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Competitive Advantage through Private Equity and Venture Capital Financing

Competitive Advantage through Private Equity and Venture Capital Financing. Dr. Jürgen Marchart AVCO – Austrian Private Equity and Venture Capital Organisation 28 th March 2014. Agenda. What is AVCO? What is Private Equity/Venture Capital? Austrian Private Equity Industry

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Competitive Advantage through Private Equity and Venture Capital Financing

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  1. Competitive Advantage through Private Equity and Venture Capital Financing Dr. Jürgen Marchart AVCO – Austrian Private Equityand Venture Capital Organisation 28th March 2014

  2. Agenda • What is AVCO? • What is Private Equity/Venture Capital? • Austrian Private Equity Industry • Competitive Advantage • Framework Conditions

  3. What is AVCO? AVCO – Austrian Private Equity und Venture Capital Organisation is … • …the umbrella organisation of the Austrian Venture Capital industry • Represents 80% of the Austrian Venture Capital market • AVCO’s mission is:

  4. Mission Information and know-how services, to raise awareness for benefits of VC Networking, fostering the co-operation of all VC players Lobbying, to improve framework conditions Co-operation with EVCA, nVCAs, EC,… Organisation AVCO is a non-profit association Financed by membership fee, sponsoring, projects Mission ofAVCO

  5. Fund location and legal framework conditions Representation of PE/VC industry in nationalen and European legal framework discussions Working groups, know-how generation and information of AVCO Members Interface to other national umbrella organisations and EVCA Deals/Transactions Matching platforms Co-operation with potential targets (portfolio companies, ...) Investors Co-operation with potential investors Information generation und dissemination about the Austrian PE/VC industry Co-Investments Creation of matching platforms Investment cases, success stories, … AVCO Services I

  6. Marketing and visability of the know-how and the services of AVCO Members visability for know-how and services of AVCO Members to members of the PE/VC Community Generation of projects/business Education PE/VC trainings and seminars Know-how transfer to young employees of AVCO Members Development of an education certificate Information Newsletter News & changes at members AVCO Services II

  7. PR (image of the branche) Public relation Image building for activities of the PE/VC industry Active communication of topics Communication of positive effects of PE/VC for Austria Awareness building Networks Network platforms Matching platforms Active community, matching of the players Lobbying Competent and independent information und know-how provider Active discussion with representatives of the government Active creation and further development of PE/VC in Austria AVCO Services III

  8. AVCO Members – PE/VC

  9. AVCO Members – Service Providers

  10. Agenda • What is AVCO? • What is Private Equity/Venture Capital? • Austrian Private Equity Industry • Competitive Advantage • Framework Conditions

  11. Financing Instruments equity financing-risk silentparticipations successparticipation shareholder loan propertyinterests subordinatedloan governance unsecuredloans credit & loan mezzanine debt intensity

  12. Financing Mix – Over Time Stock Equity Debt Equity Cash Flow Private Equity Funding/ FFF

  13. What is Private Equity? • Private Equity provides equity capital to enterprises not quoted on a stock market. • Private Equity can be used to • develop new products and technologies • to expand working capital • to make acquisitions or to strengthen a company’s balance sheet. • to resolve ownership and management issues - a succession in family-owned companies • to buy out or buy in of a business by experienced managers

  14. What is Venture Capital? • Venture capital is, strictly speaking, a subset of private equity and refers to equity investments made for • the launch • early development or • expansion of a business. • (Definition of EVCA – European Private Equity and Venture Capital Association)

  15. One Day with PE/VC? “Every day, each of you benefits from Private Equity. Your morning starts with a Latte at Starbucks, you carry your internet research at work via Google or Yahoo!, you talk to family and clients around the globe over Skypeand eat a quick lunch snack at Nordsee or BurgerKing. You order books and CDs from Amazon.com and your kids liaise with their friends over MySpace.com and U-Tube on their Compaq computer powered by Intel. You shop for Tommy Hilfinger, Jimmy Choo, Tumi bags and suitcases, Bally, Tag Heueretc. in the evening. Your doctor recommends you products from Actelion and Genentech or Amgen and you work out at FitnessFirst or HolmesPlace and you finish your day off buying tickets over Ebay, drinking a beer at Punch and watching TV on Cablecom or Sky.” (Javier Echarri, former EVCA Secretary-General)

