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Blaž Kos, kos@poslovniangeli.si Beograd, 2010

ANGEL INVESTING EXPERIENCES IS SLOVENIA. Blaž Kos, kos@poslovniangeli.si Beograd, 2010. The beginning…. What do you need to start your own business? You with the right/crazy “ Mental Blueprint ” Everything is always impossible before it works

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Blaž Kos, kos@poslovniangeli.si Beograd, 2010

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  1. ANGEL INVESTING EXPERIENCES IS SLOVENIA Blaž Kos,kos@poslovniangeli.si Beograd, 2010

  2. The beginning… What do you need to start your own business? • You with the right/crazy “Mental Blueprint” • Everything is always impossible before it works • Safe job is risky, not starting your own company • I don’t need a job, I want a fu*king adventure • Life is too short to spend 1/3 at the job you hate • Excellent Idea • Top Team • Funding(money, money, money,…)

  3. Sources of financing • Retained earnings (Internally Generated Funds) • You reinvest your money into growth of the business • Grants and other support on offers (incubators, TP) • Usually the cheapest money you can get (consider kg of reports) • Debt financing (credit, leasing, factoring, franchising…) • You borrow money and return the borrowed amount + interests in agreed time periods. There must be insurance for every penny, it influences your cash flow and there is usually no added value from Mr. Banker. • Equity financing (!) • The investors becomes co-owner of the company

  4. Equity financing Inside • 4F (founders, friends, family, fools) Outside • Business angels • Venture Funds • Private Equity Funds • Stock Exchange VentureCapital

  5. 4F • Founders • Blood money: put your money where your mouth is • Savings, Credit Cards,… • Knowledge, sweat and tears • Friends • Not always wise; don’t mix business with pleasure • Family • Financial and moral support: Big difference between US and SI • Fools • You can always find a fool 

  6. Three types of ventures • Bad businesses • Good businesses (organic growth) • Family business • Lifestyle companies • Good investment opportunities (high growth) Venture Capital

  7. Concept of Venutre Financing • In most cases business angel REALLY trusts in the team. • Therefore is willing to take the high risk, because investor believes the team will find way to make business successful. • Investor wants to become partner in the company, have some rights and add additional value to lower the risk. • The money will be made at liquidity event - EXIT (selling shares). But because of the high risk and low liquidity of the investment the RETURN must be SKYHIGH. • 9 out of 10 ventures fail in 5 years • 6 out of 10 BA invested companies fail • 1 out of 10 invested ventures makes more money than expected • 1 out of 100 invested is homerun - and that’s the name of the game

  8. Business Angels • Successful high net-worth individuals who have already built one or more successful companies • Equity financing – with his/her investment the Business Angel becomes a shareholder of the company • “Smart Money” - high value-added for entrepreneurs • Know-how • Business experience • Social capital (!!!) • High personal engagement into growth of the company (hands on investors)

  9. What do they look for? • Innovative idea • problem, pain, solution • Business model • scalability, profit margins etc. • Big market • PEG – Potential for Explosive Growth • Top executive team with strong leadership • Exit strategy Enthusiasm (spark in the eyes) and Competences (knowledge, skills, values, beliefs + experiences, network)

  10. Adding Value • Higher credibility • Strategic and business consulting • Sales contacts • Helping to close the deal • Contacts of potential strategic partners • Organizing a business • HR contacts • Getting additional funding • Exit

  11. VC Funds - difference • It’s a FUND (like mutual fund) with hired management team (some of them are partners) • Established for 10 – 12 years (fund raising, investing, exits) • They have their own investors who expect return • Investment policy • Investments in later stages (in our region) • Expansion capital • Higher investment size: 1 mio € to 3 mio € • Different added value: CFO, Exit • Different type of funds (Sector, Geography, Stage of development)

  12. Angel Networks Why investors join BANs? • Better deal-flow • More deals • Pre-screened deals • Better quality of business plans and pitches • Investment readiness programs • Syndications (risk sharing, different sectorscoverage) • Help with deal structuring and legal aspects • Networking with other high net worth individuals • Having more fun

