This document provides an overview of entrepreneurship in Italy and venture financing. It discusses the state of entrepreneurship in Italy, noting the dominance of small and medium enterprises focused on services and manufacturing. It also summarizes venture finance in Italy, noting a lack of established venture capital and small deal sizes. Key issues for Italy include deal flow, high business mortality, bridging research to business, mindsets, and managerial skills. The document then covers various topics related to entrepreneurship including what makes a successful startup, business plans, funding sources, and venture capital processes. It introduces Mind the Bridge foundation, which aims to promote entrepreneurship in Italy through various programs.

1. Introduction to Entrepreneurship. From Startups to Venture Financing Mind the Bridge ItalyTour 2010 Torino, June 10th Alberto Onetti, Chairman, Mind the Bridge Foundation With the support of:

2. Agenda

3. Agenda

5. In Italy SMEs are 98% of the total

6. Mostly mature business

7. Primarily Services (67% of GDP), Manufacturing is only 24%

8. Innovative industries play a minor role (2-5%)

9. Strong family business vocation

10. “One man only at the helm.”

11. “Companies are life-long enterprises.”

12. “First get some revenue, and then invest.”

13. “Think real.” ITALY: INDUSTRY CONTRIBUTION TO GDP (2009) Source: CrESIT 2010

15. Of the €3.8B invested yearly (avg. 2005-2009), approximately €70M went to early-stage investments (AIFI & Pricewaterhouse­Coopers 2005-2009)

16. Only 255start-ups were able to get funded in the last three years, with an average deal size of €1M (AIFI & Pricewaterhouse­Coopers 2007-2009)

17. In 2009: 79 deals despite the financial crisis (€98M invested, -15% compared to prior year, while overall investments declined by 52%) (AIFI & Pricewaterhouse­Coopers 2009)

18. Small size of the stock market does not help

19. The stock market capitalization to GDP ratio is lower than 60%, versus 140% in the United States and 170% in the United Kingdom (IMF & World Federation of Exchange)

21. Cumulative R&D investments are €17B (4% of GDP), whose 30% from universities and 20% from public and non-profit (ICE, Cotec, Istat)

22. 400k scientific publication in the period 1998-2008 ranking 8th in the global classification (7th for number of citations) (Thomson Reuters, 2008)

23. Biotech: 233 clinical trials in progress during 2009 (Ernst & Young 2010)

24. Issues in turning research into business

25. Lack of efficient technology transfer offices

26. Universities do not offer incentives for lecturers to spin-off business initiatives

27. Scarcity of skilled executives with strong entrepreneurial skills

29. High mortality (“crisi del primo miglio”)

30. Bridging research into business

31. Mindset

32. Managerial skills

33. Exit on the domestic market

34. Technology hot shots aspire to sell out to new economy “leviathans”

36. Ingredients for a Startup

37. What is an Entrepreneur

38. Average entrepreneur’s profile

39. Manager vs Entrepreneur

40. Agenda

41. The Big Idea!!! … That’s Matters a Lot, but It’s All About Execution …

42. The Questions Every Entrepreneur Must Answer

43. The Business Plan THE OPPORTUNITY: The problem we solve (description of your product highlighting the benefits to the users/customers) The competive advantage (why your product is better. Compelling reason to buy) THE MARKET:The market you are addressing (market size, potential growth, competition) BUSINESS PLAN THE BUSINESS MODEL: What are you looking for (capital you are raising- use of proceeds) Financials (Burn and cash positive projections) THE TEAM:The team and your relevant experience in the domain you're addressing

44. Why a business plan

45. business plan? Ok vsKo What investors want to see

46. Turning Scientists into Entrepreneurs OK KO

47. Talking $$$

48. Financials: Statement of Operations

49. Who reads a business plan?

50. Agenda

51. The Funding Decision Bootstrapping Equity Financing Founders’ capital/savings Family/friends Angels Early stage VC Early sources VentureDebt/Loans Acconts receivable Strategic Partners Retained earnings VC firms Corporate VC Private placement Investment banking Public markets Later sources

52. The Angel Investor

53. The Venture Capitalist

54. Agreement variables and control mechanisms

55. VC Financing Process: Getting Through The Funnel 1,000 Leads 150 Meetings Actively Pursued70 $ $ 5 – 10 Financed $ $ Less than 1% of all leads get funded $

57. Venture Capitals: Average Investment Portfolio DEFAULTS BREAKEVEN “FIRE SALES” ZOMBIES IPO/M&A GOOD IPO/M&A WILD ONES (IPO) TOTAL 60% 12% 10% 8% 6% 4% 0% 100% Source: ATV

58. Why Venture Capital ?

59. Venture Capital Investments slowed down, but US stills leads the way

60. Agenda

61. The History of the Valley

62. The (real) History of the Valley

65. HP (47)

66. Lockheed

67. NASA1930 1940 1950 1960 1970 1980 1990 2000

69. Is it sustainable long-term?

71. Approach to Risk

72. Value of Failure (not just a downside but a must-have)

73. Importance of the Hub: a world of opportunities

75. Why now? It’s the best opportunity talent abounds from scarcity comes clarity innovation comes from hunger startup cost ~0

76. (5) Lessons from Google the team is all (almost) healthy disregard for the impossible big problems are better than small ones users first don’t pay attention to the VC bandwagon

77. Agenda

79. associating mentors and role models

80. professionalizing the business planning skills

81. using and building the network

82. “give back” to build a bigger pieConnecting Talent

84. Selecting the best of breed (Annual MtB Business Plan Competition & MtB Call for Ideas)

85. Providing training & education to the new generation of entrepreneurs (MtBBootcamp and Coaching)

86. Showcasing the most promising startups and opening an international debate (MtB Venture Camp @ Corrieredella Sera)

87. Hosting&mentoring the most promising startups in the Silicon Valley (MtB Gym)

88. Pitching US investors / partners (MtB Gran Finale events)Connecting Talent

89. Building The Bridge: The Timeline

90. 2009 selectedStart-ups Revolutionary antenna system (Milano) Wi-Fi-derivedsolutions (Milano and Boston) Comprehensivenon-invasive solution for both vertebral fractures and bone strenght assessment (Lecce) Solutionto update anydigital information (Sassari) Social-networkwhichallowusersto create musicthrough the web (Treviso) Social marketplacefortravel, whereexperts can provideuserswith information and personalizedoffers (Milano) Virtual and Augmented Reality technology (Pisa)

91. THANK YOU FOR YOUR ATTENTION Questions & Answers BLOGS: SOCIAL MEDIA: www.mindthebridge.org http://siliconvalley.corriere.it/ Facebook: Mind the Bridge - Connecting Talent Twitter: MindTheBridge Contactsinfo@mindthebridge.org USEFUL LINKS: www.mindthebridge.org