MtB Italy Tour 2010, Torino
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INTRODUCTION TO ENTREPRENEURSHIP. FROM STARTUPS TO VENTURE FINANCING
With the support of:
Mind the Bridge ItalyTour 2010Torino, June 10th
ALBERTO ONETTI, CHAIRMAN, MIND THE BRIDGE FOUNDATION
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Agenda
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AGENDA
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STATE OF ENTREPRENEURSHIP IN ITALY
Source: CrESIT 2010ITALY: INDUSTRY CONTRIBUTION TO GDP (2009)
Lack of large companies In Italy SMEs are 98% of the total
Mostly mature business Primarily Services (67% of GDP), Manufacturing is only 24% Innovative industries play a minor role (2-5%)
Strong family business vocation “One man only at the helm.” “Companies are life-long enterprises.” “First get some revenue, and then invest.” “Think real.”
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STATE OF VENTURE FINANCE IN ITALY
Lack of an established venture capital community Of the €3.8B invested yearly (avg. 2005-2009), approximately €70M went to early-stage
investments (AIFI & Pricewaterhouse Coopers 2005-2009) Only 255start-ups were able to get funded in the last three years, with an average deal
size of €1M (AIFI & Pricewaterhouse Coopers 2007-2009) In 2009: 79 deals despite the financial crisis (€98M invested, -15% compared to prior
year, while overall investments declined by 52%) (AIFI & Pricewaterhouse Coopers 2009) Small size of the stock market does not help
The stock market capitalization to GDP ratio is lower than 60%, versus 140% in the United States and 170% in the United Kingdom (IMF & World Federation of Exchange)
The aforementioned lack of large companies makes the exit from investment difficult
US 29.7Silicon Valley 10.8
Europe 7.41
Italy 0.169
Italy Europe Silicon Valley USAnnual VC Investments (B US$) 2008
[Source: Dow Jones Venture source, PWC/National VC Association, AIFI]
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STATE OF ITALIAN R&D
Quality basic research Cumulative R&D investments are €17B (4% of GDP), whose 30% from
universities and 20% from public and non-profit (ICE, Cotec, Istat) 400k scientific publication in the period 1998-2008 ranking 8th in the global
classification (7th for number of citations) (Thomson Reuters, 2008) Biotech: 233 clinical trials in progress during 2009 (Ernst & Young 2010)
Issues in turning research into business Lack of efficient technology transfer offices Universities do not offer incentives for lecturers to spin-off business initiatives Scarcity of skilled executives with strong entrepreneurial skills Italian scientists do not think business
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ITALY: KEY ISSUES
Deal flow (# deals and quality) High mortality (“crisi del primo miglio”) Bridging research into business
Mindset Managerial skills
Exit on the domestic market Technology hot shots aspire to sell out to new economy “leviathans” Language barriers
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AGENDA
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INGREDIENTS FOR A STARTUP
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WHAT IS AN ENTREPRENEUR
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AVERAGE ENTREPRENEUR’S PROFILE
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MANAGER VS ENTREPRENEUR
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AGENDA
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The Big Idea!!!
… That’s Matters a Lot, but It’s All About Execution …
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THE QUESTIONS EVERY ENTREPRENEUR MUST ANSWER
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THE TEAM:The team and your relevant
experience in the domain you're addressing
BUSINESS PLAN
THE OPPORTUNITY:The problem we solve (description of your product highlighting the benefits to the users/customers)The competive advantage (why your product is better. Compelling reason to buy)
THE BUSINESS MODEL:What are you looking for (capital you are raising- use of proceeds)Financials (Burn and cash positive projections)
THE MARKET:The market you are
addressing (market size, potential growth,
competition)
THE BUSINESS PLAN
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WHY A BUSINESS PLAN
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What investors want to see
They have to see:
Realistic forecasts based, as far as possible, in fact
Monthly / quarterly projections for at least 1 year
BUSINESS PLAN? OK VS KO
They do not wish to see:
Plans full of glowing references to a prosperous, but ill-defined future
Unsupported projections or unrealistically inflated figures
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KO
OK
TURNING SCIENTISTS INTO ENTREPRENEURS
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TALKING $$$
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P&L 2009 (if established)
2010 2011 (forecast)
2012 2013 Revenue (000) Number of main customers/users Avg rev per cust (000) Gross Margin Operating Expenses Operating Margin EBIT (000) Head Count R&D Mktg&Sale Production G&A Total
P&L 2009 established
2010 anticipatory
2011 forecast
2012 forecast
2013forecast
Revenue (000)# of main customers
users
Avr rev. per cust.
Gross MarginOperating Expenses
Operating Margin
Ebit (000)Headcount
R&DMktg & SalesProduction
G&ATotal Expenses
FINANCIALS: STATEMENT OF OPERATIONS
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WHO READS A BUSINESS PLAN?
