Presentation on theme: "Getting Business Finance"— Presentation transcript:
1Getting Business Finance - Getting Started: Incubation, Investors (Angel) and the Role of GovernmentAlexandar Williams,Director or Strategy & Policy
2Moving Forward - The New Economic Imperative “Better” path→ ProductivityOutput(economicgrowth)“New” path→ InnovationNeed to move tonew growth path“More” path→ More labor and capitalMoving Forward: a different economic development path From “Bigger” to “Better”Dubai’s current situation in key sectors, e.g.Real estateDecreasing returns for each additional unit of labor and capitalIncreasing macroeconomic challenges (demographics, environment,infrastructure)→ Rising cost of growthArabicReaching optimal scaleReaching minimum scaleInputs(Labor and capital)2
3Vision, Mission, Roles & Core Initiatives Dubai SME 100, Gov. Proc. Prog., YBLIncubation,Idea Lab, Entrepreneur Capability Development, YECVisionDubai as a Global Center for Innovative SMEsAdvocateSeedGroomCorporate Governance,Access to SME Financing, Ease of Doing Business ,IPRolesMissionEntrepreneurship & EntrepreneurDevelopmentSME Sector and SME Firm Development(Groom Dubai’s Top SMEs)Foster the development of a flourishing entrepreneurial culture and a competitive SMEs sector to support Dubai’s economic development3
13Who are business angels Who are business angels? Individuals who invest their own monies locally into unquoted companies, usually at their seed to start-up phase. Besides cash, they also make available their experience, know-how and networks of contacts. It is not cheap money, charity or grant. A return on investment is expected at some future point. Key role is to bridge idea to a formal business organization. Define the products and business model. Well rounded expertise (experienced entrepreneur –turned BA). Is part of the team.
14What are business angel networks/clubs “organizations” who bring business angels in contact with quality deal flowNational federations and associationsUmbrella Organizations at national or regional level for the networks, enabling exchange of good practice and supporting professional standards (e.g., EBAN)Group of business angels that facilitate due diligence, provide business opportunities promote professionalization
15Importance of Angel Investing Primary source of risk capital and support for start-ups in a number of countries. It is frequently overlooked as angel investors are often not visible.Primary drivers of a flourishing start-up/entrepreneurial ecosystemAngel investment is a powerful source of financing for high- growth potential start-ups. Angel investors tend to be less sensitive to market cycles than venture capitalistsAlthough a “wealth effect” could impact how much they are willing to invest when markets fluctuate. However, in the current market environment, the lack of exits (whether through an IPO or M&A) has put a strain on both angel and venture investment.
16What is the Entrepreneur looking for in Angel Investors? Money to start, grow idea into a businessExpertise and advice on executionExperience in a particular domain knowledge (finance, investment, Industry verticals – Digital Media, F & B, Logistics)Contacts and networks with other resources such as financiers, consultants, buyers, procurement executives, suppliers, key talentsIs not only about money, but know how and expertiseTime and Commitment to develop the entrepreneur, the teamand businessCredibility and trust to see the business develop
17What the angel investor is looking for in the entrepreneur? Passion, ambition, industriousness, self-discipline, decisiveness, self-confidence, and tenacity of the entrepreneur and his teamDomain knowledge, numeracy, understanding of risks (to de-risk the business), sense of urgency, and a belief in Kaizen (continuous improvement)“Chemistry” with the team yet maintaining a “tough love” relationshipPreference for start-ups with mentors & advisors (culture of openness and listening to external views)An executable idea, backed by a sensible & solid business plan
18Entrepreneurial Finance Lab Psychometrics EFL utilizes a proprietary psychometric application process that incorporates an entrepreneur’s attitude and outlook, ability, business acumen and character to identify high-potential, credit worthy entrepreneurs.IntelligenceEthics & CharacterRiskBusiness SkillsAttitudes & Beliefs
19Some Challenges for BAs in ME Lack of good data & information on the activityLack of awareness & understanding of BA conceptStill risk – averse culture, but gradually changingMany wealthy individuals prefer to invest in art, real state etc.Financial sustainability of BAs (some co-funding/matching funds from government required)Up-to-date and enforceable company and share ownership laws on transfers, exits, etc.Lack of a strong university-private sector- government linkage, low R & D commercialization experienceStill Nascent but will evolve graduallyNeed to highlight more success stories
20Role of Government- Foster a Conducive Environment SUPPLYBringing more investorsDEMANDQuality deal flowMARKETImpact and sustainabilityEducating investors about opportunities in the SME spaceInvestment readiness of start –ups/ SMEs (incl. sector specific)Support sustainable and professional BANsCo-investment/matching fundsTeach entrepreneurship and access to finance very early on in schoolsCase studies with relevant Angel StakeholdersInvestor readiness capability developmentOperate incubators and Tech Parks; open R & D labs to entrepreneurs to test productsCo-organize Local BA/VC forumsSet up mentorship platforms and programmesCo-organize with private sector a platform for deal flow connectionEnsure rules and regulations support the investment and exit process
21Underlying Structural Factors Information Infrastructure SME Financing in the Dubai / UAE ContextDemand Side Factors(disincentives for borrowing)Supply Side Factors(Disincentives for lending)Information available about the industriesQuality of financial informationNo TaxBenefit of debtsPsychological factorsTrading focus -need of financeCosts of information verificationStart Ups & SMEsBanks &Be BankableShort planning horizonSpeed of getting financeAsset light businessesUnderlying Structural FactorsLegal FrameworkInformation InfrastructureAuditing EnvironmentSkip-RiskNature of Economy
23Be Bankable.org (to be launched in 2015) Launching a website to enable SMEs prepare themselves for accessing bank finance.Guide SMEs through a step-by-step process to approach banks for financeAn SME using BeBankable.ae will be able to prepare a bank finance application and also self-assess readiness for bankingSMEs can learn more about banking products, services, processes and documentation to confidently negotiate the best suited financing optionsGuide SME owners to qualified auditors (Good / Bad Balance Sheet, Auditing Contract, How to select an Auditor)
24Be Investable Initiative (to be launched in 2015) Initiatives /pogrammes to be launched (over next few years)Undertake Dubai SME Equity Financing Study (started)Set up Dubai SME Angel Investor Directory Network/platformDubai SME “Accreditation” programme for Dubai – based Angel InvestorsGuidelines for angel investors in Dubai/UAE context“Build your equity story” programme for entrepreneursBusiness Valuation and value drivers programmeDiagnostic tool kit to assess entrepreneur readiness for BA InvestingCase studies of BA in the UAE/Region
25Initiatives /pogrammes to be launched Conferences/Seminars/Workshops/Roundtables on Angel InvestingTraining course on Angel InvestingMentorship programmePitching competitionsDubai Best Start-Ups 50 ListDubai Angel Investor Awards Recognition