© www.gate2growth.com 2002- page : 1 By Uffe Bundgaard-Jørgensen, Ph.D. CEO & Partner Forum Binary Venture Capital Bucharest September 26, 2003 ROMEXPO Nicolae Titulescu Hall The Gate2Growth initiative and finding investors in a difficult market
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© www.gate2growth.com 2002- page : 1
By
Uffe Bundgaard-Jørgensen, Ph.D.
CEO & Partner
Forum Binary Venture Capital
Bucharest September 26, 2003
ROMEXPO Nicolae Titulescu Hall
The Gate2Growth initiativeand
finding investors in a difficult market
© www.gate2growth.com 2002- page : 2
Background
© www.gate2growth.com 2002- page : 3
Back ground
• March 2000, Lisbon European Council
• The goal of the Union was formulated:
– To become the most competitive and dynamic knowledge based economy in the world, capable of sustainable economic growth with more jobs and greater social cohesion by 2010.
© www.gate2growth.com 2002- page : 4
Reformulated
• at the Barcelona European Council 2002:
R & D investments must be increased from present level of: • 1,9 % of GDP
To:• 3 % of GDP in 2010
Business funding should take a greater part• From:
– 56 % of total R&D investments
• To:– 75 % of total R&D Investments
A proportion already achieved in the US:
© www.gate2growth.com 2002- page : 5
Sixth Framework Programme
• € 17,5 Billion available for European Research
– 20,9 % for life Science, Genomics and biotechnology– 32,1 % for Informations Society technologies– 11.5 % for Nanotechnologies and nanoscences– 9,5 % for Aeronautics and space– 6,1% for Food safety and quality– 18,8 % for Sustainable development, ecosystems– 2 % for knowledge-based society
• And– All this research should also result in new business and business
activity!– It is the objective, that 15 % goes to SME´s
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Research funding
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Search for funding
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Seed Financing
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Seed Financing
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Seed Financing
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The Gate2Growth initiative
© www.gate2growth.com 2002- page : 79
Gate2Growth.com is a portal to networks of Entrepreneurs, Investors, Service Providers and Thematic Networks backed by the European Commission.
Entrepreneurs Investors
Service Providers
Thematic Networks
Matching
The Gate2Grwoth initiative is a portal
© www.gate2growth.com 2002- page : 80
© www.gate2growth.com 2002- page : 81
...a service and a large Network
EIC
IRC
BIC
EBNGate2Growth network
FinanceAcademiaFinance
Academia
www.Gate2Growth.comwww.Gate2Growth.com
EurotechData
EurotechData
I-TEC NetworkI-TEC
Network
Proton NetworkProton
Network
IncubatorForum
IncubatorForum
Business AngelNetworks
CommercialpartnershipsBusiness Angel
NetworksBusiness AngelNetworks
CommercialpartnershipsCommercial
partnerships
Other EUrelated networks
Matching service
Projectand
Investmentopportunities
InvestorDatabase
ServiceProvider Database
News / Events / Forums
© www.gate2growth.com 2002- page : 82
The Gate2Growth services
© www.gate2growth.com 2002- page : 83
Gate2Growth services in a glance
• The Gate2Growth key services are adressing:
– Entrepreneurs
• Identify relevant investors with the right ”profile”
• Provide Business Plan diagnostics
• Prepare entrepreneurs for investor contacts and meetings
• Identifying co-investors
– Investors • Access to deal-flow which match investor preferences
• Pre – screening / ”gatekeeper” services
• Investment services for investor portfolio companies
• Syndication partners
© www.gate2growth.com 2002- page : 84
The VC selection process
500 new deals/year
Screening process
2 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Unsolicited deals
© www.gate2growth.com 2002- page : 85
The VC selection process
500 new deals/year
Screening process
2 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Solicited deals
© www.gate2growth.com 2002- page : 86
Helped by Gate2Growth
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 87
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 88
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 89
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 90
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 91
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 92
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 93
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 94
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 95
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 96
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 97
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 98
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 99
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 100
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 101
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 102
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 103
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 104
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 105
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 106
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 107
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 108
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
© www.gate2growth.com 2002- page : 109
500 new deals
Screening process
3 min/deal
250 selected deals
150 selected deals
10 min/deal
20 min/deal
50 analysed deals 5 Hours/deal
25 negotiation
5-10 investments
10 Days/deal
490 rejected deals
1 month/investment
Projects screened by Gate2Growth
Helped by Gate2Growth
© www.gate2growth.com 2002- page : 110
Traditional investor search process
- Lengthly- Costly- Tie up ressources
30 – 50 Potentialinvestors
10 – 15Relevantinvestors
3 – 5 Interestedinvestors
Investment
Month 1 Month 8 - 12
© www.gate2growth.com 2002- page : 111
50 – 70 Potentialinvestors
20 – 25Relevantinvestors
4 – 6Interestedinvestors
Investment
Online screening and matching
Semi Automated matching
Personal assistance to matching
Month 1 Month 3 - 6
* Reduced search cost* Improved hit ratio
Gate2Growth.com matching services
* Shorter time to investment
© www.gate2growth.com 2002- page : 112
Market development
and
concequences
© www.gate2growth.com 2002- page : 113
Amounts invested (€ bn)Amounts invested (€ bn)
Leading to a dramatic increase of European VC Investments over the same period.
