BAIT MD infoDev

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BAIT MD infoDev

  1. 1. BAIT MDBusiness Angels IT in MoldovainfoDev experiences in EasternEurope and Central AsiaMoldova ICT Summit 2013, ICT4Competitiveness Track-Access to Finance SessionChişinău, April 201323.04.2013 BAIT MD Draft Strategy v1 April 2013 1
  2. 2. infoDev global networkSupporting business angel networks in various countries, includingBelarus, Vietnam, Kazakhstan, Kenya, Jordan and others
  3. 3. BAIT MDDRAFT STRATEGY FOR DISCUSSIONDEFINITIONSBusiness Angel:A knowledgeable private individual, usually with business experience, whodirectly invests part of his or her personal assets in new and growing unquotedbusinesses. Besides capital, business angels provide business managementexperience for the entrepreneur.European Commission Enterprise and Industry, Glossaryhttp://ec.europa.eu/enterprise/policies/finance/glossary/index_en.htm#Angel capital:Fills the gap in start-up financing between seed funding (“friends andfamily”/FFF) and formal venture capital.23.04.2013 BAIT MD Draft Strategy v1 April 2013 3
  4. 4. BAIT MDDRAFT STRATEGY FOR DISCUSSIONGLOBAL GOOD PRACTICEUSA 2010:61,900 ventures received angel funding; 265,400 business angels; 370.000 new jobscreated; About half of the angel exits were at a profit and annual returns for angel’sexits (mergers and acquisitions and IPOs) were between 24% and 36%; share of ICTsector around 21% (University of New Hampshire 2011)Europe 27 2010:Est. 30,000 business angels – France and UK with around 4.500 each, Germany 1,000– 1,400, Poland 200;Overall investment value 220 – 660 Mio EUR; ICT between 26 (SE) and 100% (PL)(CSES/EBAN 2012)23.04.2013 BAIT MD Draft Strategy v1 April 2013 4
  5. 5. BAIT MDDRAFT STRATEGY FOR DISCUSSIONGLOBAL GOOD PRACTICEEastern Europe and Central Asia:Russian Federation: 2 national angel association, emerging local/regionalnetworks and association (supported by the Government), since 2010Belarus: 1 angel association (BAVIN), no local networks, since 2011Serbia: 1 national angel network (SBAN)Initiative in Kazakhstan started 2012EUPoland: Business angel networks (BANs) were mostly financed by theOperational Programme (OP) Innovative Economy, 10 regional BANs(2010, EBAN)23.04.2013 BAIT MD Draft Strategy v1 April 2013 5
  6. 6. BAIT MDDRAFT STRATEGY FOR DISCUSSIONGLOBAL GOOD PRACTICECase studies23.04.2013 BAIT MD Draft Strategy v1 April 2013 6
  7. 7. BAIT MDDRAFT STRATEGY FOR DISCUSSIONPOLICY RECOMMENDATIONSGeneral policy recommendations drawing from lessons learned in CIS countries1. Awareness raising: At current stage of development of a business angel culture in Moldova, Government and donor role should be helping raising awareness as well as building up capacity on side of potential business angels (investor readiness), early‐stage entrepreneurs (investment readiness), and innovation development promoters including Government agencies.2. Private sector involvement: For successfully initiating local angel networks, Moldovan (local and national) business champions taking on the role of local angel network leaders are essential.3. Co-investment fund: A co‐investment fund (partly) financed by the Government is considered to be a highly effective instrument for promoting angel investment for technology entrepreneurship.Recommendations are based on infoDev’s A2F Access to Finance Program findings along with international good practice23.04.2013 BAIT MD Draft Strategy v1 April 2013 7
  8. 8. BAIT MDDRAFT STRATEGY FOR DISCUSSIONPOLICY RECOMMENDATIONSGeneral policy recommendations drawing from lessons learned in CIS countries4. Incentives: The Government should research and assess further opportunities for incentives such as tax incentives and co-investment funds.4. Legal framework: The Government should furthermore address problems with regard to company law that may inhibit easy investing.4. Networking platform: The creation of a platform connecting different players of the innovation ecosystem involved in early-stage technology enterprise financing is recommended. Key tasks of this platform include the stimulation of collaboration and information exchange among players as well as the joint preparation of policy recommendations.Recommendations are based on infoDev’s A2F Access to Finance Program findings along with international good practice23.04.2013 BAIT MD Draft Strategy v1 April 2013 8
