivers known• Investment amount should be fixed• Investor share % to be discussed (but have an idea) 14
  15. 15. Investor share Investment of LVL 100’000 for 25% share means .. .. your 75% share is worth LVL 300’000 15
  16. 16. What NOT to do• Inability to easily explain your start-up in 2-3 sentences• “no competition”, “no risks”, “we need just 1% of China market” etc.• Fear of investor involvement• Fear of stealing ideas• Too much technical detail• Spending money unnecessary• Hockey sticks in forecasts 16
  17. 17. Hockey stick 17
  18. 18. Hockey stick 18
  19. 19. Agreements with investors• Simplest form – articles of association• Additional terms in shareholder or investment agreement, e.g.: – Corporate Governance - shareholder meetings, voting rights, decision making, board membership etc. – Exit of investment or sale by owner – Non-compete clauses – Options and other instruments for motivation 19
  20. 20. ContactsĢirts TihomirovsInvestment DirectorT: +371 2648 0478E: girts@capitalia.lvLatvija Lietuva IgaunijaKr.Barona 13/15-51 Didžioji gatvė 11-16 Viru väljak 2Rīga, LV-1011 Vilnius, 01128, Lietuva Tallinn, EE10111T: +371 2880 0880 T: +370 6700 7061 T: +372 663 1153

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