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Arne-G. Hostrup presentation at YES Execom Athens, 14-16 April 2011


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Arne-G. Hostrup presentation at YES Execom Athens, 14-16 April 2011

  1. 1. Current Situation of the early stage investment marketStrong demand - qualified entrepreneurs seeking financingStrong supply - more angels, super angel fundsExit market picking up interest from corporates However, pressure increasing on the early stage with widening equity gap. 3  
  2. 2. Angels and other sources of finance Capital  Needs   IPO   Venture   Higher   Capital   Risk   Funds   Early  stage   and  seed   venture  funds   Angels  help  fill  the   Business     Angels     Friends,   Family  &   Lower     Founders   Risk   Time  0   Seed   Start-­‐up   Early  Growth   Sustained  Growth   4  
  3. 3. Equal time of due diligence for smaller investments butlower potential of smaller returnsFinancial return is the main motivationCompanies in seed phase need as much mentoring as cashHistorically low track record in returns on investment in seedBubble and current crisis will increase this trend 5  
  4. 4. About Business AngelsInvestment 25 000 - 250 000 euroWilling to share their managerial skills, specialistknowledge and networksNo sector preferenceOften prefer to invest in their region of residenceSeeking profit, but also funUsually total investments below 15% of wealth 6  
  5. 5. THE CONTRIBUTION OF BUSINESS ANGELS2 wings: capital + mentoring/coachingInvest early take a higher risk and in different sectorsMore flexible and reactive than other investorsBA give access to networks and new potential customersand act as ambassador for the businessEasier to raise follow-on funding 7  
  6. 6. What business angels look forCurrent & comprehensive Business PlanStrong & committed Management TeamEnvironment and marketHigh growth / scalable / strong business forecast(5m /3yrs)Intellectual property protectionRealistic pre-money valuationExit strategy 8  
  7. 7. Business Angel vs Venture Capitalist Source:  Go  Beyond    www.go-­‐     9  
  8. 8. RISE IN BANS VS CONSOLIDATION OF VC FUNDS 16001600140012001000 711 800 No. of Networks 600 396 No of VC funds 400 200 50 0 1999 2010 Source: EBAN Statistics Compendium; EVCA Data 10  
  9. 9. About EBANBusiness Seed Federations angel Individual Associate funds of networksnetworks angels members115 member organisations Representing 300 BANs 26 countries 11  
  10. 10. Summary of industry statistics 2010 (2009 activities) EU USNetworks 396 340Commercial 20% n/aEstimate # of angels 75k 259kInvestment per round 200k 158kTotal estimate investedannually by angels 3-4 billion 17.7 billion $VC Investments in seedand start-up/early stage Circa 2 billion 6.3 billion $Source: EVCA, NVCA EUROPEAN ANGEL MARKET=25% OF US ANGEL MARKET 12   Average exchange rate 2009 : 1 USD:0.72
  11. 11. SECTORS OF INVESTMENT Source: EBAN Statistics Compendium 2010 13  
  12. 12. CHALLENGESFinancial sustainability of the angel groups andpublically supported seed fundsIndustry and performance dataExit routes 14  
  13. 13. Structure   Objectives  and  Financing     netzwerk  nordbayern  is  committed  to  the   foundation  and  growth  of  innovative   Development  organisation  for   companies  in  Northern  Bavaria  and  is   innovative  business  set-­‐ups  in   Northern  Bavaria   supported  by  the  Bavarian  Department  of   F.U.N.  (registered)   Trade  and  Industry  and  private  sponsors..   100  %     associate  shares   Founded  in  1999   f.u.n.  netzwerk  nordbayern  gmbh     10  employees   about  170  members     Membership  contributions  from  100    to  5.000     Free  of  charge  for  sponsors  and  universities   15  
  14. 14. Target  group  and  overview  of  our  services     Planning   Professional  support  in  company  planning   and  preparation  of  business  plans     Financing   Setting  up  contacts  between  investors  and   companies  seeking  capital     Training   Seminars,  workshops,  start-­‐up  wiki,   coaching  and  mentoring    Target  Group   Networking     Setting  up  contacts,  organising  networking  Innovative,  growth-­‐oriented  companies  and  founders   events,  online  networking  with  Twitter  &     XING   16  
  15. 15. Financing   Business  Angels   Strategic   Companies   investors   seeking  finance   Lending   institutions   Venture     capital   State  sponsored   organisations   grants   17  
  16. 16. Core  activities  of  the  seed  financing  network   Selection   Guidance      Betreuung   Matching      Vermittlung   Networking   Networking  First-round selection of Regular supply of Bringing ideas and Networking ofcompanies: specialist knowledge: capital together: individual network partners: company: a multiplicators to aid concept developmentSelection of investors: Individual coaching and workshops: Evaluation venture contracts 18  
  17. 17. Summary  of  investments  achieved   Sector  in  detail   Amount   Deals Amount Construction   3.505.000     Number   118   Bio-­‐/Genetic  technology   31.301.8957     Business  Angels   26.969.246     Chemicals   100.000     Strategic  Investors   2.000.000     Electrical  engineering     11.902.993     VC  Companies   74.816.280     Finance   1.204.747     Public  Investors   47.603.318     Trade   30.677     Summe 151.388.844 ICT   60.403.471     Logistics   2.509.764     Marketing   520.000     Mechanical  engineering   4.509.983     Media   531.292     Medicine  and  health   21.241.321     Environ./Energy  technology   10.726.292     Materials   2.686.071     Other   215.339     Total   151.388.844     19  
  18. 18. Financed  by  sponsors  and  public  subsidies   20  
  19. 19. UK:    Overall  Multiple:  2.2X  Holding  Period:  3.6  years   Approx  22%  IRR  US:    Overall  Multiple:  2.6X  Holding  Period:  3.5  years   Approx  27%  IRR  
  20. 20. 50%  of  deals  were  not  related.    When  related,  they  typically  had  14  years   of  experience   High  3.7X  (4.0  years)   Low  1.3X  (3.6  years)  
  21. 21. Overall  Multiple  for  High  Diligence  5.9X  (4.1years)  Overall Multiple for Low Diligence 1.1X (3.4years)
  22. 22. 11TH ANNUAL EBAN CONGRESS Pre-event EBAN Institute Trainings, BAN and seed fund managers (May 10/11) Pre event Training for women angels (May 11)« Syndication and co-investments: partnerships for the future » Hosted by Lewiatan Business Angels Warsaw on May 12/13 25