Arne-G. Hostrup presentation at YES Execom Athens, 14-16 April 2011
Jan 12, 2015
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3
Current Situation of the early stage investment market
Strong demand - qualified entrepreneurs seeking financing Strong supply - more angels, super angel funds Exit market picking up interest from corporates
However, pressure increasing on the early stage with
widening equity gap.
4
Angels and other sources of finance
Capital Needs
Time
Seed Start-‐up Early Growth Sustained Growth
Higher Risk
Lower Risk
Friends, Family & Founders
Business Angels
Venture Capital Funds
IPO
0
Angels help fill the
Early stage and seed
venture funds
5
Equal time of due diligence for smaller investments but
lower potential of smaller returns
Financial return is the main motivation
Companies in seed phase need as much mentoring as cash
Historically low track record in returns on investment in seed
Bubble and current crisis will increase this trend
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About Business Angels
Investment 25 000 - 250 000 euro Willing to share their managerial skills, specialist knowledge and networks No sector preference Often prefer to invest in their region of residence Seeking profit, but also fun Usually total investments below 15% of wealth
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THE CONTRIBUTION OF BUSINESS ANGELS
2 wings: capital + mentoring/coaching
Invest early take a higher risk and in different sectors
More flexible and reactive than other investors
BA give access to networks and new potential customers
and act as ambassador for the business
Easier to raise follow-on funding
8
What business angels look for
Current & comprehensive Business Plan Strong & committed Management Team Environment and market High growth / scalable / strong business forecast (5m /3yrs) Intellectual property protection Realistic pre-money valuation Exit strategy
9
Business Angel vs Venture Capitalist
Source: Go Beyond www.go-‐beyond.biz
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RISE IN BANS VS CONSOLIDATION OF VC FUNDS
0
200
400
600
800
1000
1200
1400
1600
1999 2010
50
396
1600
711No. of NetworksNo of VC funds
Source: EBAN Statistics Compendium; EVCA Data
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About EBAN
Business angel
networks
Federations of networks
Individual angels
Associate members
115 member organisations Representing 300 BANs 26 countries
Seed funds
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2010 (2009 activities) EU US Networks 396 340 Commercial 20% n/a Estimate # of angels 75k 259k
Investment per round 200k 158k
Total estimate invested annually by angels
3-4 billion
17.7 billion $
VC Investments in seed and start-up/early stage Source: EVCA, NVCA
Circa 2 billion
6.3 billion $
Summary of industry statistics
Average exchange rate 2009 : 1 USD:0.72
EUROPEAN ANGEL MARKET=25% OF US ANGEL MARKET
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SECTORS OF INVESTMENT
Source: EBAN Statistics Compendium 2010
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CHALLENGES
Financial sustainability of the angel groups and
publically supported seed funds
Industry and performance data
Exit routes
Structure
Founded in 1999
about 170 members
Membership contributions from 100 to 5.000 Free of charge for sponsors and universities
Development organisation for innovative business set-‐ups in
Northern Bavaria
F.U.N. (registered)
f.u.n. netzwerk nordbayern gmbh 10 employees
100 % associate shares
Objectives and Financing
netzwerk nordbayern is committed to the foundation and growth of innovative companies in Northern Bavaria and is
supported by the Bavarian Department of Trade and Industry and private sponsors..
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Target group and overview of our services
Innovative, growth-‐oriented companies and founders
Planning Professional support in company planning and preparation of business plans
Financing Setting up contacts between investors and companies seeking capital
Training Seminars, workshops, start-‐up wiki, coaching and mentoring
Networking Setting up contacts, organising networking events, online networking with Twitter & XING
Target Group
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Financing
17
Companies seeking finance
Strategic investors
Business Angels
Lending institutions
State sponsored grants
Venture capital
organisations
Core activities of the seed financing network
Betreuung Vermittlung Networking Selection Guidance Matching Networking
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First-round selection of companies:
multiplicators
Selection of investors:
Regular supply of specialist knowledge:
company: a to aid concept development
Individual coaching and workshops:
Evaluation
venture contracts
Bringing ideas and capital together:
Networking of individual network partners:
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Summary of investments achieved
Sector in detail Amount Construction 3.505.000
Bio-‐/Genetic technology 31.301.8957
Chemicals 100.000
Electrical engineering 11.902.993
Finance 1.204.747
Trade 30.677
ICT 60.403.471
Logistics 2.509.764
Marketing 520.000
Mechanical engineering 4.509.983
Media 531.292
Medicine and health 21.241.321
Environ./Energy technology 10.726.292
Materials 2.686.071
Other 215.339
Total 151.388.844
Deals Amount Number 118
Business Angels 26.969.246
Strategic Investors 2.000.000
VC Companies 74.816.280
Public Investors 47.603.318
Summe 151.388.844
Financed by sponsors and public subsidies
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UK: Overall Multiple: 2.2X Holding Period: 3.6 years
Approx 22% IRR
US: Overall Multiple: 2.6X Holding Period: 3.5 years
Approx 27% IRR
50% of deals were not related. When related, they typically had 14 years
of experience
High 3.7X (4.0 years) Low 1.3X (3.6 years)
Overall Multiple for High Diligence 5.9X (4.1years) Overall Multiple for Low Diligence 1.1X (3.4years)
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Pre-event EBAN Institute Trainings, BAN and seed fund managers (May 10/11)
Pre event Training for women angels (May 11)
« Syndication and co-investments: partnerships for the future »
Hosted by Lewiatan Business Angels Warsaw on May 12/13
www.ebancongress2011.eu
11TH ANNUAL EBAN CONGRESS
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