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Venture Capital for your businesses

Venture Capital for your businesses . A business angel perspective Harry De Smedt. Questions to be answered. What is venture capital ? What is a business angel (not) ? Can you indicate a prime example ? What are they looking for ? Is there a manual or procedure to handle them ?

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Venture Capital for your businesses

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  1. Venture Capital for your businesses A business angel perspective Harry De Smedt

  2. Questions to be answered • What is venture capital ? • What is a business angel (not) ? • Can you indicate a prime example ? • What are they looking for ? • Is there a manual or procedure to handle them ? • Ban Vlaanderen vzw ?

  3. Who the hell is a business angel ?

  4. Who the hell is a business angel ? Wikipedia : is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership My definition : Is an entrepreneur/manager with a least 1 great idea which she/he converted in a successful business and wants to be part of a similar experience again by providing an added-value (like own money, expertise, reputation, network…)

  5. Who the hell is a business angel ? first investment of US$500,000 in June 2004 from Peter Thiel, in exchange for 7% of the company

  6. Who the hell is a business angel ? The first business angel

  7. Who the hell is a business angel ? IPO Capital Needs Venture Capital Funds Higher Risk Early stage and seed venture funds Business Angels • Angels help fill the ‘Equity Gap’ Friends, Family & Founders Lower Risk Time 0 Seed Start-up Early Growth Sustained Growth

  8. Who the hell is a business angel ? YES : • When the risks are too high for banks (start up companies, no tangible assets, no profit...) • Offers ‘smart money’ : • CAPITAL (Eigen vermogen) • ADVICE • EXPERIENCE • NETWORK • CREDIBILITY TO VENDORS AND BANKS

  9. Who the hell is a business angel ? YES : • An experienced entrepreneur who doesn’t runaway and helps with the business • (Smart) money and mouth • Qualified sounding board • Seeks and offers commitment • Forces you into formal frameworks such as reporting, communication, corporate governance • An investor who wants to make a return and wants to leave after 3/5 years

  10. Who the hell is a business angel ? NOT : • No wings • An easy and risk seeking banker • Free consultant, 24/7 • A trusted replacement father figure • A TV dragon

  11. My personal testimonial... www. Linkedin.com/harry.de.smedt

  12. My personal testimonial... • My entrepreneurial ideas : • 1985 : Re-usable application software on open systems • 1993 : Security (viruses) is gonna be determining IT usage • 1998 : We need to grow rapidly, buy-and-build strategy, IPO • 2007 : An even bigger company wants to buy us • 2008 feb : start sabbatical year and trip around the world • 2008 apr : lot’s of businesses I can offer value to

  13. My personal testimonial... • Resulting in investments : • LISIS Technology : ERP solutions for ‘cradle-to-cradle’ • IMPAKT : IT-security solutions as a service for SMB • FAMILYWARE : E-health tools for self-diagnosis • SERVOY : Open source X-platform rapid development tool • EX-ARTE: Document management systems • STEP4MEDIA : interactive Digital Signage in QSR

  14. What are we looking for ? • 1 : the right entrepreneur (fit) • 2 : the right entrepreneur • 3 : the right entrepreneur • 10 : idea/product/service which is innovative, disruptive, makes a difference • 11 : is there a market opportunity? • 12-... : leverage possibilities, recurring revenues, exit possibility, reasonable entry valuation, time and money needed, patents, ... ACID TEST : Honesty, Integrity, Experience, High energy level, Skills, Leadership, Communicationstyle, Motivation…

  15. How do we proceed ? • Elevator pitch or teaser document • Personal meeting to explain • what you are looking for & why • Your personal/team drivers & vision • business model canvas/business plan • Show numbers : • Market • Company history (know your numbers !!) • Future : realistic targets, needs in cash/help • If ‘fit’ : draft term sheet (quantitive & qualitive) • (Limited) due diligence • Contract, shareholders agreement, .... How big is yourmarket ? Howfastchanging ? How different fromcompetition ? How does your business model capitalizeonmarketopportunity ?

  16. Noses in the same direction • Agree on : • Valuation & shares (classes) • Company/Board composition , rules, decisions • Milestones for funds transfer • Ratchet (up/down) • Exit possibilities • timing, event driven, preferences, put/call... • Standstill, pre-emption rights, Tag/Drag Along • Conditions precedent • Exclusivity (non-competing clause) • Everything you think is/will be important (reading material)

  17. BAN Vlaanderenvzw • Platform where entrepreneurs and informal investors meet • Some numbers : • 225 business angels • more 600 entrepreneurs • 30 investment deals • average deal 113.000 euro for 25% company • Only Flanders • All sectors (IT, Services, e-commerce, health..) • Helps you with governmental subsidies • Offers training courses ‘how deal with external shareholders’ • Go to www.banvlaanderen.be or www.angel4me.be • NOT : crowdfunding

  18. Questions ? harry@cumfides.com www.banvlaanderen.be

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