Venture Fund


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Venture Fund

  1. 2. Russian-Armenian Venture Capital Fund
  2. 3. Fund Concept <ul><li>Russian-Armenian Venture Capital Fund is being established as an initiative of Russian and Armenian government Commission for economic cooperation between Russia and Armenia </li></ul><ul><li>Armenian government is attracting investments in the country via venture funds and free economic zones including those focused on innovations </li></ul><ul><li>Russian-Armenian Venture Capital Fund will be funded by Armenian governmental development institutions, international finance organizations and private investors </li></ul><ul><li>Prospective anchor investor Russian company SITRONICS intends to co-invest into the Fund as well as to render part of its RAO MARS site to high tech companies & their production facilities and may acquire successful companies eventually at exit stages </li></ul><ul><li>Armenian government intends to grant special economic zone status to RAO MARS site </li></ul><ul><li>Russian-Armenian Venture Fund will invest into Armenian and Russian companies that run innovative business within the generic framework of priority lines for technology development of both countries and are interested to establish production in Armenia </li></ul><ul><li>The Fund will also invest into foreign companies that are seeking venture financing and are willing to bring their technologies to Armenia and place manufacturing facilities for high tech products in Armenia thus establishing high tech business in Armenia </li></ul>
  3. 4. <ul><li>The size of the Fund is expected to be $70-80 million and will be formed in two stages </li></ul><ul><li>The first closing of the Fund will be done at ~$40M level. SITRONICS and Armenian government intend to become anchor investors, and international finance organizations are expected to join and co-invest at this first stage as it’s extremely difficult to commit private investor money for the first closing of the Fund in current economic environment. However prospective Fund managers will use best efforts to attract interested specific groups of private investors, particularly international Armenian diaspora at this stage too </li></ul><ul><li>The Fund managers will allow 12-18 months for the second closing of the Fund, and at this stage Fund size is expected to reach $70-80M, and prospective Fund managers expect to commit other investors including but not limited to </li></ul><ul><ul><ul><li>governmental high tech investors and fund of funds like Russian Corporation Rosnanotech, Russian Venture Company and others </li></ul></ul></ul><ul><ul><ul><li>international finance organizations like EBRD, IFC and others </li></ul></ul></ul><ul><ul><ul><li>private investors from Russia, Armenia and other countries </li></ul></ul></ul><ul><li>Prospective Fund managers will seek co-investors particularly international venture funds to co-invest on the deal level, especially when foreign innovative companies will plan to place production facilities and establish high tech business in Armenia </li></ul>Fund Concept (cont’d)
  4. 5. Fund Strategy <ul><li>Priority science & technology development lines: </li></ul><ul><ul><li>Security and counterterrorism </li></ul></ul><ul><ul><li>Life sciences </li></ul></ul><ul><ul><li>Nano systems and new materials </li></ul></ul><ul><ul><li>Information and telecommunication systems </li></ul></ul><ul><ul><li>Environment conservation </li></ul></ul><ul><ul><li>Transport, air and space systems </li></ul></ul><ul><ul><li>Energy and power saving </li></ul></ul><ul><li>Maximum potential is in technologies of overlapping areas </li></ul><ul><li>Alternative energy sources </li></ul><ul><li>Energy efficiency </li></ul><ul><li>Environmentally friendly manufacturing processes - raw materials, fuel and water processing </li></ul><ul><li>New materials </li></ul><ul><li>Nanotechnology </li></ul><ul><li>IT </li></ul>! Energy saving New materials Environment protection
  5. 6. Fund Management Team Sergei Bubnov Managing General Partner <ul><li>More than 25-year long experience in high-tech industry </li></ul><ul><li>Lead venture investments at Renaissance Investment Management </li></ul><ul><li>Established small technology companies in early 1990th </li></ul><ul><li>Over ten years with General Electric, established large engineering and technology center for GE in Russia </li></ul><ul><li>Commercialized Russian-origin technologies in America, Europe and Asia </li></ul><ul><li>Invested in companies developing Russian-origin technologies on international markets in the frame of establishing venture capital fund Islands of Excellence </li></ul><ul><li>Established and developed Russian high-tech company and built its presence in international markets </li></ul><ul><li>6 patents </li></ul><ul><li>PhD </li></ul><ul><li>Moscow State University </li></ul>Boris Mislavsky Managing General Partner <ul><li>More than 15 years in banking & investments </li></ul><ul><li>Managing director for alternative investments at Renaissance Investment Management </li></ul><ul><li>Portfolio Manager for RenShares Utilities Fund ( offshore closed end fund investing into CIS energy companies) </li></ul><ul><li>Invested in companies developing Russian-origin technologies on international markets in the frame of establishing venture capital fund Islands of Excellence </li></ul><ul><li>Principal banker with the Power & Energy Utilities Dept of the European Bank of Reconstruction and Development in London </li></ul><ul><li>VP Emerging Markets Equity Research Dept of Merrill Lynch in London </li></ul><ul><li>VP Equity Research Dept of Credit Suisse First Boston </li></ul><ul><li>CFA, 1998 </li></ul><ul><li>MBA/Chicago University </li></ul><ul><li>Moscow University for Foreign Affairs </li></ul>Principals worked together to establish venture capital fund and to invest into high tech companies
