BUSINESS ANGEL Network (BAN): Veneto Region Experience

Transcription

1 BUSINESS ANGEL Network (BAN): Veneto Region Experience START Network - Pre-seed and early stage financing Workshop July 4, Venezia Massimo Meneghini massimo@meneghini.it it 1

2 What is the Business Angels market? The Business Angel investment market comprises private individual who make venture capital investments in smaller unquoted companies; (early stage, start up, expantion) They can make investment decisions using their Knowledge of the field, professional Relationship and Personal Save; The fundamental nature of the Business Angel market is informal: finance is only part of the contribution of a proper business angel to a company. Business Angel financing can be definted acceleration capital ; massimo@meneghini.it it 2

3 Why a BAN for Innovation start ups? Because the small innovation company can not ask bank loan by immaterial asset ; The only other way to finance the innovation start - ups and their growth is by equity; There is a equity gap ; Informal market is bigger than formal one (Venture Capital and Marchant Bank); Financing equity is the best way to finance the innovation (to see USA history and Israel as well); The aim of a BAN is to match the capital seeking entrepreneur with the informal investor Because Veneto Innovazione wants increase the number of Veneto innovation company ( biotech,ict, nanotechnology, 3 software, electronics, etc.)

4 What are the Veneto BAN services? for ENTERPRISE Investor Identification, saving resources and costs in the investors search process (a lot of BAs prefer anonymity) Business Presentation model Preparing the contact with BAs Financial advice (for example, number of rounds, exit strategy, etc) and Presentation advice Reference of patents related to a specific technology Visibility Assistance during the matching (deal structure and Investment model, drafting the term of the deal,negotiation, etc) Information for additional fund raising for BUSINESS ANGEL access to selection methods (scouting, processing and estimation of Business Idea and Business Plan) access to regional deals flow sourcing Partecipate in the deal selection training, newsletter evaluation of the entrepreneurs tools of deal analysis possibility to co-financing with other BA ( share risk, access to amount of investment too big for single Angel, share competence and experience with lead Angel) Investment Fora, for socializing with other Investors, or one to one meeting Link with other Network 4

5 Veneto BAN work process model 5

6 BUSINESS IDEA APPLICATION BUSINESS ANGEL APPLICATION EDIT FIRST SIDE FORM IN WEBSITE CONTACT B-ANGEL.IT BY WEB SITE, IF POSSIBLE GET ACCESS 2 ^ SIDE FORM CONTRACT SEND EXECUTIVE SUMMARIES OF DEALS INVITE TO THE FORUM PERSONAL INTERVIEW B.A. SEND GUEST ADHESION DEAL PRESENTATION INVESTIMENT FORUM 6

7 INVESTMENT FORUM it 7

8 Some criteria of deal estimate Innovation deals (start up or spin-off) Original deals but concrete Deal with patent (best if there is also the prototype) Products in a wide market (also future market, better if present) Item products are prefered to servicies like consultancy Abilility to generate cash flow in short time and get BEP in close time (Angel wants a balance between risk and financial return) Yung company that will become adult massimo@meneghini.it it 8

9 Example Company... 9

10 WHO WE ARE Managment team Example Company... Sample name 1: University degree in Information Tecnology Football devoleper videogames Zidane Football Generation for Playstation 1 Process consultant c/o Conad Program S.p.A. Sample name 2,sample name 3 Football developer videogames Zidane Football Generation for Playstation 1 Devolopment on embedded (videopoker) system Devolopment e-trading, e-banking system Company Sample company s.r.l., funded on 2001 october, by Euro of risk capital, in Tommaseo street - PADOVA The history 2001 company fundation devolopment software product for other brands Foottball development videogames Zidane Football Generation for Playstation devolpment system of e-banking and e-trading for Antonveneta Bank 2002 seeking financial partners to growth 10

11 WHAT WE MAKE Example Company... The product/service: Realization of a three-dimensional volley game Original and Innovative elements The product is unique in the world: is never been devoloped a volley game in 3 dimensions Big realism (the actions of electronics player are created by Motion Capture system with professional player) Support of the A1 italian volley team, both male than female Which advantage offer? New product for electtonics games world market Strong graphics impact Easy and intuitive game system 11

12 WHAT WE BRING into the enterprise Patents and rights: Example Company... Sample company is Xbox Registered Developer ( it has autoritation to develop Volley World League for Xbox - by Microsoft) The idea of a volley games in 3 dimensions (6 player against 6 player) is never been developed and presented on the market Contracts ang goodwill Support of A1 female association volley team Support of Trentino Volley (A1 male team) Contact with publisher waiting a show version of the product for PC and Xbox. Moreover, we have already get a oders for Coin Op version of the game Personal Investment: hardware / software material office charges personal liquidity that will be invested initial risk capital estimation of the project now (at the actual step) animation by motion capture already done

