2. Turning business ideas into reality
Paulo Andrez
Business Angel
DNA Cascais (incubator) Board Member
President of EBAN

3. Start Ups Valley of Death
time
Cash flow
Start-up

4. Imagine that you have 100.000 USD in a safe bank, and you have 4% of interest rate for your deposit.
Hi, My name is Scott, and I want you to invest in my new fantastic Start Up ! I will pay you 5% annually.

5. But if the World Bank guarantees you that if Scott’s new venture doesn’t pay you the 5%, they will pay it immediately to you, would you invest ?

6. Probability of an entrepreneur to raise money from investors
Business Angels
Venture Capital
Mutual Guarantee
Family, Fools , Friends & State
Bank
100%
GOAL
Probability of an entrepreneur to raise money from investors
0% Mitigated Risks %
Risks (MELFO)
Market, Entrepreneurs, Legal, Financial, Operational

7. POTENTlAL
Initial
Project
RISK

8. Reduction of 50% to 90% of the total risk of the project
Getting out of comfort zone
Reduction of 50% to 90% of the total risk of the project
Total Project Risk
Final Risk of the Project
Initial Project
Project after mitigation of risks

9. The importance of good entrepreneurial ecosystems
Entrepreneur Schools – We have a partnership with Professor Chris Curtis for the 10th to 12th grade, and with Junior Achievement for the 9th grade. In this first year, about 2000 students attend these classes.
CINC – more than 200 projects were received.
Ideas Bank – its aim is to provide business ideas to investors, creating a match between them.
Social Entrepreneurship – helping develop social equity and self employment with socially innovative ideas and projects.
Time Bank – is related with social entrepreneurship in means of contributing with time instead of money.
Incubation Centers – Offices available to help start ups in their early stages
Interim Management – experienced managers and executives that can help the kick off of new business ideaswith their knowledge not capital.
Bas – Provide private equity with networking skills. The well known smart money is applied here.
Financing Solutions – Non equity based solutions like small firms loan (with IAPMEI guarantee)
Venture Capital – innovative projects up to 2.5 million euros.
Investment Support – help in developing business plans; Coaching, law consultancy and financial advisory.
Global Partners :

10. 2/3 of jobs come from moderate and high growth firms
Source : Ernst & Young and Endeavor 2011

11. Launched in December 2011

12. Parts of the OECD study

15. 1 2 3 4 4 Created in 1999 by Eurada with
the support of European Commission 2
Not for profit organization based in Brussels 3
Members in 35 countries 4 4
+ 100 members (BANs, Federations…)
…and growing

16. COMMON OBSTACLES IN EARLY STAGE FUNDING
IPO
Capital Needs
Venture Capital
Funds
Equity Gap
Higher Risk
Early stage and seed venture funds
Business Angels
Investment
Readiness
Friends, Family , Founders & State !
Lower
Risk
This is not linear today – the equity gap is expanding and there are several gaps in the chain
Time
Seed
Start-up
Early Growth
Sustained Growth

17. Business Angel’s value chain
Source: EBAN RESEARCH COMMITTEE

18. INVESTMENT CYCLE Assessing investment opportunities Investment
Manage portfolio of investments
Re-investments
Exits

19. A VERY COMPETITIVE PROCESS
100
Deals
Business Plans received
Pre-screening
Screening
Terms Sheet
Due diligence
1-5 Investments
Investment

20. There are good revenues
Revenues almost zero
There are good revenues
Veal
Cow
Cow
Milk
Veal turns into Cow
Cow produces Milk Buckets

21. WHAT ANGELS DON’T LIKE

22. Meeting with Investors
I am the BEST!
I want a salary of euros+ car + unlimited credit card + 25% of the profits of the company
I can’t tell much about my project because you can steal the idea and the project !
I didn’t test the idea because the potential clients could steal the idea and the project !
I want to have the majority of the equity to control the company ! I thought in 90% of the shares !
The total investment is euros, and I will put euros…
I have all the skills to manage this company, so I do not need anybody in the Board !
There is no competition. This technology is unique.

23. Scott talking with Investors

24. Scott´s conclusion I have to emigrate!
The government grants, co-investments funds , venture capital…is just for government’s friends.
There are no Business Angels and Venture Capitalists in Europe !
The politicians speak a lot but do nothing !
The Risk Investors do not want Risk ….
These investors made me lose time and money. They will regret not to have invested !
In Europe we are 20 years behind the US in terms of BA and VC !

25. Number of BANs* in Europe
Slide content
297
286
data collected
*BAN – Business Angel Network/Group

26. Amount invested: Size of Visible/ Invisible Market
2011
2012
4.745 M€
5086 M€
508 M€
427M€
Visible Market
9% 10%

27. Number of BAs* in BANs 2011 2012 241.444 261.054 “formal” market
21.730
26.105
“formal” market
9% 10%
*BAs who made at least 1 investment in the past 3 years.

28. SAMPLE OF CURRENT ACTIVITY
Sectors of Investment
SAMPLE OF CURRENT ACTIVITY
Source: EBAN Statistics Compendium OK

29. Visible market by country

30. Visible market growth/ decline (amount invested)
838%
250%
175%
116%

31. Average investment amount by BANs in 2012 (k€)
7100
Average = 1,1M€

32. Impact in the economy, just in the year of investment (2012)
Enterprises Financed
(2.900)
Jobs Created
(17.700)

33. Some Angel investments in Europe
Michelson Diagnostics

34. Thanks paulo.andrez@dnacascais.pt paulo.andrez@eban.org
“The whole entrepreneurial thing is that you kind of jump off a cliff and assemble your airplane on the way down. ”,
Reid Hoffman – LinkedIn founder