  6. 7. Fund Management Team <ul><li>Unique combination of experienced principals </li></ul><ul><ul><li>Building effective business with high ethical standards </li></ul></ul><ul><ul><li>High tech innovative projects management </li></ul></ul><ul><ul><li>Finding prospective technologies and hi-tech companies </li></ul></ul><ul><ul><li>Long time experience in technology due diligence and business & technical teams competence check </li></ul></ul><ul><ul><li>IP protection management </li></ul></ul><ul><ul><li>Development of strategic plans for company growth </li></ul></ul><ul><ul><li>Management for on time & on budget execution </li></ul></ul><ul><ul><li>Six Sigma quality methodology </li></ul></ul><ul><ul><li>Negotiation skills and experience in licensing technologies and buy/sell of high tech companies </li></ul></ul>
  7. 8. Fund Prospective Advisers & Partners <ul><li>More than 35 years in international energy business </li></ul><ul><li>Managing partner of UK-based Investment Fund </li></ul><ul><li>Headed $270M Fund engaged in development and commercialization of new technologies in energy industry </li></ul><ul><li>Worked in oil and gas sector of Shell in Europe, Australia and Venezuela </li></ul><ul><li>Headed diversified energy and transportation company Natomas </li></ul><ul><li>Headed T hermal P ower - the most profitable geothermal company in the world at that time </li></ul><ul><li>MBA </li></ul><ul><li>Has got 20-year-long experience in Russia and region in technology transfer business and intellectual property protection </li></ul><ul><li>Senior partner with the global law firm Squire, Sanders & Dempsey, heads the firm's CIS practice </li></ul><ul><li>Served as a director of two venture capital funds with investments in Russia and the CIS </li></ul><ul><li>Bears the global Squire Sanders network including operations in Europe, Asia, the United States and Latin America, has got extensive contacts in both technology and investment communities </li></ul><ul><li>Harvard College and Georgetown University Law School </li></ul><ul><li>Member of Russian Academy of Science </li></ul><ul><li>More than 50 years in energy industry </li></ul><ul><li>The head of energy section for energy and mechanical engineering of Russian Academy of Science </li></ul><ul><li>The Chairman of scientific Council for energy industry development in Russia </li></ul><ul><li>The Chairman of United scientific Council for thermal physics and heat engineering </li></ul><ul><li>over 60 inventions , 6 books , more than 250 scientific articles </li></ul>Sarah Carey Squire, Sanders & Dempsey LLP Tony Amor Pulsar Energy Capital LLP Oleg Favorsky Russian Academy of Science <ul><li>UK-based Investment Fund </li></ul><ul><li>American venture Capital Fund </li></ul><ul><li>International consulting firm in energy & energy technologies </li></ul><ul><li>Assistance to start-ups , </li></ul><ul><li>commercialization aid </li></ul><ul><li>American incubator for start-ups from different countries </li></ul>
  8. 9. Fund Investment Policy <ul><li>Key selection criteria: Team + Company + Technology </li></ul><ul><li>Unique technology with well protected IP, good market potential on large existing and rapidly growing new markets </li></ul><ul><li>Good standing company with transparent ownership structure and finances, with well stated business idea, adequate assessment of technical, financial, marketing and other risks, realistic strategy for high profitability and high return on investments, good potential for market cap growth </li></ul><ul><li>Solid management team well tuned to collective work and partnership with Fund managers for implementing growth strategy and building company with high market cap </li></ul>
  9. 10. Fund Investment Policy (cont ’ d) <ul><li>Existing prototypes </li></ul><ul><li>Established IP protection for technologies and products and/or any other means of securing competitive advantages </li></ul><ul><li>Transparent financial structure and company’s ownership allowing for sufficient control for investors </li></ul><ul><li>Internal rate of return ( IRR ) higher than 45% and potential for company growth higher than 5 times </li></ul><ul><li>Maximum investments in one industry will not exceed 30% of the total Fund size </li></ul><ul><li>Expected time to exit from individual investee companies – 3-5 years </li></ul><ul><li>Minimum volume of investments into one company – $3M </li></ul><ul><li>Maximum volume of investments into one company will not exceed 15% of the Fund size </li></ul><ul><li>Well developed exit strategy for the Fund ( M & A , MBO / MBI , Recapitalization , IPO, etc .) </li></ul>
