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Andrea Di Anselmo - Prospects for the development of capital investments in Europe
- 1. Prospects for the development of capital investments in Europe Various ways of acquiring capital for innovative projects: business angels, private investors seed and venture capital funds Andrea Di Anselmo Vice president META Group - ZMV spa Krakow 04/03/20010
- 2. Start-ups Early Stage investments Regional/ interregional Structural Funds Revolving ERDF – ESF PPP Market & Profit driven Policy Issue
- 3. Demand side: Quality of the Deal Flow Investment readiness International dimension Policy Issue Environment : Risk adverse culture Low level of recognition of the entrepreneur as part of the elite
- 5. Creativity + Entrepreneurship = KICs (Knowledge intensive companies) “… Europe needs to foster entrepreneurial drive more effectively. It needs more new and thriving firms to reap the benefits of market opening and to embark on creative or innovative ventures for commercial exploitation on a larger scale” … .” Entrepreneurship is crucial to competitiveness ”. The Green Paper on Entrepreneurship in Europe, COM(2003) 27 final
- 8. Knowledge intensive companies need ( a lot of ) money! 3 Fs (Fools/Founders, Family, Friends) are not enough !
- 15. Risk taking and risk rewarding
- 16. Source: EVCA Year Book 2008 Stage distribution of investments per year In 2007, seed investments represented 0,3% of recorded VC investments in Europe Seed + start up around 3 bn €
- 17. EU INVESTMENT ACTIVITY 25% of US LEVELS Source: Compiled information from EBAN, ACA and Center for Venture Research Angel Investing - Summary of industry statistics
- 18. Early stage investment in Europe Source: AIFI; BVCA; AFIC; ASCRI; BVK; 2008 Red (in € Mln) amount invested in seed e start up in 2008 Green N° of operations
- 19. Source: Innovation Philadelphia (2005) Seed vs Other Investment Returns 20 Yr 10 Yr 5 Yr 3 Yr 1 Yr 13.7 12.8 6.8 -3.6 23.4 All Private Equity 9.6 7.6 5.9 2.0 18.1 Mezzanine 12.4 8.1 2.6 0.1 28.8 All Buyouts 15.7 26.0 22.0 -13.3 15.7 All Venture 14.1 17.1 7.1 -6.9 38.0 Later Stage VC 13.6 20.8 17.5 -9.4 20.5 Balanced VC 19.1 37.9 47.1 -19.8 -2.9 EARLY/SEED VC % Return Fund Type
- 20. Some Data: Evolution of Seed ‘99 -05’
- 24. … All money is not the same!!! (Christian Saublen, Eurada )
- 25. The evaluation approach of risk capital investors
- 31. SEED FINANCING EARLY STAGE FINANCING START UP FINANCING Spin-off and Start–ups with no more than 36 months Located in Emilia Romagna
- 34. Thank you for listening [email_address] “ It is not difficult to learn new things but to quit old habits”
Editor's Notes
- We have been involved in many RIS projects but not all RIS have the same capacity to be transferred. We have tried to highlight the more interesting issues from 3 of all RIS projects where META Group is been involved.
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- Because seed investments are inherently very risky, over time, the ROI of seed investments exceeds all other private equity investments.
- Definition of early stage (seed + start up) Seed represent 5% of this 2bn € According to EVCA[1], the volume of private equity investments in Europe has shown a sharp increase, whereas the share of early stage investments is still declining. Private equity investments increased by 27% from €36.9 billion in 2004 to €47.0 billion in 2005. However, seed financing was not able to pick up on the growth of private equity. Seed investments fell by almost 34% from €148m in 2004 to €97m in 2005. This decline is reflected in the sharp decrease of the share of seed investments of the total from 0.4% in 2004 to 0.2% in 2005. Start-up investments (following the seed phase) increased slightly from €2.2 billion in 2004 to €2.3 billion in 2005. In the UK the supply of business angel finance increased substantially in 2004/05 from £50 million to £700 million following an increase in tax relief for investors in venture capital trusts from 20% to 40% but decreased sharply when the extent of the allowances was reduced. Business angel investments in Europe are estimated to be less than 10% of those in the United States. The business angel phenomenon is much less developed in Europe than it is in the US. Although exact figures are difficult to obtain, it is estimated that there are 1,455 angels per million population in the US114, compared to only 33 in Europe115. These orders of magnitude point to a clear reality: business angels do not play the same role in the EU innovation ecosystem as they do in the US, and will not do so in the near future. This is coupled with the observation that the average level of investment per business angel is lower in Europe than in the US. In many European countries, an individual investment of EUR 100,000 is considered to be very substantial. The lack of seed and start-up investments prevents new firms from reaching a size where they can attract expansion capital
- Definition of early stage Sidecar represent 5% of this 2bn € Including Eastern Europe According to EVCA[1], the volume of private equity investments in Europe has shown a sharp increase, whereas the share of early stage investments is still declining. Private equity investments increased by 27% from €36.9 billion in 2004 to €47.0 billion in 2005. However, seed financing was not able to pick up on the growth of private equity. Seed investments fell by almost 34% from €148m in 2004 to €97m in 2005. This decline is reflected in the sharp decrease of the share of seed investments of the total from 0.4% in 2004 to 0.2% in 2005. Start-up investments (following the seed phase) increased slightly from €2.2 billion in 2004 to €2.3 billion in 2005. In the UK the supply of business angel finance increased substantially in 2004/05 from £50 million to £700 million following an increase in tax relief for investors in venture capital trusts from 20% to 40% but decreased sharply when the extent of the allowances was reduced. Business angel investments in Europe are estimated to be less than 10% of those in the United States. The business angel phenomenon is much less developed in Europe than it is in the US. Although exact figures are difficult to obtain, it is estimated that there are 1,455 angels per million population in the US114, compared to only 33 in Europe115. These orders of magnitude point to a clear reality: business angels do not play the same role in the EU innovation ecosystem as they do in the US, and will not do so in the near future. This is coupled with the observation that the average level of investment per business angel is lower in Europe than in the US. In many European countries, an individual investment of EUR 100,000 is considered to be very substantial. The lack of seed and start-up investments prevents new firms from reaching a size where they can attract expansion capital about 2 bn € seed funds + 2 bn € BAs ??? 2007 -2013 fast growth foreseen amount invested still very low (25-30% of available finance) US Seed Funds: ??? BAs: 20 bn €
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