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add partners. investing in future global leaders. University of Exeter Lecture. 28 November 2002. Agenda. What does it take to start a company ? What is Venture Capital ? What do VCs do ? A peek into Add Partners Strategy Portfolio VC returns Q & A. Components of a Startup.

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add partners

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  1. add partners investing in future global leaders University of Exeter Lecture 28 November 2002

  2. Agenda • What does it take to start a company ? • What is Venture Capital ? • What do VCs do ? • A peek into Add Partners • Strategy • Portfolio • VC returns • Q & A

  3. Components of a Startup • Product / Service that addresses a market need • Founders • Staff / Management team • Financing

  4. Financing Options • Personal funds of founder(s) • Friends & Family • Angel investors • Bank loans • Private equity / venture capital

  5. Venture Capital is … • money provided by professionals who invest alongside management in young rapidly growing companies that have the potential to develop into significant economic contributors • an important source of equity for startups • Examples of venture-backed companies: Intel, Compaq, Sun Microsystems, Ariba

  6. Venture capitalists generally … • Finance new and rapidly growing companies; • Purchase equity securities; • Assist in the development of new products and services; • Add value to the company through active participation; • Take higher risks with the expectation of higher rewards; • Have a long-term orientation

  7. Example Capitalisation Table Acme Inc Capitalisation Table 1st Round Current Number of Shares % Ownership Fully Diluted % Ownership Fully Diluted Number of Shares Investment In $ New Shares Founder 1 Founder 2 Allocated ESOP Unallocated ESOP Add Partners Investor B Investor C Investor D TOTAL Pre-Money Valuation Post-Money Valuation Share Price Founder 1 Founder 2 Allocated ESOP Unallocated ESOP Add Partners Investor B Investor C Investor D TOTAL Pre-Money Valuation Post-Money Valuation Share Price 2,000,000 2,000,000 4,000,000 2,000,000 6,000,000 0.22 7,200,000 1,200,000 800,000 9,200,000 00 78.3% 13.0% 8.7% 29,770,000 24.2% 4.0% 2.7% 7.3% 30.9% 30.9% 7,200,000 1,200,000 800,000 2,170,000 9,200,000 9,200,000 29,770,000 91.3% 8.7% 0.0% 2,170,000 9,200,000 9,200,000 28.2% 10.0% 61.8% 100.0% 100.0%

  8. Why use Venture Capital ? Make a company grow bigger, faster than it otherwise would. • Combination of funding and added value • Price is reflective of both financial investment and added value investment

  9. Types of VCs • Investment Focus – generalists or specialists • Stage of Investments: • Seed • Early stage • Expansion stage • Late stage / pre-IPO • Others: • Acquisition, turnaround or recapitalisation • MBO / MBI / BIMBO

  10. Add Partners’ Strategy Early Stage Pan European Technology Hands On • 1st or 2nd round • Revenue visibility • Focus on UK, Germany, France & Scandinavia • Global potential • Infrastructure enablers • Technology validated • Development capital of €3-5 million • Active investor

  11. Adding Value to Future Global Leaders Financing Recruiting • Syndication partners • IPO • M&A Exposure • Specialized headhunters • Pool of contacts • Media • Analysts • Conferences Portfolio Company Partners Customers • Technology leaders • Keiretsu • Universities • Technology leaders • Telcos, banks, insurance co’s

  12. Anatomy of a Deal • What do we look for in a company ? • Size of market • Product / Technology • Strength of management team • Term sheet • Valuation • Investor rights • Exit Considerations • Trade sale • IPO

  13. Valuation Metric ?

  14. From start-up to IPO

  15. Current Portfolio Terahertz Photonics • Optical component and backplane materials • Lead 1st Round, Aug 2000 • Co-investors: Scottish Equity Partners Freever • Messaging platform technology & services • Lead 2nd Round, Sep 2000 • Co-investors: Net Partners, CDC Innovation, Apollo Invest XIAM • Information routing technology • Lead 2nd Round, Nov 2000 • Co-investors: Vertex, Delta Partners www.terahertz-photonics.com Livingston, Scotland www.freever.com Paris, France www.xiam.com Dublin, Ireland

  16. www.temposoft.com Paris, France www.scisys.com Dublin, Ireland Current Portfolio SurfKitchen • Portal infrastructure and applications software • Lead 1st Round, Jan 2001 • Co-investors: n/a Scientific Systems • Plasma measurement and control solutions • 2nd Round, Sep 2001 • Co-investors: Vertex, ACT Partners TempoSoft • Human Capital Management software • Lead 3rd Round, Sep 2001 • Co-investors: Atlas Venture, CDC Innovation www.surfkitchen.com Zurich, Switzerland

  17. www.proximion.com Kista, Sweden www.polarlake.com Dublin, Ireland Current Portfolio Proximion • Optical components and subsystems • 2nd Round, Sep 2001 • Co-investors: Celtic House, Innovations Kapital Phyworks • Communications ICs • Lead 1st Round, Feb 2002 • Co-investors: Atlas Venture, Prelude PolarLake • Transactional XML Processing Software • Lead 1st Round, November 2002 • Co-investors: Delta Partners www.phyworks-ic.com Bristol, UK

  18. Venture Capital Returns (1)

  19. Venture Capital Returns (2)

  20. A Convergence of Favorable Factors Re-shapes the European Technology Landscape Real Deals, Tornado Insider, serial entrepreneurs Entrepreneurship on the rise Cambridge, Thames Valley, Munich, Flanders, Kista Success of technology clusters Development of venture capital US VCs in Europe, European VCs more focused Local growth exchanges Easdaq, Euro NM, Techmark & European NASDAQ Restructuring of technology giants Nokia, Ericsson, Alcatel, Siemens, Philips, ST Micro

  21. Contact Details Maisy Ng Add Partners Limited 34 Dover Street London, W1S 4NG UK Tel: +44 (0) 20 7399 2280 Fax: +44 (0) 20 7629 8398 www.addpartners.com

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