  10. 11. Deal Flow & Fund Financial Indexes <ul><li>Project Sources </li></ul><ul><li>Contacts of Fund managing partners and Fund Advisory Board both in Armenia and Russia and outside, particularly in US and European high tech communities and venture funds </li></ul><ul><li>Community of Armenian high tech companies </li></ul><ul><li>Companies-participants of Innovation Contests (Boris Mislavsky, Managing partner has been a member of the Russian Innovation Contest’s expert panel from 2001) </li></ul><ul><li>Companies-grantees with various government programs to support innovation business such as International Science & Technology Center (ISTC), First/Next Steps to Market of US Civilian Research & Development Foundation (CRDF), European and other programs </li></ul><ul><li>Companies participating venture fairs </li></ul><ul><li>Associations of venture investors and business-angels of Armenia and Russia </li></ul><ul><li>Other investment funds and investment companies that work mainly with start-ups on pre-seed and seed stages in Armenia, Russia, USA and Europe </li></ul><ul><li>Innovation companies from technology incubators and technoparks in Armenia and Russia </li></ul><ul><li>Special web-site </li></ul><ul><li>Sample Projects </li></ul><ul><li>Hydrogen sulphide (H2S) conversion by plasma technology </li></ul><ul><li>Mobile social network </li></ul><ul><li>Continuous basalt fiber technology & products </li></ul><ul><li>Terminal access to remote servers for small and medium size businesses </li></ul><ul><li>Triple junction solar cells & concentrator PV power plant </li></ul><ul><li>Multiphase oil flow meter </li></ul><ul><li>Scintillation and laser single crystals production </li></ul><ul><li>Fund’s financial indexes </li></ul>Average IRR , % 45 % ROI 4 Value / EBITDA 1.69 Value / Sales 1. 01
  11. 12. Deal Flow <ul><li>Hydrogen sulphide (H2S) conversion </li></ul><ul><li>by plasma technology </li></ul><ul><li>Kintech LLC </li></ul><ul><li>Summary : company developed new prospective technology for oil refining industry </li></ul><ul><li>Category : energy efficiency, environment protection </li></ul><ul><li>Innovation : developed technology is novel in the market; oil refineries worldwide use conventional steam reforming of methane for hydrogen production and Claus-process for hydrogen sulphide into commodity sulfur </li></ul><ul><li>Uniqueness : technology allows for more efficient use of methane in both processes and therefore significantly reduces CO2 emissions </li></ul><ul><li>Project’s financial indexes </li></ul><ul><li>Continuous basalt fiber technology </li></ul><ul><li>& products </li></ul><ul><li>Kamenny vek LLC </li></ul><ul><li>Summary : company developed new basalt fiber production technology for various markets – wind energy, construction, automotive industry </li></ul><ul><li>Category : nanosystems, material industry </li></ul><ul><li>Innovation : developed technology allows for using natural basalt as raw materials leading to cost reduction and environmental friendliness </li></ul><ul><li>Uniqueness : The material shows the best price/properties ratio as compared to competitors and easy disposal at the end of life cycle </li></ul><ul><li>Project’s financial indexes </li></ul>IRR , % 101% ROI 3.7 Value / EBITDA 1.6 Value / Sales 1.3 IRR , % 90.23% ROI 1.24 Value / EBITDA 1.79 Value / Sales 0.89
  12. 13. <ul><li>Multiphase oil flow meter </li></ul><ul><li>LLC « Aktel » </li></ul><ul><li>Summary : company developed new type of multiphase flow meters for oil recovery industry </li></ul><ul><li>Category : process efficiency, environment protection </li></ul><ul><li>Innovation : unique new gages and signal processing algorithms allow for real time monitoring of oil well output at significantly lower cost and with no radioactive components </li></ul><ul><li>Uniqueness : new low cost oil flow meter makes it cost-efficient to install equipment on every individual oil well and thus increase oil well efficiency respectively </li></ul><ul><li>Project’s financial indexes </li></ul>Deal Flow (cont’d) <ul><li>Single crystals production </li></ul><ul><li>technology & scintillators </li></ul><ul><li>and laser components </li></ul><ul><li>Summary : new low gradient technology of oxide single crystals growth </li></ul><ul><li>Category : material industry </li></ul><ul><li>Innovation : developed technology allows for higher quality and better properties, higher productivity at lower cost </li></ul><ul><li>Uniqueness : These crystals have best price-to-quality ratio in comparison with any other products available in the market </li></ul><ul><li>Project’s financial indexes </li></ul>IRR , % 126% ROI 3.4 Value / EBITDA 2 Value / Sales 1 IRR , % 72 % ROI 1 . 0 Value / EBITDA 1. 4 6 Value / Sales 0. 66
