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The role of angel investors in the promotion of entrepreneurship in
Europe
Claire MunckManaging DirectorEBAN
YES ExeCom, June 2010
2
WHO ARE BUSINESS ANGELS?
Business Angel: Private individual investing own wealth in early stage businesses AND own expertise and network of contacts
• 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”).
3
ANGEL BACKED COMPANIES
InkSpin1
Aventiv NV (Ltd.)
Michelson Diagnostics
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 CapitalFunds
IPO
0
Angels help fill the ‘Equity Gap’
Early stage and seed
venture funds
5
WHY DO WE NEED MORE BUSINESS ANGELS?
Source: EVCA Year Book 2009 Stage distribution of investments per year
>Different amounts invested>Complementary roles
6
WHAT BUSINESS ANGELS LOOK FOR
• Current & comprehensive Business Plan• Proven market - USP• High growth / scalable / strong business forecast
(5m€/3yrs)• Intellectual property protection • Realistic pre-money valuation• Exit strategy
BUT Entrepreneur’s qualities are most important i.e. strong and committed management team
7
THE CONTRIBUTION OF BUSINESS ANGELS
• 2 wings: capital + mentoring/coaching
• Invest early – take a higher risk
• Invest in different sectors
• More flexible and reactive than other investors
• BA give access to networks and new potential
customers
• BA acts as an ambassador for the business =
credibility
• Easier to raise follow-on funding
8
TRENDS IN EUROPE
2008 Europe 2010-2013
Networks 334
For profit 31%
Estimate n of angels and private investors
75k
Investment per round
207k€
Total estimate invested annually
4 billion€
2008 Europe 2010-2013
Networks 334
For profit 31%
Estimate n of angels and private investors
75k
Investment per round
207k€
Total estimate invested annually
4 billion€
Average amount of the deal in 2008: 200.000€
9
SECTORS OF INVESTMENT
ICT & Software
still dominating sectors – Clean tech and health
« hot » sectors
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THE IMPACT OF THE CRISIS
• Equity gap is widening
• Increased dealflow – better valuations
• Angels have continued to invest – role of
providers of capital AND
knowledge/experience valorized
• Intermediaries impacted
11
WHAT POLICY MAKERS CAN DO
• Awareness campaigns • Support to the creation of business angel networks• Support the creation of a national federation• Investment and investor readiness programmes• Public-private co-investment funds• Fiscal incentives
>To be carried out with the support of stakeholders i.e. business and entrepreneur organisations
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DELIVERING VALUE TO OUR MEMBERS
Business angel
networks
Federations of networks
Individual angels
Associate members
Over 100 member organisations – Representing 300 BANs – 28 countries
Seed funds
13
• ICT SMEs currently receiving FP support for R&D
• Post proof of concept / pre-commercial
• SME mapping, selection, coaching, investment readiness
• SME« plugging » into investment events
• ICT Investor mapping and sustainable network
www.access-ict.eu ; www.ict-finance-marketplace.eu
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EARLY STAGE INVESTING: AN ASSET CLASS
9th Winter University hosted by Sophia Business Angels18/19 November 2010, French Riviera
Making your first investments to exit strategiesInvesting local and thinking globalCollaborating with other investors
European and international experts and practitionersBAN/Seed fund managers/Investors/Incubator managers, etc
Networking, learning opportunities
www.eban.org
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CONTACT DETAILS
EBAN Secretariat
+32 2 626 20 60
www.eban.org
Thank you for your attention!