Jacek Błoński Warsaw, April 22, 2008 Business Angels as alternative source of financing early-stage investments

LBA Founding Institution Polish Confederation of Private Employers Lewiatan  An organisation of private entrepreneurs set up in January 1999  Confederation of business associations and companies from many sectors of economy and all regions of Poland  …representing about companies – mostly large and mid-sized  In total, member-companies employ over people  Strong media presence  Easy access to entrepreneurs and managers (especially from traditional sectors) EUROPEAN FUND FOR REGIONAL DEVELOPMENT In the initial phase the project was co-financed by the European Union

WHO IS AN ANGEL INVESTOR? Business Angels:  Wealthy individuals  Good business experience  Good contacts and marketing skills  Very often cashed out entrepreneurs or managers  Actively supporting development of the company

BUSINESS ANGELS ON THE RISK CAPITAL MARKET Low risk Capital needs Time START-UP Early stageExpansion High risk Friends, family and fools Business Angels Venture Capital Funds IPO Growth Seed

LBA KEY DATA  A group of ca. 70 individual investors associated with LBA, interested in early-stage companies with extraordinary growth prospects, no sector specialization  Typical investment – between EUR 50k and EUR 1.5m  Services provided to investors:  provision of carefully selected business plans, according to individual preferences and investment criteria  Services provided to entrepreneurs:  access to selected group of active investors

STRATEGY LBA has established an extensive angel network in Poland and between 2005 and 2007 finalized 7 investments in different sectors/branches Ideas screened Ideas refined in Meetings Ideas submitted to the Investors Number of Investments 2% of business plans submitted get financing Many of the projects submitted to investors came from LBA’s partners Negotiation process is less formal than with VCs, but also less predictable

PROJECT SELECTION CRITERIA  Experience and competences of the management team  Strong growth potential  Growing market or attractive niche  Competitive advantage  Founders involvement and commitment (also financial)  Identified and clear exit options  Business plan and financial projections – coherent and well thought

INVESTMENTS

COOPERATION WITH BUSINESS ANGELS–BENEFITS  Benefits for entrepreneurs seeking financing from business angels:  Provision of adequate financing, flexible terms  Experience and strategic know-how  Business contacts and relations within industry

BUSINESS ANGELS NETWORK – MAIN PROBLEMS  Problems with self financing of the network – especially at the beginning (external financing highly needed)  Low quality of the incoming project at the initial phase of the new network (good training and PR needed)  Lack of appropriate know-how  Very limited number of business angels with experience in capital investments and exits strategies.

Opportunities for Ukrainian entrepreneurs  Some Business Angels associated with LBA do not exclude investing in foreign start-ups  LBA is interested in cooperation with Ukraine entrepreneurs looking for alternative sources of financing  Special interest in projects that can be developed internationally  Communication in English is necessary  And finally LBA can help in founding new Business Angel Network in Ukraine (next to Private Investors of Ukraine) and share some experience and thoughts to stimulate angel market.

Jacek Błoński LEWIATAN BUSINESS ANGELS Tel: Fax: