© 2002- page : 1 By Uffe Bundgaard-Jørgensen, Ph.D. CEO & Partner Forum Binary Venture Capital...

© 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


Background


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.


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:


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


Death Valley

FP4FP5FP6

EUREKAOther

Research funding

R&D

Search for funding

Death Valley


Death Valley

FP4FP5FP6

EUREKAOther

Research funding

R&D

VC financing ?

Death Valley

Business plan and And early search forExploitation financing

Seed Financing


Death Valley

FP4FP5FP6

EUREKAOther

Research funding

R&D

VC financing ?

Death Valley


Seed Financing


Death Valley

FP4FP5FP6

EUREKAOther

Research funding

R&D

Death Valley


Seed Financing

VC financing ?


The Gate2Growth initiative


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


...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


The Gate2Growth services


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


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


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


25 negotiation

5-10 investments

10 Days/deal

490 rejected deals

1 month/investment

Solicited deals


Helped by Gate2Growth

500 new deals

Screening process

3 min/deal

250 selected deals

150 selected deals

10 min/deal

20 min/deal


25 negotiation

5-10 investments

10 Days/deal

490 rejected deals

1 month/investment

Projects screened by Gate2Growth


500 new deals

Screening process

3 min/deal

250 selected deals

150 selected deals

10 min/deal

20 min/deal


25 negotiation

5-10 investments

10 Days/deal

490 rejected deals

1 month/investment



500 new deals

Screening process

3 min/deal

250 selected deals

150 selected deals

10 min/deal

20 min/deal


25 negotiation

5-10 investments

10 Days/deal

490 rejected deals

1 month/investment


Helped by Gate2Growth


Traditional investor search process

- Lengthly- Costly- Tie up ressources

30 – 50 Potentialinvestors

10 – 15Relevantinvestors

3 – 5 Interestedinvestors

Investment

Month 1 Month 8 - 12


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


Market development

and

concequences


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 !


Large deal flow !

0

1000

2000

3000

4000

5000

6000

7000

1995 1996 1997 1998 1999 2000 2001 2002 2003

No DealsNumber of deals


”.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


Partially due to ”dotcombustion”

0102030405060708090

100

At peak now

At peaknow

Yahooooooooooooooo Market value in Bn USD


% early stage / later stage

2000

2001

2002

early stage

later stage

0

10

20

30

40

50

60

70

80

% early stage / later stage


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 !


..... 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


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


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



Other sectors are growing

2000

2001

2002

Telecommunication

Biotechnology

Other Technology

0

20

40

60

80

100

120

140

160

180

200



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


Average deal size ( growth sectors)


20002001

2002

Other Technology

Biotechnology

Telecommunication

0,0

5,0

10,0

15,0

20,0

25,0

Deal size pr sector ( mio EUR)


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)



The Matching proces

and

services


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


Protected area

Display window

Elevator pitch

Business Plan

Gate2Growth team

Request fordiagnostic

DiagnosticFeed back

Dataroom

WEB based tool and service available

InvestorInvestors

Identificationof investors


Company profile


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


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


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


VC´s

Investor’s choice in the VC industry

MBOFunds

Seed Funds

Later stage’Funds

Early stagefunds

Technologyfunds


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


Consequences for investors

Management company

InvestorInvestor

InvestorInvestor

InvestorInvestors

Fund IIFund I

Fund I

Porteføljeselssskaber PorteføljeselssskaberPorteføljeselssskaberPortfolio companiesPortfolio companies Portfolio companiesPortfolio companies

PorteføljeselskaberPorteføljeselskaberPorteføljeselskaber

PorteføljeselskaberPorteføljeselskaberPortfolio companies



Management company

InvestorInvestor

InvestorInvestor

InvestorInvestors

Fund IIFund I

Fund I





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

© 2002- page : 1 By Uffe Bundgaard-Jørgensen, Ph.D. CEO & Partner Forum Binary Venture Capital...

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Transcript of © 2002- page : 1 By Uffe Bundgaard-Jørgensen, Ph.D. CEO & Partner Forum Binary Venture Capital...