2. 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.
3

3. Angels and other sources of finance
Capital Needs
IPO
Venture
Higher Capital
Risk Funds
Early stage
and seed
venture funds Angels help fill the
Business ‘Equity Gap’
Angels
Friends,
Family & Lower
Founders Risk
Time
0
Seed Start-up Early Growth Sustained Growth
4

4. Why are VC’s moving to lager stages?
• Equal time of due diligence for smaller investments but
lower potential of fast 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
5

5. 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
• Can become involved in the business (“active Angel”)
or not (“passive Angel”).
6

6. 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
7

7. 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
• BUT Entrepreneur‟s qualities are most important
8

8. Business Angel vs Venture Capitalist
Source: Go Beyond www.go-beyond.biz
9

9. RISE IN BANS VS CONSOLIDATION OF VC FUNDS
1600
1600
1400
1200
1000
711
800 No. of Networks
600 396 No of VC funds
400
200 50
0
1999 2010
Source: EBAN Statistics Compendium; EVCA Data
10

10. About EBAN
Business Seed Federations
angel Individual Associate
funds of networks
networks
angels members
115 member organisations – Representing 300 BANs – 26 countries
11

11. Summary of industry statistics
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 Circa 2 billion € 6.3 billion $
Source: EVCA, NVCA
EUROPEAN ANGEL MARKET=25% OF US ANGEL MARKET
12
Average exchange rate 2009 : 1 USD:0.72€

12. CHALLENGES
Financial sustainability of the angel groups and
publically supported seed funds
Industry and performance data
Exit routes
14

13. Structure
Objectives and Financing
netzwerk nordbayern is committed to the
foundation and growth of innovative Development organisation for
companies in Northern Bavaria and is innovative business set-ups in
Northern Bavaria
supported by the Bavarian Department of
F.U.N. (registered)
Trade and Industry and private sponsors..
100 %
associate shares
Founded in 1999 f.u.n. netzwerk nordbayern gmbh
10 employees
about 170 members
Membership contributions from 100 € to 5.000 €
Free of charge for sponsors and universities
15

14. Target group and overview of our services
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
Target Group Networking
Setting up contacts, organising networking
Innovative, growth-oriented companies and founders events, online networking with Twitter &
XING
16

15. Financing
Business Angels
Strategic
Companies
investors seeking finance
Lending
institutions
Venture
capital
State sponsored
organisations
grants
17

16. Core activities of the seed financing network
Selection Guidance
Betreuung Matching
Vermittlung Networking
Networking
First-round selection of Regular supply of Bringing ideas and Networking of
companies: specialist knowledge: capital together: individual network partners:
› Business plans from the BPW › Investors„ newsletter › Informal individual matching › Investor / Investor
› Business plans across regional › Individual support for each › Financial forums › Investor / Company
company: a ″sparring partner“› Investors„ newsletter › Company / Company
multiplicators
to aid concept development
› Business plans outside Bavaria
› Seminars
Selection of investors: Individual coaching
› Business Angels and workshops:
› VC companies › Basics of purchase financing
› Promotion societies › Investors„ pitch
› Strategic investors › Due diligence/Company
Evaluation
› Legal/tax aspects for joint
venture contracts
18

17. Summary of investments achieved
Sector in detail Amount Deals Amount
Construction 3.505.000 € Number 118
Bio-/Genetic technology 31.301.8957 € Business Angels 26.969.246 €
Chemicals 100.000 € Strategic Investors 2.000.000 €
Electrical engineering 11.902.993 € VC Companies 74.816.280 €
Finance 1.204.747 € Public Investors 47.603.318 €
Trade 30.677 € Summe 151.388.844 €
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 €
19

18. Financed by sponsors and public subsidies
20

19. 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

20. 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)

21. Overall Multiple for High Diligence 5.9X (4.1years)
Overall Multiple for Low Diligence 1.1X (3.4years)

23. 11TH ANNUAL EBAN CONGRESS
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
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