13 WHAT WE REQUEST Kind of Business Angels: Example Company... One o more financial BAs that support us in financial managment A Business Angel to bring in three rounds: first from , second from , and final , to support the following investment plan: Buying Hardware % Personnel cost % Consultants % Motion Capture % Cost of the amministrator % Office % TOTAL % 13

14 TUNROVER ANALYSIS Example Company... Version Coin Op PC e Xbox PC e Xbox PC Xbox Sponsor N = Number of clients Q = quantity bought P = unit medium Price Fatturato = NxQxP Other source of turnover Total turnover The other scources of turnover are the royalty on product selling. Market and strategies of sellling: The world market of electronic games growth about 40% every six mouths ( source: The product will be sold to a one o more publishers or sporting magazine in PC version Will be offered on the market a Coin Op version The version Xbox will be sold to one or more publisher 14

15 COST ANALYSIS Time period 6 moths 12 moths 18 moths 24 months Coin Op PC, Xbox PC,Xbox turnover Coin Op turnover Total turnover COST ANALYSIS Hardware Software Motion capture Personnel cost Consultants charge Cost of amministrator Office Example Company... Total cost Turnover - Total cost (BEP) Break event point EMPLYMENT PLAN Number of new emploies Cumulate emploies The break even point will be taken on 6 months 15

16 ECONOMICAL/FINANCIAL ANALYSIS after the investment of a Business Angel Example Company... Period 6 mesi 12 mesi 18 mesi 24 mesi Turnover (euro) Change % 0% 104% -90% 0% Total cost Change % 0% -54% -100% 0% Profit befor tax Tax estimation ( 42%) Net Profit/Loss Change % 297% -92% 0% Cumulated (asset-liability) net value Change % nin 2 years 225% Earning/(asset-liablity) 49% 66% 5% 5% Earning/turnover 37% 71% 58% 58% 100% shares Price of the company Variazione % nel triennio 280% Price/Earning 2,1 0,9 22,7 23,7 Price Earning Growth ratio 0,3-24,7 0,0 Price/Turnover 0,8 0,6 13,2 13,7 Price/(asset-liability) 1,0 0,6 1,2 1,2 Potential capital return for the Angel is 280% on 24 months, (under hypothesis do not distribution of profit and without capital gain tax) 16

17 HOW THE INVESTMENT RETURN LIQUID Example Company... The selling shares to more Business Angels is 49% of total shares in more rounds, to be equivalent Euro. When/How the Business Angel exit: The B.A. can stay inside the company until he prefers; we offer a ri-acquisition clause three years with entrepreneurs or Put Option (price and time definited before) 17

18 A good matching when ENTERPRISE Has a good management team Makes a good presentation Has a good intellectual property rights Seeks right amount of money BUSINESS ANGEL! Knows market and understand the business! Has contacts helpful to the company! Knows company weakness and can help! Does not want the control of the company 1. There is a feeling between entrepreneur and BA 2. Right time of the matching (1-4 month) 3. Development of Business Plan 4. Due diligence (in particular technology one) 5. Bid and Ask price are reasonable massimo@meneghini.it it 18

19 Some Veneto BAN data from May 15, 2000 to the end of 2002 More than 300 entrepreneurs having contacted Veneto BAN (first side application form) About 200 are qualified to edit second side form 29 deals has been presented to BA 6 Investment Fora + (one to one meeting) 25 registered Business Angels 2 deals successful concluded massimo@meneghini.it it 19

20 Some Veneto BAN characteristics The majority of BAs invested sums of less than Euro, but the median capital seek from company is over Euro Start up are prefered to early stage Innovation products in the traditional markets (manufacturing, software, electronic) are prefered to new products in new sector ( internet, biotech, etc.) There was (and there is) quite a sharp decline in equity investment activity Veneto BAN is focused on Innovation Now, the BAN is in standby massimo@meneghini.it it 20

21 Can Business Angels fly? Yes, if entrepreneurial culture in Europe changes Owner managers want total control There is not a favourable framework conditions for Business Angel Investment We need to raise awareness about the potential and benefits of an Angel market We need awareness that not all money is the some The unification of European risk capital markets will increase the potential and the pressure for cross-border cooperation Europe needs a strong equity culture massimo@meneghini.it it 21

22 BUSINESS ANGEL Network (BAN): Veneto Region Experience START Network - Pre-seed and early stage financing Workshop July 4, Venezia Massimo Meneghini massimo@meneghini.it it 22