  16. PE & VC – More than Money Captial Call Concept PE/VC as Asset class PE/VC as Financing-Tool EXIT Fundraising Investment Performance Profit Fundmanagement Investor SME Fund Institutional investors like Pension funds, Insurances, Banks Growth support , Innovation … Capital Investment plus Information, Coaching, Management Know-how

  17. Agenda • What is AVCO? • What is Private Equity/Venture Capital? • Austrian Private Equity Industry • Competitive Advantage • Framework Conditions

  18. European PE/VC Industry – Statistics • PEREP_Analytics™: (Private Equity Research Exchange Platform)Private Equity non-commercial pan-European private equity database • Industry statistic:PE/VC activities of PE/VC funds located in Austria(Fundraising / Investments / Exits at national and international SME). • Market statistic: PE/VC activities at SME located in Austria(Investments / Exits of national and international funds).

  19. Private Equity & Venture Capital in Austria Incl. funds located in Austria, investing in Austria andabroad Austrian Funds Austrian Companies 2012 Fundraising 173 Mio. -31% Investments 115 Mio. -7% 261 Mio. -19% Deinvestments 83 Mio. -76% 182 Mio. -37% • Industry statistic – Austrian Funds:PE/VC activities of PE/VC funds located in Austria(Fundraising / Investments / Exits at national and international SME). • Market statistic – Austrian Companies: PE/VC activities at SME located in Austria(Investments / Exits of national and international funds). Source: EVCA PEREP_Analytics | AVCO (May 2013)

  20. Private Equity & Venture Capital in Europe Investments 2012 GDP share: PE & VC Funds in Europe in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  21. Private Equity & Venture Capital in Europe Investments 2012 GDP share: PE & VC Austrian Companies in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  22. Private Equity & Venture Capital in Europe Investments 2012 GDP share: VC only Austrian Funds in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  23. Private Equity & Venture Capital in Europa Investments 2012 GDP share: VC only Austrian Companies in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  24. Private Equity & Venture Capital in Austria Investments 1999 - 2012 Development: PE & VC Austrian Funds in Mio. € Source: EVCA PEREP_Analytics | AVCO (May 2013)

  25. PE/VC Investments Austira vs. Europe Investments 1995 - 2012 Development Austria vs. Europe: PE & VC Austrian Funds in Mio. € Source: EVCA PEREP_Analytics | AVCO (May 2013)

  26. Private Equity & Venture Capital in Austria Investments 2007 - 2012 Development: PE & VC Austrian Companies in Mio. € around € 500 Mio. around € 590 Mio. Communication Dealaround € 180 Mio. Statistics since Source: EVCA PEREP_Analytics | AVCO (May 2013)

  27. Private Equity & Venture Capital in Austria Investments 1999 - 2012 Development: VC share Austrian Funds in Mio. € Source: EVCA PEREP_Analytics | AVCO (May 2013)

  28. Private Equity & Venture Capital in Austria Investments 2011 / 2012 Branches: PE & VC Austrian Funds in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  29. Private Equity & Venture Capital in Austria Investments 2011 / 2012 Branches: PE & VC Austrian Companies in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  30. Private Equity & Venture Capital in Austria Investments 2011 / 2012 Life Cycle phases: PE & VC Austrian Funds in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  31. Private Equity & Venture Capital in Austria Investments 2011 / 2012 Life Cycle phases: PE & VC Austrian Companies in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  32. Private Equity & Venture Capital in Austria abroad Investments 2012 Flow: PE & VC Germany 17,2 Mio. Czech Republic 11,5 Mio. Switzerland 2,1 Mio. Hungary 1,6 Mio, Liechtenstein 0,3 Mio. in Mio. € 32,9 178,7 0,037 %GDP share 82,5 € 115,4 Mio. Investmentsmade by Austrian Funds von österr. Fonds: 115,4 0,084 %GDP share in Austrian Companies: 261,3 € 261,3 Mio. Investmentsin Austrian Companies Source: EVCA PEREP_Analytics | AVCO (May 2013)

