Nastas Lecture Graduate School of Business Michgan State University

737 views

Published on

Tom Nastas lecture on VC in the emerging markets, at the Graduate School of Business, MIchgan State University

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
737
On SlideShare
0
From Embeds
0
Number of Embeds
6
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Nastas Lecture Graduate School of Business Michgan State University

  1. 1. VC & PE in the CIS & CEE Lecture to MBA PE Class, Graduate School of Business Michigan State University East Lansing, MI, USA, 23 April 2009 Innovative Ventures Inc. Haslett, MI. USA Moscow, Russia Thomas Nastas President Tom@IVIpe.com www.IVIpe.com 23 April 2009 www.IVIpe.com Info@IVIpe.com
  2. 2. Today’s Message Part I What’s Happening in the Market? The Past & the Present Part II GoForward Plan to Accelerate $$ 23 April 2009 www.IVIpe.com Info@IVIpe.com
  3. 3. IVI History-Direct Invest & Advisory Canada (1992) Europe (1992/94) C$100MM-Canadian TP Fund, $10MM- Bus. Dev. Bank EU, $-Financière St Dominique, Paris USA (1986) Russia (1997) The Michigan Product HP LP, $30MM-EBRD & Dev. Fund ($5MM) USAID Africa (1993/96) E. Africa $5MM, Sub- Saharan, $200MM, South Africa,$30MM, IFC/WB 23 April 2009 www.IVIpe.com Info@IVIpe.com
  4. 4. About Me • MSU Grad, BA & MBA • Founder: From 1986 • In Russia from 1997 • Moscow Bank, Member, Board of Directors, 2007 • Moscow MBA Program, Prof in VC & Mkting, 2001 • Moscow, MBA Advising, 2001 23 April 2009 www.IVIpe.com Info@IVIpe.com
  5. 5. Part I: What’s Happened & Happening in the Market? The Past & the Present 1992-1998 1998-2008 The Future 2009-Future 23 April 2009 www.IVIpe.com Info@IVIpe.com
  6. 6. 1st Wave,1992-1998 Fall of the Soviet Union Economic Shock Therapy Creation of the EBRD Governments & DFIs provided $, IFC, EBRD & US; Tenders for Western Fund Managers to Mge Funds, 90% capital from Govt’s & DFIs, 10% Private Sector Funds Created to Demonstrate Viability of Investing 23 April 2009 www.IVIpe.com Info@IVIpe.com
  7. 7. 1 Wave,1992-1998 st VC to PE in CEE, CIS & Russia 1. Three major investors EBRD, IFC & US Gov’t 2. Enterprise Funds in CEE 3. Enterprise Funds in CIS 4. EBRD Funds in CEE, CIS & Russia 5. Approximately $2 Billion Committed, 90% from the Multilaterals (IFC & DFIs) 23 April 2009 www.IVIpe.com Info@IVIpe.com
  8. 8. 1 Wave,1992-1998 st • $255 • Polish-American Fund, 1990 • $73 • Hungarian-American Fund, 1990 • $65 • Czech-Slovak American Fund,1991 • $58 • Bulgarian-American Fund, 1991 • $50 • Baltic-American Fund, 1994 • $61 • Romanian-American Fund, 1994 • $106 • Central Asian-Am Fund, 1994 • $150 • Western New Independent States Fund, 1994 • $329 • The U.S. Russia Investment Fund, 1995 • $30 • Albanian-American Fund, 1995 • $1,177 • TOTAL 23 April 2009 www.IVIpe.com Info@IVIpe.com
  9. 9. 1 Wave,1992-1998 st Value-Added of VC (Beside $$) 1. Privatized Companies, Some Emerging Growth, More Debt vs. Equity 2. Raise New $$$ & Add Corporate Governance, Experience & Contacts 3. Keep Interests Aligned 4. BOD Participation, not Manage the Firm 5. Encourage Founders to Think in Miles, not Inches 23 April 2009 www.IVIpe.com Info@IVIpe.com
  10. 10. 1 Wave,1992-1998 st Default of the Russian Gov’t (1998) Crash of the Ruble High Inflation Cost of Imports Soared; Stimulate Local Mfg. Creation of Oligarch PE Funds Development of the Domestic Economy Driven by Global Demand/Pricing for Natural Resources (Oil, Gas, Metals & Minerals); 80% of Budget Revenues 23 April 2009 www.IVIpe.com Info@IVIpe.com
  11. 11. 2 Wave,1998-2008 nd VC to PE in Russia Today 1. 1st in VC (1994-1999). Deals w/VC Characteristics. Migrated to PE financing/growth in Post Financial Crisis 2. Expansion Stage Financing, US$5-$50 million/deal with limited syndication 3. Deals = For Domestic Economy, FMCGs, F&B, Retailing, Real Estate, Wholesaling, Construction Transportation & Western Models to Russia 23 April 2009 www.IVIpe.com Info@IVIpe.com
  12. 12. 2 Wave,1998-2008 nd 1. Creation of More PE Funds & Investment by Private Investors (Institutional) 2. Investment & $ under Mgt Increased Exponentially 3. PE Model Accepted by Russian Managers Liquidity-IPOs (London) & Trade Sale (Corporate Buyers) Adoption of Corporate Governance 23 April 2009 www.IVIpe.com Info@IVIpe.com
  13. 13. 2 Wave,1998-2008 nd How Deals Differ, US vs. Russia? 1. Longer & More Expensive to Do Deals 2. Accounting, Finance & Legal Due Diligence Presence of Tax & Contingent Liabilities? 3. Valuation Issues/Challenges 4. Legal Structures (off-shore, Cyprus, BVI) 23 April 2009 www.IVIpe.com Info@IVIpe.com
  14. 14. 2 Wave,1998-2008 nd How Deals Differ, US vs. Russia? 5. Corporate Governance & Align Interests Manage Company for Benefit of All Shareholders Incentives: Equity ROI vs. Cash/Salary. Limits on $$ Reporting to IFRS Transparent, not Opaque: Responsive, not Egocentric Funds employ Security (Former KBG) Guys on Staff 23 April 2009 www.IVIpe.com Info@IVIpe.com
  15. 15. 3 Wave 2008+? rd Part II GoForward Plan to Accelerate $$ For Entrepreneurs/SMEs For Gov’t Policy Makers 23 April 2009 www.IVIpe.com Info@IVIpe.com
  16. 16. 3rd Wave 2008+? What Does the Future Look Like 1. Russia Integrated into Global Economy- Supply Chain 2. More Diversification & Variety of PE & Structured Finance Funds 3. Russian Gov’t Initiative-Regional VC, in Tech, Now RVC as Fund-of-Funds & Rusnano Technology Corp. 23 April 2009 www.IVIpe.com Info@IVIpe.com
  17. 17. 3rd Wave 2008+? What’s Needed for New Growth? 1. Creation of Medium Term $ & Industry 2. Build the Quality & Quantity of Deal Flow in Tech 23 April 2009 www.IVIpe.com Info@IVIpe.com
  18. 18. Thomas D. Nastas Tom@IVIpe.com www.IVIpe.com Tel. 7.985.923.47.27 Innovative Ventures Inc. Moscow, Russia Haslett, MI USA 23 April 2009 www.IVIpe.com Info@IVIpe.com
  19. 19. Web References http://www.ebrd.com/projects/eval/showcase/equity f.pdf http://www.ebrd.com/country/sector/fi/funds/perf06 .pdf http://www.ebrd.com/projects/eval/showcase/equity f.pdf 23 April 2009 www.IVIpe.com Info@IVIpe.com

×