1. Venture capital funds as an alternative financing source for early stage companies

2. Agenda Development phases of a company Venture capital characteristics
Investment process
Investment criteria
Value enhancement
Exit strategies
Successful investor pitch

3. My bio Investment experience Operational experience
Partner and co-founder of a regional € 38 million private equity fund
Invested in innovative early stage companies (
Operational experience
Co-founder and managing director of a boat building start-up
Founder of a nano publishing start-up
Currently managing director of an M&A advisory firm

4. Company financing sources

5. Venture capital
Is provided by funds looking to invest in fast growing early stage companies
Investors in venture funds are primarily institutions (corporations, banks, insurance companies...) and high net worth individuals
VC funds invest in companies via a capital increase:
Providing fresh equity base for companies
Investment does not burden the company’s cash flows
VC funds are portfolio investors and are an alternative to sources of financing such as commercial banks

6. Equity vs Debt financing
Bank loan
Equity
Risk sharing no
yes
Founder’s “sacrifice”
cash flow
ownership
Ownership
unchanged
VC fund co-owner
Investor protection
standard
no / deal structure
Value added

7. Target industries of regional funds
IT / SW development
Telecommunications
VC funds’
investments
Internet / e-commerce
Biotech
Alternative energy
Services
Media

8. From presentation to investment
Management team
100
Consultants
Short review
Investment committee
VC funds invest in ~2% screened companies
Financial analysis 50
Business model
Tech due diligence
Letter of intent
Investment memo
First meeting
Investment
Investment process usually lasts from 4 to 9 months

9. What VC funds look for Founders Growth potential Exit strategy
Willingness to work with a partner
Aligned interests
Growth potential
Company operating in an industry with a high growth potential
Competitive advantage of product or service
Consolidation play
Exit strategy
Identifiable path to exit
Joint sale after 4-6 years

10. Value creation VALUE USTVARJANJE VREDNOSTI PRILOŽNOSTI ZA
COMPANY VALUE
CREATED
VALUE
Preparations for exit – trade sale
Well structured sales process
Value maximization for all stakeholders
USTVARJANJE VREDNOSTI
PRILOŽNOSTI ZA
New markets
Development of new products
Organic growth of the company
Taking a leading position in referential markets
VALUE
Fresh equity base
COMPANY VALUE
Pre-investment value of the company
Strategy and management, revenue growth, operational effective
New company value
Capital increase
Preparation for exit

11. Exit strategies
Common strategy in CEE, in most cases the most profitable one
Trade sale
Stock market listing
Not very common, few SME platforms available
The least favorable option for a VC fund
MBO or secondary

12. Pitching to investor (1)
Team
Short
Relevant accomplishements of key founders
Company overview
Value proposition
Target markets
Current status
Problem / opportunity
What problem are you solving?
Show that you can understand the market segment you are tareting

13. Pitching to investor (2)
Solution
What specifically are you offering?
To whom are you offering?
Do you change the way certain business processes get executed?
Benefits / Value
State the benefits you provide
Competitive advantage
Summarize key reasons why customers prefer your solution to other solutions
Why are you better than competition?

14. Pitching to investor (3)
Sales strategy
A pipeline of customers and strategic partners that have already expressed some interest in your solution
Business model
How will you be making money?
Financial projections and requirements
Show metrics that drive revenues, expenses and growth
Summary
Your value proposition in short

15. Further inquiries Jan Kobler Levana capital management
Dositejeva 22, Belgrade
Serbia