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Entrepreneurship and Venture Capital in Spain - Nico Goulet - Adara Ventures - Stanford - March 1 2010


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Talk at Stanford Engineering School by Nico Goulet, Adara Venture Partners, Madrid, Spain, March 1 2010.

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Entrepreneurship and Venture Capital in Spain - Nico Goulet - Adara Ventures - Stanford - March 1 2010

  1. 1. Entrepreneurship and <br />Venture Capital in Spain<br />NicoGoulet<br />Adara Venture Partners, Madrid, Spain<br />March 1, 2010<br />European Entrepreneurship &Innovation Program<br />School of Engineering<br />
  2. 2. Historical perspective on Venture activities in Spain<br />Drivers of change: 2000-2010<br />Current environment & implications<br />Adara Ventures<br />March 2010<br />2<br />OVERVIEW<br />
  3. 3. The entrepreneurial eco-system<br />3<br />FRAMEWORK<br />Entrepreneurs &<br />Innovation<br />Venture Funding<br />& Support<br />Success<br />Stories<br />March 2010<br />
  5. 5. 5<br />HISTORICAL PERSPECTIVE<br />Barriers to entrepreneurship<br />Recognition<br />Culture of Risk & Reward<br />Support<br />Funding<br />Opportunity Cost<br />March 2010<br />
  6. 6. 6<br />HISTORICAL PERSPECTIVE<br />Historical structure of private funding (pre-2000)<br /><ul><li>Almost all private funding focused on PE
  7. 7. Some public funding efforts
  8. 8. No major successes to point to
  9. 9. Practically no specialized venture funds
  10. 10. Very difficult for entrepreneurs to find financial support beyond the Friends and Family stage</li></ul>March 2010<br />
  11. 11. 7<br />HISTORICAL PERSPECTIVE<br />Situation at the turn of the century<br />M<br />March 2010<br />
  12. 12. DRIVERS OF CHANGE 2000-2010<br />
  13. 13. 9<br />DRIVERS OF CHANGE<br />Skilled professional base<br />March 2010<br />
  14. 14. 10<br />DRIVERS OF CHANGE<br />Low cost base<br />March 2010<br />
  15. 15. 11<br />DRIVERS OF CHANGE<br />Infrastructure support<br />March 2010<br />
  16. 16. 12<br />DRIVERS OF CHANGE<br />Strong local base of corporate technology “consumers”<br />March 2010<br />
  17. 17. 13<br />DRIVERS OF CHANGE<br />Institutionalized support<br />March 2010<br />
  18. 18. 14<br />DRIVERS OF CHANGE<br />2000-2010: From a vicious cycle to a virtuous cycle<br />Attractive factor conditions<br /><ul><li>Productivity of human assets
  19. 19. Lower infrastructure cost base
  20. 20. Commercial (and Exit) possibilities pan-European/Global
  21. 21. Strong government support</li></ul>Getting entrepreneurs what they need to thrive<br /><ul><li>Funding & Capital
  22. 22. Strategic support
  23. 23. Development support
  24. 24. Networking</li></ul>March 2010<br />
  25. 25. 15<br />DRIVERS OF CHANGE<br />Spain has attractive factor conditions for company building<br /><ul><li>Productivity of human assets is very high
  26. 26. High quality professionals
  27. 27. Universities with good programs, including technological/technical
  28. 28. High patent productivity for Madrid, Barcelona and Basque regions
  29. 29. R&D: low cost and globally competitive
  30. 30. High quality of life makes it easier to attract outside talent
  31. 31. Excellence in software development processes
  32. 32. Lower infrastructure cost base
  33. 33. Regions are competing to attract investment and companies
  34. 34. Effective aid and subsidy programs to support growth and development (CDTI, SEPIDES, PROFIT, …)
  35. 35. Technology parks have grown from 6 to 17 over the past years, providing significant start-up support
  36. 36. Combined revenue for Spain’s tech parks stands at €5.5b
  37. 37. R&D employment at 9000
  38. 38. Commercial and Exit possibilities are now pan-European
  39. 39. Harmonization enhances the potential for acquisition of regional companies by major European players
  40. 40. The European market offers significant growth opportunities to Spain based companies
  41. 41. Strong political desire to support innovation and entrepreneurship
  42. 42. Strong fiscal incentives to develop
  43. 43. Many development and subsidy programs available to fund R&D programs</li></ul>March 2010<br />