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AGENDA
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THE FUNDING DECISION
Founders’ capital/savings
Venture Debt/LoansAcconts receivableStrategic PartnersRetained earnings
VC firmsCorporate VC
Private placementInvestment banking
Public markets
Family/friendsAngels
Early stage VC
Bootstrapping Equity Financing
Early sources
Later sources
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THE ANGEL INVESTOR
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THE VENTURE CAPITALIST
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AGREEMENT VARIABLES AND CONTROL MECHANISMS
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VC FINANCING PROCESS: GETTING THROUGH THE FUNNEL
1,000 Leads
150 MeetingsActively Pursued
70
$
$ 5 – 10 Financed
Less than 1% of all leads get funded
$ $
$
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hLooks to see who sent it15 sec
hAnalyzes key aspectssectorlocationinvestment required 60 sec
hReads the plan 15 min
hDecides whether or not to request a formal presentation
10min
Total: 26 min 15 sec
WHAT DOES AN INVESTOR DO WITH A BUSINESS PLAN?
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DEFAULTS
BREAKEVEN
“FIRE SALES”
ZOMBIES
IPO/M&A
GOOD IPO/M&A
WILD ONES (IPO)
TOTAL
60%
12%
10%
8%
6%
4%
0%
100%
VENTURE CAPITALS: AVERAGE INVESTMENT PORTFOLIO
Source: ATV
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WHY VENTURE CAPITAL ?
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VENTURE CAPITAL INVESTMENTS SLOWED DOWN, BUT US STILLS LEADS THE WAY
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AGENDA
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THE HISTORY OF THE VALLEY
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THE (REAL) HISTORY OF THE VALLEY
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THE (REAL) HISTORY OF THE VALLEY
1930 1940 1950 1960 1970 1980 1990 2000
WAV
ES O
F IN
NOVA
TION
INNOVATION NETWORKS
INTERNET
PERSONAL COMPUTERS
INTEGRATED CIRCUITS
DEFENSE
Today:25 of Fortune 100Adobe SystemsAMDAgilent TechnologiesApple Inc.Applied MaterialsBusiness ObjectsCisco SystemseBayElectronic ArtsGoogleHewlett-PackardIntelIntuitLSI LogicMaxtorNational SemiconductorNetwork ApplianceNvidiaOracle CorporationSanDiskSeagate TechnologySolectronSymantecSun MicrosystemsYahoo!…
◊ NASA◊ Lockheed
◊ HP (47)
◊ Intel (68)
◊ Kleiner Perkins (72)
◊ Apple (80)
◊ 3Com, Adobe, Cisco
◊ Yahoo, ebay, Google (90s)
?
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THE MAIN PILLARS
◊ Is that replicable / portable?
◊ Is it sustainable long-term?
◊ What is the impact of the changing international outlook?
KEY QUESTIONS
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SOFT FACTORS
◊ The importance of Dynamism, speed: continuous evolving world
◊ Approach to Risk
◊ Value of Failure (not just a downside but a must-have)
◊ Importance of the Hub: a world of opportunities
◊ Think Big
KEY TO SUCCESS
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WHY NOW?
talent abounds
from scarcity comes clarity
innovation comes from hunger
startup cost ~0
IT’S THE BEST OPPORTUNITY
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(5) LESSONS FROM GOOGLE
1. the team is all (almost)
2. healthy disregard for the impossible
3. big problems are better than small ones
4. users first
5. don’t pay attention to the VC bandwagon
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AGENDA
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bridging opportunities of the Silicon Valley with Italian talent
associating mentors and role models
professionalizing the business planning skills
using and building the network
“give back” to build a bigger pie
Mission:to promote a new Italian entrepreneurial ecosystem that is:
ETHICAL, HIGHLY PROFESSIONAL, INTERNATIONALLY FOCUSED, EXCELLENCE DRIVEN
Model:funded by foundations/companies/private sector/donors
not government partnering with the most relevant actors
INDEPENDENT
CON
NEC
TIN
G TA
LEN
T MIND THE BRIDGE FOUNDATION
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CON
NEC
TIN
G TA
LEN
T
BUILDING THE BRIDGE: THE PILLARS
Discovering and Nurturing the Italian Talents (MtB Italy Tour 2010) Selecting the best of breed (Annual MtB Business Plan Competition &
MtB Call for Ideas) Providing training & education to the new generation of entrepreneurs
(MtB Bootcamp and Coaching) Showcasing the most promising startups and opening an international
debate (MtB Venture Camp @ Corriere della Sera) Hosting&mentoring the most promising startups in the Silicon Valley (MtB
Gym) Pitching US investors / partners (MtB Gran Finale events)
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BUILDING THE BRIDGE: THE TIMELINE
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2009 SELECTED START-UPS
Revolutionary antenna system (Milano)
Wi-Fi-derived solutions (Milano and Boston)
Comprehensive non-invasive solution for both vertebral fractures and bone strenght assessment (Lecce)
Solution to update any digital information (Sassari)
Social-network which allow users to create music through the web (Treviso)
Social marketplace for travel, where experts can provide users with information and personalized offers (Milano)
Virtual and Augmented Reality technology (Pisa)
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THANK YOU FOR YOUR ATTENTION
Questions & Answers
Contacts [email protected]
www.mindthebridge.orgUSEFUL LINKS:
www.mindthebridge.orghttp://siliconvalley.corriere.it/
BLOGS:
Facebook: Mind the Bridge - Connecting TalentTwitter: MindTheBridge
SOCIAL MEDIA: