Creating a Venture Capital Model for the Region a Best-practice Approach

Transcription

1 Creating a Venture Capital Model for the Region a Best-practice Approach Judith M S Mark Managing Director CME Consulting Limited Enterprise Development Consultants CME Consulting Limited Enterprise Development Consultants

2 About CME- Enterprise Development Consultants We specialise in the development of enterprise models, entrepreneurship education programs and SME training and support services

3 Presentation Outline Definition of venture capital The conceptual issues of venture capital financing Developing the model -Context and Inputs

4 Definition Venture Capital risk capital provided by established VC funds, angel investors or corporate entities Seed funding to early-stage companies and as growth funding throughout the entrepreneurial growth cycle Intent growth and profitability to generate a return via exit

5 Creating a Venture Capital Model for the Region a Best-practice Approach

6 Creating a Venture Capital Model for the Region a Best-practice Approach

7 Context

8 Creating a Venture Capital Model for the Region a Best-practice Approach The state of the venture capital industry now or in the future is based on micro-economic principles of demand and supply and macro re the economy. These are the factors that must be addressedinanyattempttocreateamodelfortheregion

9 Creating a Model -Options Create a model in which the stimulant is an increase in institutional and private capital Create a model which focuses on participation of a wider stakeholder group

10 Examples of Models/ Framework SMEEIS Framework Corporate venture model Public Private Community (PPC Model)

11 SMEEIS a framework for mobilising capital Source: Jonathan Yusuf ISBC 2012 Banks agree to set-aside 10% of Profit After Tax (PAT) Annually for 5years for Equity Investment in SMEs The Central Bank is appointed by the banks to act as Secretariat Banks agree that non-invested set-aside funds be withdrawn by the Central Bank as a penalty The withdrawn funds invested in Nigeria Treasury Bills and the proceeds used to run the Secretariat

12 SMEEIS a framework for mobilising capital

13 Corporate Venture Capital A larger, more established company invests resources directly into a smaller company usually for strategic purposes Usually occurs where the product, market or technology is related to the investing company s operations or where the investee provides a business opportunity Corporate Venturing can be an invaluable tool for keeping pace with industry developments and in fostering innovation

14 CV Model-Pros and Cons

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16 Creating a Model There is no one model applicable to the region Several models can co-exist all tailored to meet the needs of the investor and the entrepreneurial firm Whatever the model there should be a win-win scenario; growth and profitability for the firm and an ROI for venture capitalist commensurate with the risk taken

17 Creating a Model Adequate Supply of Funds Fund Structure and Management Adequate Deal Quantity and Quality Market information Valuations, Due Diligence and exit Individual and Institutional Capacity Supporting Infrastructure Utilize technology in the VC Process -information, education, networking, fund formation and deal generation

18 The Way Forward See VC as part of a larger socio, economic & political system -Dossani& Kenny 2001 Create a financial market structure and architecture conducive to VC activity Dossani& Kenny 2001 Ensure correlation between entrepreneurship, legal & policy framework, education system and supporting institutions Lawton 2002

19 Creating a Venture Capital Model for the Region a Best-practice Approach Thank You! one-stop entrepreneurship centre