  44. 44. 16<br />DRIVERS OF CHANGE<br />Getting entrepreneurs what they need to thrive<br />Capital<br />Including follow-on support and commitment<br />- Configuring subsequent funding rounds<br />Investor management<br />Strategic support<br />Critical one time decisions<br />- Product launch configurations<br />- Strategic partnerships<br />- Mergers & acquisitions<br />Development support<br />Commercial development<br />- Finding and engaging blue chip customers<br />Business development<br />- Structuring product development deals<br />- Distribution or project implementation agreements<br />Team<br />- Attracting and structuring the involvement of talented people<br />Networking<br />Relationships with larger VC’s (local and international)<br />Links to blue chip companies in core and adjacent sectors<br />Access to international peer companies<br />March 2010<br />
  45. 45. 17<br />DRIVERS OF CHANGE<br />Emergence of a SW development cluster<br />March 2010<br />
  46. 46. 18<br />DRIVERS OF CHANGE<br />Emergence of specialized Venture Capital fund managers<br />March 2010<br />
  47. 47. 19<br />DRIVERS OF CHANGE<br />Participation of foreign funds in local investments<br />March 2010<br />
  48. 48. 20<br />DRIVERS OF CHANGE<br />Emergence of significant success stories<br />March 2010<br />
  50. 50. 22<br />CURRENT ENVIRONMENT AND IMPLICATIONS<br />Context<br />Recession, budget cuts, investment plans curtailed<br />Credit crunch<br />Difficulty in raising new funds<br />Very difficult business environment, particularly for smaller, entrepreneurial companies<br />March 2010<br />
  51. 51. 23<br />CURRENT ENVIRONMENT AND IMPLICATIONS<br />Survive…. and build for the future<br />“Manage what you can control…”<br /><ul><li>Focus on preserving cash and reaching break-even
  52. 52. Continue to pursue healthy growth targets, focusing on high growth and diversified markets
  53. 53. Cost control a top priority, constantly reviewing performance and risk/benefit
  54. 54. Pursue funding rounds wherever conditions are favorable, but minimize dependence on external sources
  55. 55. Adapt your strategy to potential exit scenarios</li></ul>March 2010<br />
  56. 56. 24<br />CURRENT ENVIRONMENT AND IMPLICATIONS<br />VC’s perspective<br />Focus on strong growth opportunities and diversified markets<br />No debt, only equity: Manage funding and fundability<br />(Even) longer exit horizon<br />People, people, people…<br />Cash, cash, cash…<br />March 2010<br />
  57. 57. ADARA VENTURES<br />
  58. 58. 26<br />ADARA VENTURES<br />Apply traditional VC model to the Spanish eco-system<br />$80Mn first time fund<br />Institutional base of investors<br />Focused on ICT<br />Invest in Spain or Spain related companies, with global footprint<br />Seek to leverage experience and networks to drive growth in portfolio companies<br />13 investments in total:<br />Software services and platforms: 5 investments<br />Mobile and On-Line services: 3 investments<br />Components and semi-conductors: 3 investments<br />Telecoms equipment: 1 investment<br />8 investments part of strong syndicates<br />Amadeus (2x), Accel, TVM, GIMV, Active Capital Partners, Baytech, Caja Navarra, La Caixa<br />March 2010<br />
  59. 59. ADARA VENTURES<br />Live Portfolio<br />Exits<br />Write-offs<br />27<br />As of February 2010<br />March 2010<br />
  60. 60. Growth track<br />ADARA VENTURES<br />Active portfolio revenue<br />Portfolio revenue/employee<br />28<br />March 2010<br />
  61. 61. 29<br />ADARA VENTURES<br />Our values<br />Spirit of the Firm<br />An entrepreneurial spirit underlies the philosophy of our firm. Creativity, boldness and commitment are critical to everything we do. <br />Our investors’ interests always come first; then the interest of the entrepreneurs we support. By serving investors and entrepreneurs well, our own success will follow. <br />We measure success through tangible results and performance. <br />Integrity, honesty and fairness guide the way we do business. <br />Our Work<br />Our core activities are principal investing and company-building. <br />We take pride in the professional quality and high standards of our work. We would rather be best than biggest. <br />We manage our work and make decisions in an efficient and pragmatic manner. <br />We strive to anticipate the changing industry environments in which we specialize. We seek to remain innovative and regularly challenge our assumptions. <br />People<br />The value of our firm lies in our people. Our main assets are our reputations, knowledge, and relationships. <br />We believe that teamwork, supported by individual initiative, is the best way to obtain outstanding results. <br />We strive to recognize and harness talent, with a preference for diversity in such talent. <br />We look to develop long-term, win-win collaborative and trusting relationships with our stakeholders. <br />March 2010<br />
  62. 62. Thank You<br />