4,1 5,4 5,5 6,89,7
14,5
25,1
34,9
0
5
10
15
20
25
30
35
40
1993 1994 1995 1996 1997 1998 1999 2000
Source: EVCA 2001 Yearbook
• Reform of European national pension schemes
• Low interest rates
• High volatility of public equity
• Increasingly attractive returns
• Proliferating European (and US) VC success stories
....an exiting market development !
© www.gate2growth.com 2002- page : 114
Large deal flow !
0
1000
2000
3000
4000
5000
6000
7000
1995 1996 1997 1998 1999 2000 2001 2002 2003
No DealsNumber of deals
© www.gate2growth.com 2002- page : 115
”.com ” - SAD NEWS !
0
50
100
150
200
250
aug-99 oct 99 dec-99 feb-00 apr-00 jun-00 aug-00 oct-00 dec-00 jan-01 apr-01
Share price index for Internet shares
© www.gate2growth.com 2002- page : 116
Partially due to ”dotcombustion”
0102030405060708090
100
At peak now
At peaknow
Yahooooooooooooooo Market value in Bn USD
© www.gate2growth.com 2002- page : 117
% early stage / later stage
2000
2001
2002
early stage
later stage
0
10
20
30
40
50
60
70
80
% early stage / later stage
© www.gate2growth.com 2002- page : 118
Funds raised (blue) and amounts invested (€ bn)Funds raised (blue) and amounts invested (€ bn)
Despite abundance of VC capital
0
10
20
30
40
50
60
Source: EVCA statistics
• VC´s have become more critical !
• Requires better Business Plans !
• Looking for more syndication !
• Wants to secure next round financing from the start !
• Do not accept high pre-money valuations !
• Entrepreneurs have to give up more shares to attract sufficient funding !
.. This changed the market conditions !
© www.gate2growth.com 2002- page : 119
..... number of deals declined
0
1000
2000
3000
4000
5000
6000
7000
1995 1996 1997 1998 1999 2000 2001 2002 2003
Number of US Deals
© www.gate2growth.com 2002- page : 120
Stagnation and growth
20002001
2002
Grow th sectors
Stagnation sectors
Total deal development
0
200
400
600
800
1000
1200
1400
Europe + Israel development in number of fundings
Number of deals, source Tornado Insider
© www.gate2growth.com 2002- page : 121
Specific sectors are declining
20002001
2002
Investor /Incubators
Wireless
E-commerce
Softw are
Internet
0
50
100
150
200
250
300
350
400
Fundings, stagnation sectors
Number of deals, source Tornado Insider
© www.gate2growth.com 2002- page : 122
Other sectors are growing
2000
2001
2002
Telecommunication
Biotechnology
Other Technology
0
20
40
60
80
100
120
140
160
180
200
Number of deals, source Tornado Insider
© www.gate2growth.com 2002- page : 123
Average deal size is declining
20002001
2002
Softw are
Internet
Wireless
E-commerce
Investor /Incubators
0,0
5,0
10,0
15,0
20,0
25,0
30,0
Deal size ( mio EUR) stagnation sectors
Deal size, SourceTornado Insider
© www.gate2growth.com 2002- page : 124
Average deal size ( growth sectors)
Deal size, SourceTornado Insider
20002001
2002
Other Technology
Biotechnology
Telecommunication
0,0
5,0
10,0
15,0
20,0
25,0
Deal size pr sector ( mio EUR)
© www.gate2growth.com 2002- page : 125
All in all a decling in deal size
0
2
4
6
8
10
12
2000 2001 2002
Deal size development all sectors (mio EUR)
Deal size, SourceTornado Insider
© www.gate2growth.com 2002- page : 126
The Matching proces
and
services
© www.gate2growth.com 2002- page : 127
The Matching process
1) Entrepreneur/Business ”quality check”
- Diagnostic of the business plan
- Check on technology and market
- Check on enterpreneur/management ”quality”
2) Investor identification
- Identification of potential investors via Database
- Shortlist of investors after - analysis of investment manager profiles- type of portfolie companies
3) Action plan to be discussed with the Entrepeneur
4) Investor contact - by phone- participation in introduction meetings
© www.gate2growth.com 2002- page : 128
Protected area
Display window
Elevator pitch
Business Plan
Gate2Growth team