  13. Our portfolio • OBS d.o.o. – mountvacation.com internet booking portal • Versor d.o.o. – systems for parking optimization in car parks • Sonia d.o.o. – fashion accessory store • Acies E d.o.o. – biotechnology development company • British International School in Ljubljana d.o.o. • Sosed d.o.o. – computer assistance at home • Ekstundo d.o.o. – patent for eliminating dead spots in cycling • VentureLab d.o.o. – management and business service company

  14. Why Business Angels of Slovenia? • A big lack of early stage financing sources for SMEs, even bigger in the financial crises • Fast development of new entrepreneurial activities • In the past, few successful business angel investments were made, but no network • Business angels are a very important fragment of the capital market in every country and have a significant role in the development of successful new companies • We had first sponsor for 50.000€

  15. Profile of the Association • Legal founding form: Non for profit association (club) • Founding date: June 2007 • Official name: Poslovni angeli Slovenije • International name: Business Angels of Slovenia • Webpage: www.poslovniangeli.si, www.businessangels.si • Primary investment region: Slovenia • Secondary investment region: Countries in the Balkan region (cross border investments - trend) • Our members: More than 35 carefully selected top high net-worth individuals from Slovenia

  16. Associationactivities • Promoting equity investing • Scanning and evaluating the projects/teams/companies • Educating potential business angels and entrepreneurs • Cooperation with entrepreneurial support organizations • Organization of internal events (investment dinner) • Deal structuring (legal, financial structure etc.) • Due Diligence • Monitoring and adding value (hands on investing) • Information exchange between members • Cooperation with foreign business angel networks

  17. Investment criteria • Phase of the company: Seed or startup (founded company with first revenues) • Investment size:100.000 € - 500.000 € (syndication, trend) • Investment mechanisms: Equity financing, convertible loan agreements • Sectors: No limitations (ethical business) • Investment time: 3 to 5 years • Expected: Minimum 30% annual return • Targets: Companies with high growth potential, excellent management and viable exit strategy.

  18. Investment process BAN ManagerReview

  19. Pipeline development • Public relations • Appearance at entrepreneurial conferences • Promotion through key partners • Educational institutions (faculties, institutes etc.) • Support environment (incubators, technology parks etc.) • Student initiatives • Co investments • Webpage • Networking and word-of-mouth advertising

  20. Our own projects • StartUp Slovenia Business Plan competition (co organizers) • 100% StartUpForum (co organizers) • iTIME Business Accelerator • (don’t) SKIP conference (early stage financing conference) • Slovenian Innovation Forum (co organizers) • Investment Readiness Program (StartUp School) • More than 40 entrepreneurial events per year!

  21. Start Up School • The purpose is to help entrepreneurs write appropriate investment documentation: • Business plan • Executive summary • Business plan presentation (10/20/30) • The emphasis is on financial projections for a 3 to 5 year forecast • For every project, we try to make a basic deal structure which is the starting-point for further negotiations between the investors and entrepreneurs • We also prepare the entrepreneurs for their presentation to the investors

  22. EU Projects • EBAN Members • Easy Cross Border Early Stage Financing (2008 – 2009) • Inno Deal Innovations (2008 – 2009) • Ready for Equity 2 (2009 – 2010) • 4 years of program development • Business angel trainings • Entrepreneur trainings • EBAN Accredited • International oriented BAN!

  23. Club financing • Memberships fee for Business Angels (1.500€) • Investment Readiness Program (200€) • 3% Success Fee of the Investment • Consulting services • Sponsorships and donations • Public sources of financing (EU projects) • It’s good to have a sponsor (private or public)

  24. Current results • Founded in June 07 (very young BAN) • 35 members, business angels • Over 300 companies reviewed (100+ annually) • Over 100 companies took part in our IRP • 50 projects presented at 5 investment dinners • 8 projects supported, total investment value of 1,65 mio € • Business angels Fund (5,4 mio €)

  25. Business angels Fund • Starts to operate in October 2010 • 5,4 mio € business angel fund • 51% business angel money, 49% public money • Most active business angels are in investment committee • Sectors allowing for high returns • Seed and early stage fund (50.000€ - 500.000€) • We plan to make 15 investments in next 5 years

  26. Contact information Business Angels of Slovenia Železna cesta 18, SI – 1000 Ljubljana Phone number: + 386 1 30 70 933 E-mail: info@businessangels.si

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