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Bettaieb Tt Conf Amman


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4th Technology Commercialization Conference Amman

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Bettaieb Tt Conf Amman

  1. 1. VC-TT Model on Valuing IP-based Technologies Presented by : Alaya BETTAIEB Founder & Past Chairman Tunisia’s Venture Capital Ass. Founder & Member Board Euromed Capital Forum ACIPLP by LES-AC & member BOD of LES-AC, ToT by LES Director Arab Academic Technology Transfer Project @ ASTF During 4th Annual Conference on Technology Commercialization: Amman, 13 November 2008
  2. 2. Contents <ul><li>Importance of Seed/VC Funding in Valuing IP Assets, </li></ul><ul><li>The VC-TT model on investing in IP-based technologies, </li></ul><ul><li>Ingredients for successful TT activity in the Arab world, </li></ul><ul><li>Role of the elite in fostering the development of IP culture in the region. </li></ul>
  3. 3. Bank Financing Criteria <ul><li>Risk- free projects. </li></ul><ul><li>Highly reliable entrepreneur rather than presumably profitable project. </li></ul><ul><li>Tangible collaterals. </li></ul><ul><li>No equity, </li></ul><ul><li>No follow-up/ Hands-off approach </li></ul>
  4. 4. Gap in Financing Technology Projects Profitability Risk Low Low Medium Medium High High Banks Venture Capital No Interest
  5. 5. Nature of the Participation of Venture Capital Funds <ul><li>Equity, </li></ul><ul><li>No Interest rate and no collaterals. </li></ul><ul><li>During a period long enough to recover the participation without constraints to the company. </li></ul><ul><li>With a hand-on approach (coaching the entrepreneurs, 2 nd , 3rd …round) within the limited period of the life of the fund. </li></ul>
  6. 6. Venture Capital Values the progress The value International Company. Idea Prototype Start-Up SME Large Company
  7. 7. Financing Scheme from the Stage of the Idea to the Stage of Maturity Idea R&D Prototype Creation Start-up Growth and Development Maturity Grants, personal resources and government subsidies Development/Expansion Capital M&A Capital Private Equity Venture Capital Seed & Spin-Off funds Bank financing Stock Market/Exchange Risk levels Low High
  8. 8. The Environment of Valuing University Research Breakthrough (Patents) The university : Professors Researchers post-doctorates Fundamental and Applied research Technology transfer office between the University and the Industry Inventions Patents Licenses Knowledge: Applications Research Contracts Operational Enterprises Spin-offs Operational Enterprises Incubator Researcher, Entrepreneur Rental space Common Equipment Venture Capital Coaching/technical assistance Research Development Institutions Technology Park Leasing or selling land basic infrastructure/utilities (electricity, water, communications) space for rent and space for sale Production sites & Facilities
  9. 9. Sample of US Companies Backed by Venture Capital <ul><li>MICROSOFT </li></ul><ul><li>COMPAQ </li></ul><ul><li>MACINTOSH </li></ul><ul><li>INTEL </li></ul><ul><li>SUN MICROSYSTEMS </li></ul><ul><li>YAHOO </li></ul><ul><li>AMAZON </li></ul><ul><li>E-BAY </li></ul><ul><li>CISCO SYSTEMS </li></ul>
  10. 10. Sample of ROI of Technological Funds 70 250 20 Vertex Int’l (Singp) F9 175 25 Walden (USA) F10 2880 210 350 25 Advent (USA) F2 580 20 Oxton (USA, EAsia) F4 400 20 TVM & Sing Tech F8 645 20 CMS (USA) F7 280 20 AVX Kyocera Japan F6 20 MPV (USA) F5 40 20 Van Leer Group (NL) F3 90 20 Daimler-Benz (Ger) F1 Size at exit (2003) Original size (1993) Partner Fund
  11. 11. What makes LPs still hesitating Investing in Technology in MENA <ul><li>Existing opportunities in later stage, riskless huge PE deals, </li></ul><ul><li>Smaller & riskier, longer investment wont justify involvement for some LPs, </li></ul><ul><li>Difficulties securing intial funding ( Grants, Business Angel, Seed…) </li></ul><ul><li>Lack of qualified entrepreneurs for Techno start-ups (Mngmt), </li></ul><ul><li>Lack of supporting infrastructure (industries) for techno projects, </li></ul><ul><li>Shortage in appropriate local expertise in dealing with technology </li></ul><ul><li>investment, </li></ul><ul><li>Lack of experience in managing the innovative projects </li></ul><ul><li>Missing legal framework for IP protection in most MENA countries </li></ul><ul><li>Difficulties marketing from MENA, Strategic alliances with MENA … . </li></ul>
  12. 12. Why should LPs be interested in Investing in Technology in MENA <ul><li>Seeding for future PE deals, </li></ul><ul><li>Growing MENA as a technology market ( ex : East Asia, ASEAN, East </li></ul><ul><li>Europe, Latin America, …) for developed economies </li></ul><ul><li>Techno start-ups could play crucial role in such a target, </li></ul><ul><li>Techno start-ups contribute to the burning need for Building a SME fabric </li></ul><ul><li>in emerging MENA, </li></ul><ul><li>Environment is incitative + potential for research breakthrought is high + </li></ul><ul><li>young graduates available… </li></ul><ul><li>Opportunities for strategic alliances in different fields with developed </li></ul><ul><li>countries. </li></ul>
  13. 13. Missing ingredients in Investing In Technology in MENA Innovation Techno Transfer Business Envirt For creating SMEs Venture Capital Access to soft loans Technology Index Creation Index Economic Creativty Index Source : World Competitiveness Report, Davos 2000.
