Jez Challengeinbuildingupearlystagecompanies

Prague Summer Conference on IP & Innovation, Sept 14, 2010 1

Challenges in building up early stage companies

venture capital perspective

Vladislav Jež

JV Capital Management/Credo Ventures

Sept 14, 2010 Prague 2

What is PE/VC?

Seed Start-up ExpansionReplacement Capital Buyout

Venture Capital

Early stage

Private Equity

3

Revenues

Time

Start

SetupPrototype

Launch

Growth

Expansion

Maturity

FFF

Business Angels

VC

Banks, Leasing

Buyouts

IPO,Acquisition

Investment stages

Sept 14, 2010 Prague


How to finance the growthof early stage companies

• Business Angels

• Venture Capital

• Governmental supportencouraging technology transfer

commercialization of intellectual property

Maximase leverage of public sector funds and the engagement of private sector investors


Priorities of VC Investors

• Partnership with Entrepreneur• Management team – strongly motivated• Growth potential• Solid business plan with a clear vision• Clear exit strategy

Fundraising, Investments & Exits

6Sept 14, 2010 Prague


Fundraising for CEE – PE/VC2003 - 2009

0

500

1000

1500

2000

2500

3000

3500

4000

mil.

EU

R

2003 2004 2005 2006 2007 2008 2009

Source: EVCA/PEREP

CEE funds raised – incremental closings during the year (€1,000s)

2007 2008 2009

Funds raised by fund stage focus Amount % Amount % Amount %

Early-stage 6,000 0.2 49,010 2.0 0 0.0

Later-stage venture 38,150 1.0 132,850 5.3 26,000 6.9

Balanced 32,700 0.8 28,200 1.1 3,000 0.8

Total venture 76,850 1.9 210,060 8.4 29,000 7.7

Growth capital 260,500 6.5 154,500 6.2 6,300 1.7

Buyout 3,277,630 82.3 1,893,250 76.1 146,140 38.7

Mezzanine 225,000 5.6 161,200 6.5 140,000 37.1

Generalist 143,470 3.6 69,610 2.8 56,070 14.9

Total funds raised 3,983,450 100.0 2,488,620 100.0 377,510 100.0


Source: EVCA/PEREP_AnalyticsDisclaimer: Data is continuously updated and therefore subject to change.

New VC Fund – Credo Stage One Fund


• Size - EUR 20 mil.

• Geography – CEE (primary focus CR+SR)

• Investment Size – min.EUR 250.000,-

• Investors – HNWI, institutional investors

• Sectors – Internet, Software, Mobile, Health


Investments in 2009stage distribution by % of invested amount

€ ´000 CZECH REP. CEE Europeseed 0,0% 0,1% 0,6%

Start-up 0,0% 0,4% 8,1%

Later stage VC 0,02% 1,3% 8,1%

Total VC 0,02% 1,8% 16,8%

Growth+Buy-out 99,98% 98,2% 83,2%

Total 2009Total 2008

1,396,000450,000

2,456,0002,480,000

22,690,00052,675,000

Source:EVCA/Perep


Investments (mil.EUR)Czech republic

0

200

400

600

800

1000

1200

1400

1600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

roky

mil.

EUR

Source: EVCA/CVCA


Number of Investments Czech rep.

0

5

10

15

20

25

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

roky

poče

t inv

estic

Source: EVCA/CVCA


Returns in PE/VCEurope

Stage 1Y IRR 3Y IRR 5Y IRR 10Y IRREarly Stage 5,7 2,3 -4,7 -1,1

Development 2,4 6,9 1,2 7,1

Balanced 35,3 6,6 -1,8 7,9

All Venture 17,2 5,0 -2,0 4,1

Buyouts 29,6 15,3 8,3 14,3

Generalist 98,6 15,8 5,9 10,0

All Private Equity 36,1 13,0 5,4 11,0

Source: Thomson Financial for EVCA


Why not more deals in early stage?

• Limited participation by local investors• Public incentive missing• Limited number of experienced Fund

Managers• Limited contacts with Universities • Missing more success stories


Early stage investmentsbacked by VC

• NetCentrum – web portal• Voicetronics – voice recognition technology• Nostromo – entertainment mobile content• Systinet – provider of web services

infrastructure software• NewsTin –cross-language news

aggregation• Geewa –multiplayer casual games


Czech Private Equity&Venture Capital Association

• Founded in 1995• 40 members

- Full members: 14 fund managers

- Associate members: 26 companies


Contacts

Tel.: +420 737 238 278 E-Mail: [email protected]; [email protected]

www.cvca.cz;www;credoventures.com

Jez Challengeinbuildingupearlystagecompanies

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