  33. Private Equity & Venture Capital in Austria Exits 1999 - 2012 Development: PE & VC Austrian Funds in Mio. € Source: EVCA PEREP_Analytics | AVCO (May 2013)

  34. Private Equity & Venture Capital in Austria Exits 2007 - 2012 Development: PE & VC Austrian Companies in Mio. € Statistics since Source: EVCA PEREP_Analytics | AVCO (May 2013)

  35. Private Equity & Venture Capital in Austria Exits 2011 / 2012 Exit Route: PE & VC Austrian Funds in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  36. Private Equity & Venture Capital in Austria Exits 2011 / 2012 Exit Route: PE & VC Austrian Companies in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  37. Private Equity & Venture Capital in Austria Fundraising 1999 - 2012 Development / Sources: PE & VC Austrian Funds in Mio. € Source: EVCA PEREP_Analytics | AVCO (May 2013)

  38. Private Equity & Venture Capital in Austria Fundraising 2011 / 2012 Sources: PE & VC Austrian Funds 2011 2012 in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  39. Private Equity & Venture Capital in Austria Fundraising 1999 - 2012 Sources: PE & VC – Share GovernmentAgencies Austrian Funds in % Source: EVCA PEREP_Analytics | AVCO (May 2013)

  40. Agenda • What is AVCO? • What is Private Equity/Venture Capital? • Austrian Private Equity Industry • Competitive Advantage • Framework Conditions

  41. PE & VC – Intelligent Money Financing Function: no alternative finance sources available for specific project Selection Function: limited financial resources are allocated to projects with highest profit-potential at high risks Added Value: („smart money“) input of active investors is not only money, but also management know-how, networking, consulting, …

  42. PE & VC Investment Phases Early Stage Expansion Stage Later Stage Pre-Seed Stage • Business Angel Investment • Seed Financing • Start-up Financing • First StageFinancing • Second Stage Financing • Third StageFinancing • ManagementBuy-out/Buy-in(MBO, MBI) • Bridge Financing(Pre-IPO) • TurnaroundFinancing Business Angel Venture Capital Private Equity

  43. PE & VC – The Process Closing Analyse & Valuation Stop or Go Supervisory Board Preliminary Offer Contract LOI Negotiations Due Diligence Business Due Diligence Legal Due Diligence Financial Due Diligence Pre Due Diligence Post Due Diligence

  44. Effects of PE/VC on Company Development

  45. Effects of PE/VC on Company Development • PE/VC financed companies show: • 70 % higher turnover • 50 % higher employment

  46. Agenda • What is AVCO? • What is Private Equity/Venture Capital? • Austrian Private Equity Industry • Competitive Advantage • Framework Conditions

  47. Tax & Legal Situation Austria

  48. Legal Framework Conditions AIFMD implementation, adoption necessary Future national PE/VC regulation for sub-threshold area is depend on AIFMD implementation MiFiGended 2013 IGG / ”MifiG new” is under discussion Status Quo in Austria

  49. AVCO Community 16 Fund Members represent the relevant players in the market Service Provider are well educated and highly experienced with PE/VC Austrian SME landscape provides an attractive pipeline for portfolio companies Austrian investors seek for investment opportunities abroad and/or Austria, and for syndication partners Status Quo in Austria

  50. Contact Jürgen Marchart Managing Director juergen.marchart@avco.at T +43 1 526 38 05 F +43 1 526 38 05-6552 AVCO Austrian Private Equity andVenture Capital Organisation www.avco.at

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