  9. 9. BAIT MDDRAFT STRATEGY FOR DISCUSSIONPOLICY RECOMMENDATIONSGeneral policy recommendations drawing from lessons learned in CIS countries7. Association: A National angel network association, to which local angel networks will be members, can provide connections between angel networks in Moldova on one hand and links to international groups and associations on the other hand. It can also help setting standards to be adopted by local angel networks. Yet, this should emerge from existing angel networks (bottom-up), not vice versa.8. Investment-readiness of R&D sector: Business orientation of the R&D sector needs to be strengthened in order to reduce costs and investment needs for R&D commercialization.9. Internationalization of angels: Domestic market constraints such as limited market size can be overcome by stimulating transnational activities of business angels and entrepreneurs. International links can also foster knowledge transfer to MD.23.04.2013 BAIT MD Draft Strategy v1 April 2013 9
  10. 10. BAIT MDDRAFT STRATEGY FOR DISCUSSIONPOLICY RECOMMENDATIONSFurther findingsRomania (UBIT Software incubator Timisoara): Links to business partners, contracts,mentoring more important than “cash”Belarus (BAVIN): Create win-win situation with partners and develop trust!Recommendations are based on infoDev’s A2F Access to Finance Program findings along with international good practice23.04.2013 BAIT MD Draft Strategy v1 April 2013 10
  11. 11. BAIT MDDRAFT STRATEGY FOR DISCUSSIONConclusions• Angels are out there, and talents are out there!• Bottom-up, not Government-driven.• Champion!• It takes time, and trust.• Win-win situations with partners are needed.• International links are crucial for capacity-building.• ICT is a pioneer, and mentoring is as important as investment.Thank you very much!Stefan Schandera, s.schandera@schandera.de www.infoDev.orgRecommendations are based on infoDev’s A2F Access to Finance Program findings along with international good practice23.04.2013 BAIT MD Draft Strategy v1 April 2013 11
  12. 12. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD VISION AND OBJECTIVEVisionThe BAIT MD vision is a vibrant, internationally competitive and innovative ICTlandscape of Moldova, that provides investment opportunities for Moldovan andinternational investors and that generates business opportunities for Moldovan andinternational ICT entrepreneurs.GoalThe overall goal of BAIT MD is to establish an efficient investment networkmechanism that identifies and helps to qualify early-stage investment cases of high-growth nature in the ICT sphere in Moldova, while it at the same time fosters theinvestment readiness of private investors.23.04.2013 BAIT MD Draft Strategy v1 April 2013 12
  13. 13. BAIT MDDRAFT STRATEGY FOR DISCUSSIONSITUATION MD: SWOTStrengths Weaknesses• Existing, but not consolidated • Low entrepreneurship culture network of entrepreneurs. • Small market for innovative projects• Existing ongoing entrepreneurship (need to grow international) and startup supporting activities • Low access to information about• Succesful examples on international financing methods level • Low Government support in startup• Existing private investors looking for development projects to invest intoOpportunities Threats• Green field to build upon • Bigger markets around• ICT sector strategy incuding • Loss of interest in case of slow entrepreneuship support which might development attract gov support • Lack of unified efforts and leadership• Boost of entrepreneurship projects23.04.2013 BAIT MD Draft Strategy v1 April 2013 13
  14. 14. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD KEY STAKEHOLDERSStakeholder Role in BAIT MDPrivate individuals as potential angels Business angels and mentorsICT start-ups and potential start-ups Investment casesInternational angel networks (BANs) International links, know-how (investment-readiness)Public sector and government Framework, incentives, co-investment fund, initiation of BAIT MD, awarenessInternational donor community Capacity-building, funding, awarenessCivil society and mass media Awareness, acceptanceOther players of ICT ecosystem Collaboration, outreach, awareness23.04.2013 BAIT MD Draft Strategy v1 April 2013 14
  15. 15. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD VALUE PROPOSITIONBAIT MD identifies and qualifies early-stage investment cases of high-growthnature in the ICT sphere in Moldova, while it at the same time fosters theinvestment readiness of private investors.Value proposition to business angels (BAIT MD members)BAIT MD identifies and provides access to superior early-stage ICT investmentopportunities, and supports BAIT MD angels to make use of these opportunitiesValue proposition to start-upsBAIT MD angels provide access to capital, business management and mentoring, andbusiness links.23.04.2013 BAIT MD Draft Strategy v1 April 2013 15
