This document summarizes a presentation about sources of funding for innovative small- and medium-sized enterprises (SMEs). It discusses options like venture capital, business angels, and bank loans. It provides examples of companies that received different types of funding. The presentation promotes an upcoming training by the Integrated Innovation Support Programme to help more SMEs become investment-ready.

1. This project is funded by
the European Union
Integrated Innovation Support
Programme
Finance for Innovative SMEs
Robert Sheffrin – Finance Expert IISP
2nd November 2012

2. This project is funded by
the European Union
“When the wind blows, some people build
walls; others build windmills”
Chinese proverb
Integrated Innovation
Support Programme (IISP) 2

3. This project is funded by
the European Union Topics
• Venture capital - introduction
• Sources of funding for innovative SMEs
• Examples of venture capital and angel backed
companies
• Investment readiness
Integrated Innovation
Support Programme (IISP) 3

4. This project is funded by
the European Union
Private Equity & Venture Capital
• Private Equity is the provision of long term, equity (share)
capital to non-quoted companies with high growth
potential
• Private Equity is for PRIVATE companies
• Venture Capital is a type of Private Equity focussed on
start-up, early stage companies and emerging growth
companies
Integrated Innovation
Support Programme (IISP) 4

5. This project is funded by
the European Union
Business Angel
“ ..an individual, acting
alone or in a formal or
informal syndicate, who
invests their own money
directly in an unquoted
business where there is
no family connection.”
Professors C Mason & J Harrison
Integrated Innovation
Support Programme (IISP) 5

6. This project is funded by
the European Union
Bank vs Venture Capital
Bank Debt Venture Capital
• Secured (collateral) • Risk funding (equity capital)
• Capital & interest • Return only on success
repayments
• Committed
• Risk of withdrawal
• Partner relationship
• Monitoring relationship - support
• REPAYMENT – regardless of
profitability • GROWTH – no repayment
until sufficient profit and
value
Integrated Innovation
Support Programme (IISP) 6

7. This project is funded by
the European Union
What are the funding options for innovative SMEs?
Stage of development:
 Seed?
 Start-up?
 Early growth?
 Sustained growth?
Integrated Innovation
Support Programme (IISP) 7

8. This project is funded by
the European Union
Risk Finance Ladder
Integrated Innovation
Support Programme (IISP) 8

9. This project is funded by
the European Union Example – Biotech start-up
 Activity – crop nutrition & protection products
 2003 – start up funding. Owner + business angel
 2004 - £50k seedcorn finance (venture capital fund)
 2005 – 6 patents
 2005/06 - £1m. 3 VC funds & 6 business angels
 2006 - £3.85m AIM (London junior stock market)
www.plantimpact.com
Integrated Innovation
Support Programme (IISP) 9

10. This project is funded by
the European Union
Example – Service Sector start-up
 Activity – dental recruitment
 Former dental nurse
 Rejected by banks & local Micro-Finance Fund
 Received £35k investment from one angel
 Failed
 Learned from failure - started again
 New angel investor
Integrated Innovation
Support Programme (IISP) 10

11. This project is funded by
the European Union What an investor looks for
 High growth prospects
 An ambitious management team that can achieve
the growth
 Product / service that has a good market and the
ability to reach that market
 Competitive edge / unique selling point
 Willingness to share ownership
 Exit route
Integrated Innovation
Support Programme (IISP) 11

12. This project is funded by
the European Union
Checklist - is venture capital for you?
Need funding for growth 
Good growth prospects 
Viable product or service 
Management ability 
Willing to sell shares 
Willing to work with others 
Exit route for investor 
Integrated Innovation
Support Programme (IISP) 12

13. This project is funded by
the European Union
Where’s the money?
Some now - more in the future…
2012:
Serbian Business Angels Network www.sban.eu
– next meeting 15th - 16th November
Balkan Venture Forum www.balkanventureforum.org
– 22nd - 23rd November
11 Accelerator Venture Fund – www.eleven.bg
2013/14
Western Balkan Enterprise Development and Innovation
Facility (WB EDIF) – Innovation, Expansion & Loan Funds
Other VC Funds - >$200m being raised for region
Integrated Innovation
Support Programme (IISP) 13

14. This project is funded by
the European Union
Investment Readiness
 Knowing your potential funding market
 Having your “tool kit” ready for investors.
 Knowing your investors
 Knowing when to approach the market
 Understanding the investment process
Integrated Innovation
Support Programme (IISP) 14

15. This project is funded by
the European Union
IISP Investment Readiness Training
• Training for 100 SMEs
• Coaching for 20 SMEs
• Application and assessment from January 2013
• Starts February 2013
For pre-registration, go to www.iisp.rs and click on
“investment readiness” or email sme.finance@iisp.rs
Integrated Innovation
Support Programme (IISP) 15

16. This project is funded by
the European Union
IISP Contact info.
Tel: 011 362 0923
Email: sme.finance@iisp.rs
Web: www.iisp.rs
Robert Sheffrin - Finance Expert
Aleksandar Vesic – Innovation Funding Expert
Integrated Innovation
Support Programme (IISP) 16