  14. 14. Technology Fund Int’l Life Science Consulting Firm Tech Transfert Co. <ul><li>Techno Search </li></ul><ul><li>IP Diligences </li></ul><ul><li>IP Drafting/Listing </li></ul><ul><li>Techno Auditing </li></ul><ul><li>Techno Licensing </li></ul><ul><li>Techno Valuation </li></ul><ul><li>Techno contracts </li></ul><ul><li>Techno Assistance </li></ul><ul><li>Market Diligence </li></ul><ul><li>Techno Diligence </li></ul><ul><li>Techno Auditing </li></ul><ul><li>Techno Coaching </li></ul><ul><li>Techno formation </li></ul>- Licensing-driven Fund - VC & PE in MENA - Life Science specific - High Value target Fund Management Co. <ul><li>- Deal sourcing </li></ul><ul><li>Investment Due Dilig. </li></ul><ul><li>Validation of DD with </li></ul><ul><li>Consulting firm, </li></ul><ul><li>Following-up investees </li></ul><ul><li>Exit coordination with </li></ul><ul><li>Tech Transfert Co. </li></ul>The VC-TT Investment Model
  15. 15. Why Technology Licensing OUT Could lead to Successful Early Stage Technology Investment <ul><li>Because It guides potential entrepreneurs/researchers towards market demand, and BAs/VCs towards a start-up which products or services are promissing, </li></ul><ul><li>Because it secures VCs for better protection of IP rights, </li></ul><ul><li>Because it helps assess value of technology at exit stage essentially </li></ul><ul><li>Most importantly it helps VCs exiting, by commercilizing the technology through trade sales transaction. </li></ul>
  16. 16. Why Technology Licensing IN could lead to Successful Later Stage Investment in MENA. <ul><li>Because Technology « if well managed » rather than financial restructuring is behind strengthening the competitive advantage of a company and lastening its activity, </li></ul><ul><li>By injecting proven new technology through a LIcensing contract we give chance to a company to remain competitive for a while, </li></ul><ul><li>A licensing contract will secure access to new technology in a very short time, better transfer through continuous technical assistance, access to all improvements in technology and its impact on lasting the competitiveness…., </li></ul><ul><li>Most importantly it increases the value of the project at the entry which could be recovered at the time of exit, with significant additional capital gain, </li></ul><ul><li>Finally it helps VCs exiting hopefully with multiples, by commercilizing the technology through trade sales transaction. </li></ul>
  17. 17. How could Investment in Technology Contribute to Sustainable Growth in MENA. <ul><li>By positioning the labs on niche sectors of vital interest to the </li></ul><ul><li>region and to the world ( renewable energy, water, health care, ICT…) </li></ul><ul><li>By Valuing more Research Results in University labs </li></ul><ul><li>By creating better framework for IP protection and enforcement, </li></ul><ul><li>Good IP protection raise LP/VC interest and give confidence & </li></ul><ul><li>reputation… </li></ul><ul><li>By selecting team of entrepreneurs with complementary </li></ul><ul><li>background ( technology + Management) </li></ul><ul><li>By securing appropriate funding at early stages, BA particularly </li></ul><ul><li>By securing commercialization or acquisition of technology </li></ul><ul><li>through Technology Transfer/Licensing agreements , </li></ul>
  18. 18. The Role of the Elite <ul><li>To raise the awareness on the vitality of mastering necessary technologies and on the risk brought to next generations if the issue is not regarded seriously. </li></ul><ul><li>To upgrade, the professional and educational levels of the students, without scarifying the quality, </li></ul><ul><li>To inculcate the culture of IP within the Universities and Innovative companies, and to build appropriate expertise </li></ul><ul><li>To exploit patents from inside and outside the university in technology project, </li></ul><ul><li>To convince officials, to prepare the legal framework for IP, to bridge university to industry and to provide supporting network for transfer of technology activity </li></ul><ul><li>To ease the creation of a new generation of fund managers, </li></ul><ul><li>To foster the creation of business angels network that adopt projects in their early stages. </li></ul><ul><li>To establish a national business competition for best start-ups, and innovative projects </li></ul>
  19. 19. In Conclusion <ul><li>Investing in Technology is not a matter of choice any more for MENA, </li></ul><ul><li>it is crucial for survival, </li></ul><ul><li>Success is more visible in Technology companies, because of higher </li></ul><ul><li>value of intangible assets, fruit of lnnovation </li></ul><ul><li>Investing in technology is risky, but higly rewarding once we gather </li></ul><ul><li>the right ingredients, </li></ul><ul><li>Technology Licensing is considered a good leverage fostering the </li></ul><ul><li>investment in both Early stages and Later stages, through the </li></ul><ul><li>licensors additional diligences and technological expertise </li></ul><ul><li>By doing so VC and PE alike could support innovative entrepreneurs, </li></ul><ul><li>achieve significant capital gain, and contibute to upgrading MENA </li></ul><ul><li>indutrial fabric. </li></ul>
  20. 20. Thank you for your attention <ul><li>Contacts : </li></ul><ul><li>Alaya BETTAIEB, </li></ul><ul><li>Director AATT project @ ASTF </li></ul><ul><li>Director ASTF-Tunis Office </li></ul><ul><li>Mob: + 216-98-263-800 </li></ul><ul><li>E-mail: [email_address] </li></ul>