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“ISTANBUL FORUM”Early Stage Funding in the EU, Lessons to Turkey
Session 2
“Self-evaluation of Entrepreneurs: essential preparation before elevator pitch”
Paolo ANSELMO
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IBAN: the network
Thank you for listening!
Business Angels, Venture Capital,and Banks
National and local Stakeholders
Universities, Research Centres and technology Companies
Professional
Intermediaries, Business Support
Organizations
IBAN
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The players: 3 national networks – 11 local groups
IBANfor the whole Italian territory
BAN Bologna
BAN Toscana Sud
BAN Umbria
BAN Sardegna
BAN Lazio
BAN Campania
BAN Puglia
BAN Brescia
BAN Friuli V.G.
BAN Liguria
BAN Club Milano Centro
ICT BANfor the whole Italian territory
Life Science BANfor the whole Italian territory
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IBAN – overview of 2006 results
Angels investor involved: 300 Business applications evaluated: 569 Successful deals: 70 Average amount invested: 167.500 Euro Total invested amount: 11,6 M Euro
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Foreword
• It’s difficult for start-ups to access finance• All money is not the same• There is an asymmetry of information between
entrepreneurs and investors• The equity gap require an investment readiness
methodology
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Entrepreneurs & investors: the equity gap
A business PROJECT!!
A great IDEA ?
The entrepreneur
The investor
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The equity gap
Entrepreneurs are generally faced with several types of issues when trying to raise equity:
a) cultural reluctance when it comes to opening their companies to outsiders (shareholders and managers)
b) difficulties in presenting themselves or their business planc) project investment readiness: certain credit and venture
capital tools are not adapted to the needs of all businesses at all stages of their development
d) difficulties in identifying the administrative & governance requirements of venture capital and credit providers
e) + formal venture capital investing in higher and higher amounts, not enough equity is dedicated to seed or early stage
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Is the company ready?
Business plan?Stage of development of the companyType of investment?Valuation?Management team ready ?
Has the management team enough time and energy to raise fundsIs the team shaped to talk to the most appropriate investors?Does the company know where to go? And which method of financing is the right choice?
Business angel financing is one of the solution to close the gap
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IBAN – the investment readiness methodology
• Behaviours rules concerning informal investments (EBAN tool kit, informal investment guide, awareness folder)
• Business Plan Guide in cooperation with PriceWaterhouseCooper
• “Light up your idea” 2001 & 2002 SMAU ICT International Exhibition
EASY www.earlystageinvestors.org
• Early Stage Investors Actions for Growth of Innovating Businesses
Ready for Equity www.eban.org/ready_for_equity.php• Development and testing of training curriculums
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The EASY best practice
The Work Package 2 aims at developing a transnational operational model supporting improved investment awareness and investment readiness among early stage KBBs.
On the basis of the best practices collected, IBAN and Meta Group have developed a toolkit to support the investment readiness process.
It revolves around two main aspects:the investment readiness self-evaluation tool A tool (software) has been developed to assess potential weaknesses of KBBs’ business plans. the Investment readiness workshopThe workshop is intended to prepare KBBs in effectively presenting their business idea to investors during the international investment meetings, improving both their presentation skills and the presentation contents.
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The I²RSAT tool
The I²RSAT Software includes both quantitative and qualitative information. I²RSAT is divided into four sections (company evaluation process, financial matters, management team and market research), with 58 questions covering key aspects of an international business activity and related to the information requirements of investors:
Section I: Company evaluation: This section investigates and measures the company’s understanding of effects related to any “informal investment” into the company. It also explores key areas of interest to investors such as business plan, net worth and company valuation, investor exit plan and returns;Section II: Financial Matters: This section evaluates the level of understanding and preparation for investment including: previous financing, dilution, use of funds, investor protection;Section III: Management Team: This section measures the skills and experience of the management team including: previous entrepreneurial experience, financial commitment of the management, existing management/employee share or equity ownership;Section IV: Market research: This section measures the company’s attitude to investigate the market and to monitor competitors;Summary Section This section summarises both the score achieved in each section and the total score. This is the starting point of the scoring, weighting and reporting system implemented according to the stage of development of the business and the company’s financial needs (euros Required).
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The One Day Workshop
The second step of the investment readiness methodology consists of a one day training. It is a workshop for entrepreneurs or would be entrepreneurs with the aim of tailoring their presentation to investors requirements, improving the efficacy of the international communications aspects.Workshop has the objective of enhancing the entrepreneurs’ presentation capabilities.The format involve both companies both angels.The main issue of the workshop include:A pitch presentation session. The visiting SMEs made a ten-minute presentation presenting their business idea to investorsA brainstorming activities with the investors focused on:• How to Ensure that Your Business Plan Will Attract International Investments• Valuation of the Business• Structuring the Investment Deal: Legal Considerations for Early Stage SMEs• Term Sheets and Due Diligence - Protecting your IP
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What an elevator pitch need to be successful?
• an executive summary the idea (activities and outputs), the size, the investment required, the location
• a knowledge market with focused targets where we are - where we want to stand in 3 years
• a product or a service description
• the people back-round
• the required finance package
• the assets needed
• the company strategy: how will you make money
A good elevator pitch don’t necessarily guarantee an investment!
BUT