  13. 14. Fund Management Company <ul><li>Renaissance Investment Management (RIM) is a leading independent investment management company established in 2003 as a 100% owned subsidiary of the Renaissance Group with offices in Moscow, London and Geneva and with presence in Almaty, Kiev, Kenya and Dubai </li></ul><ul><li>RIM has grown to over $3.4 billion in assets with approximately 150 employees </li></ul><ul><li>A market leader in providing asset and wealth management services in high opportunity emerging markets </li></ul><ul><li>Largest non-captive asset manager in Russia and one of the largest managers of the biggest Russian pension fund assets </li></ul><ul><li>Largest non-captive player in the Russian real estate market and manages the biggest in Russia land fund </li></ul><ul><li>In-depth experience and a track record in managing high opportunity emerging markets </li></ul><ul><li>Delivering consistent superior performance by employing world-class investment management professionals </li></ul>
  14. 15. Fund Management Company (cont’d) Renaissance Group has now expanded its offerings and services throughout the CIS, Africa and Middle East and will continue to expand in high-opportunity emerging markets throughout the world London London Moscow Moscow Kiev Kiev Cyprus Cyprus Almaty Almaty Geneva Geneva Nairobi Nairobi Lagos Lagos New York New York London Moscow Kiev Nicosia Almaty Nairobi Lagos Dubai Harare Geneva Lusaka Accra Johannesburg Abuja Note: Renaissance Group has a presence in the cities shown
  15. 16. Disclaimer <ul><li>DISCLAIMER </li></ul><ul><li>This presentation, furnished on a confidential basis to the recipient, is neither an offer to sell nor a solicitation of any offer to buy any securities, investment product or investment advisory services, including any other interests in private investment funds (the &quot;Fund&quot;) to be managed by Renaissance Investment Management (UK) Ltd. It is intended exclusively for the use of the person to whom it has been delivered by Renaissance Investment Management (UK) Ltd, and it is not to be reproduced or redistributed to any other person without the prior consent of Renaissance Investment Management (UK) Ltd. </li></ul><ul><li>A more complete description of the Fund, including but not limited to, the risks, fees and investment strategies of the Fund is contained in the Fund’s </li></ul><ul><li>information memorandums. Any offering is made only pursuant to the relevant information memorandum, together with the current financial statements of </li></ul><ul><li>the Fund, if available, and a relevant subscription application, all of which must be read in their entirety. No offer to purchase interests will be made or </li></ul><ul><li>accepted prior to receipt by an offeree of these documents and the completion off all appropriate documentation. All investors must be “accredited </li></ul><ul><li>investors” and “qualified purchasers” as defined in the securities laws of the United States before they can invest in one of the Funds. </li></ul><ul><li>The Fund is a collective investment schemes as defined in the Financial Services and Markets Act 2000 (“FSMA”) of the United Kingdom (the “U.K.”), and </li></ul><ul><li>no invitation or inducement to participate in the Fund may be communicated in or into the U.K. otherwise than in accordance with the FSMA. The Fund </li></ul><ul><li>has not been authorized or otherwise approved by the U.K. Financial Services Authority and are not recognized schemes (as defined in the FSMA). No </li></ul><ul><li>application has been or is intended to be made for an authorization order (as defined in the FSMA) in respect of the Funds. As unregulated schemes, they </li></ul><ul><li>accordingly cannot be promoted in the U.K. to the general public. This presentation shall be issued in the U.K. only to persons to whom it may lawfully be </li></ul><ul><li>issued or passed on, and then only to restricted categories of recipients, namely investors to whom the Fund can be promoted without contravening </li></ul><ul><li>sections 21(1) or 238(1) of the FSMA. Transmission of this presentation to any other person in the U.K. is unauthorized and may contravene the FSMA, </li></ul><ul><li>and no such person shall be entitled to act upon it. </li></ul><ul><li>Historical return information is not necessarily indicative of future performance. There can be no assurance that the Funds’ investment objective will be </li></ul><ul><li>achieved and investment results may vary substantially over time. Changes in interest rates of exchange may fluctuate and investors may get back less </li></ul><ul><li>than their investment. </li></ul><ul><li>All statements of opinion and/or belief herein and all projections, forecasts or statements relating to expectations regarding future events or the possible </li></ul><ul><li>future performance of the Fund represent Renaissance Investment Management (UK) Ltd’s own assessment and interpretation of information available to </li></ul><ul><li>it currently. No representation is made or assurance given that such statements, view, projections or forecasts are correct or that the objectives of the </li></ul><ul><li>Fund will be achieved. All statements relating to profits refer to net profits and do not include the original capital invested. </li></ul>Page Page