Request fordiagnostic
DiagnosticFeed back
Dataroom
WEB based tool and service available
InvestorInvestors
Identificationof investors
© www.gate2growth.com 2002- page : 129
Company profile
© www.gate2growth.com 2002- page : 130
Utilizing the extensive network
IRC
EIC
BIC
EIC
IRC
BIC
EBNGate2Growth network
FinanceAcademiaFinance
Academia
www.Gate2Growth.comwww.Gate2Growth.com
EurotechData
EurotechData
I-TEC NetworkI-TEC
Network
Proton NetworkProton
Network
IncubatorForum
IncubatorForum
Business AngelNetworks
CommercialpartnershipsBusiness Angel
NetworksBusiness AngelNetworks
CommercialpartnershipsCommercial
partnerships
Other EUrelated networks
Matching service
Projectand
Investmentopportunities
InvestorDatabase
ServiceProvider Database
New / Events / Forums
© www.gate2growth.com 2002- page : 131
Different sources of financing
Seed Start-up Development Growth/ Expansion. M&A/Restructuring
Capital requirement
FFF
Bank loansBusiness Angels
Classical Venture Funds
Corporate investors/Large VC funds
IPO/ Stock Markets
© www.gate2growth.com 2002- page : 132
Flow of capital
Investors-Pension Funds
-Insurance companies-Banks
-Corporations-Private wealthy people
-Others
Realestate
VCfunds
Bonds Quoted stocks
Privateequity
G e n e r a l S a v i n g s
© www.gate2growth.com 2002- page : 133
VC´s
Investor’s choice in the VC industry
MBOFunds
Seed Funds
Later stage’Funds
Early stagefunds
Technologyfunds
© www.gate2growth.com 2002- page : 134
Performance (up to 2001)
MBOFunds
Seed Funds
Later stage’Funds
Early stagefunds
Technologyfunds
EVCA 5 years
16,3 % IRR
EVCA 5 years
33,1 % IRR
US5 years
5,1 % IRR
US5 years
14,9 % IRR
US5 years
20,7 % IRR
US5 years
50 % IRR
US5 years
33,2% IRR
EVCA 5 years
12,4 % IRR
© www.gate2growth.com 2002- page : 135
Consequences for investors
Management company
InvestorInvestor
InvestorInvestor
InvestorInvestors
Fund IIFund I
Fund I
Porteføljeselssskaber PorteføljeselssskaberPorteføljeselssskaberPortfolio companiesPortfolio companies Portfolio companiesPortfolio companies
PorteføljeselskaberPorteføljeselskaberPorteføljeselskaber
PorteføljeselskaberPorteføljeselskaberPortfolio companies
© www.gate2growth.com 2002- page : 136
Consequences for investors
Management company
InvestorInvestor
InvestorInvestor
InvestorInvestors
Fund IIFund I
Fund I
Porteføljeselssskaber PorteføljeselssskaberPorteføljeselssskaberPortfolio companiesPortfolio companies Portfolio companiesPortfolio companies
PorteføljeselskaberPorteføljeselskaberPorteføljeselskaber
PorteføljeselskaberPorteføljeselskaberPortfolio companies
© www.gate2growth.com 2002- page : 137
Consequences for investors
Management company
InvestorInvestor
InvestorInvestor
InvestorInvestors
Fund IIFund I
Fund I
Porteføljeselssskaber PorteføljeselssskaberPorteføljeselssskaberPortfolio companiesPortfolio companies Portfolio companiesPortfolio companies
PorteføljeselskaberPorteføljeselskaberPorteføljeselskaber
PorteføljeselskaberPorteføljeselskaberPortfolio companies
© www.gate2growth.com 2002- page : 138
Consequences for investors
Management company
InvestorInvestor
InvestorInvestor
InvestorInvestors
Fund IIFund I
Fund I
Porteføljeselssskaber PorteføljeselssskaberPorteføljeselssskaberPortfolio companiesPortfolio companies Portfolio companiesPortfolio companies
PorteføljeselskaberPorteføljeselskaberPorteføljeselskaber
PorteføljeselskaberPorteføljeselskaberPortfolio companies
© www.gate2growth.com 2002- page : 139
coordinates
Belgian office
Address : St.-Jacobsmarkt 9-13c/o Suite SJ-306B-2000 Antwerpen
Phone : +32 (0)3 220 4750 Fax : +32 (0)3 220 4200 E-mail : [email protected]
Danish office :
Address : Hvidørevej 79DK-2930 Klampenborg
Phone: (+45) 39 307 307Fax : (+45) 39 642 399Mobile: (+45) 40 521 645
http://www.Gate2Growth.com
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