  16. 16. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD SERVICE PORTFOLIOServices for business angels (members) Generating superior deal-flow for angels; Preparing investment cases (and investment readiness of start-ups); Organizing pitches; Increasing investment-readiness of business angels; Advocacy and fundraising (public sector and donors); Public relations and BAIT MD branding; Creating and maintaining international links.23.04.2013 BAIT MD Draft Strategy v1 April 2013 16
  17. 17. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD SERVICE PORTFOLIOServices for start-ups (investment cases) Pre-incubation services and investment readiness; Access to investors, mentors and capital; Incubation services; Next phase investment readiness; Quality management and monitoring of angel investment and mentoring processes; Angel network coordination.23.04.2013 BAIT MD Draft Strategy v1 April 2013 17
  18. 18. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD BUSINESS MODELBusiness model option Management structure: Manager-led vs. member-led Legal structure: Informal vs. formal (registered); non-profit versus for profit Investment structure: Group investments versus individual investments KEY REQUIREMENT: Champion or group of champions23.04.2013 BAIT MD Draft Strategy v1 April 2013 18
  19. 19. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD BUSINESS MODELProposed business model BAIT MDPHASE 1 Manager-led (coordinator, board, key functions) Legal structure: Informal, non-profit -> membership fees? Investment structure: Individual investmentsPHASE 2 Manager-led (and supported by members) Legal structure: Formal, non-profit23.04.2013 BAIT MD Draft Strategy v1 April 2013 19
  20. 20. BAIT MD DRAFT STRATEGY FOR DISCUSSION BAIT MD ORGANIZATIONAL STRUCTURE PHASE 1 STRUCTURE Board <- Champion Coordinator External administration• Activity planning Angels support• Quality and process management and monitoring • Deal screening • • Meeting and pitch coordination• Membership recruitment and Member recruitment • Outreach and communication • Deal-flow management including relationship management PR and communication• Financial management• PR and Branding Constitution Membership in international Strategy and Business Plan associations ? Resources and Funding 20 Rules and Procedures Tools such as GUST, ANGELIST
  21. 21. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD MARKETINGBasic communication tools Advanced communication tools Brand & CI  Virtual incubator Website, providing basic information Facebook etc. Information materials for partners and start-ups Information materials potential angels (good practice!!) Network meetings (informal) Requests for proposals / pitches Public relations instruments (mass media/public)23.04.2013 BAIT MD Draft Strategy v1 April 2013 21
  22. 22. BAIT MD DRAFT STRATEGY FOR DISCUSSION BAIT MD DEVELOPMENT MILESTONES Phase 1 milestones Structure and rules Awareness raising Core group Investment readiness Successful Institutional Branding and PR investment sustainabilityIs there a potentialchampion and core cases covering the angelgroup, ready to take over Fundraising network office and will be the mainresponsibility? catalyst in the administration costs First angel pitches process 23.04.2013 BAIT MD Draft Strategy v1 April 2013 22
  23. 23. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD BUDGETINGBudgeting considerations Fundraising considerations Branding, website, communication  Fundraising for pitches? Setting up structures and rules  Funding for awareness raising? Costs for network meetings and pitches  Funding for capacity building Membership in international associations? (investment readiness)? ½ time administration assistant or external support? Office?Revenue considerations Membership fees? Member resources (meeting locations, staff, marketing…)23.04.2013 BAIT MD Draft Strategy v1 April 2013 23
  24. 24. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD MEASURING SUCCESSSuccess measures 1000 proposals screened -> 100 pitches -> 5 investment cases Number and dynamics (increase) of deal-flow Quality of proposals -> and number of investments placed Quantity and quality of angels/members, and their level of activityKey recommendations Keep expectations realistic! Start informal and bottom-up! Find a champion! Raise awareness by using good practice! Exploit success stories!23.04.2013 BAIT MD Draft Strategy v1 April 2013 24
  25. 25. BAIT MDDRAFT STRATEGY FOR DISCUSSIONBAIT MD DISCUSSION1. Is the selected model the right one for MD?2. Can we find a champion?3. What are the objectives for 2013 – 2014?4. What are the next steps?23.04.2013 BAIT MD Draft Strategy v1 April 2013 25

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