INNOVATIVE ENTREPRENEURSHIP AND BASIC FUNDRAISING CONCEPTS

Transcription

1 INNOVATIVE ENTREPRENEURSHIP AND BASIC FUNDRAISING CONCEPTS Fundraising Education and Pitch training Seminar

2 I HAVE AN IDEA! Shall we get some money for it?

3 Ideas worth investing in Improve the existing Innovate for a new

4 Funding in Latvia Innovative Growth Companies Conventional Life-style businesses

5 What is innovation? The process of translating an idea or invention into a good or service that creates value or for which customers will pay New ideas, new methods, new scientific and technological products or services Developed on the cross-section of branches, experiences, industries or professions Application of scientific method Invention Innovation Diffusion

6 Improvements of existing:

7 Innovations in Baltic states

8 I HAVE AN IDEA... Do NOT test your ideas with your own money!!! Test your ideas with your Bose s money! Prepare for start-up Buy low, sell high, collect early and pay late.. Systematic approach: 1. R&D, Technology, IP (idea) 2. Supply 3. Production 4. Sales, marketing 5. Administration, HRM Dick Levin Associate Dean School of Business Administration University of North Carolina

9 Start-up environment: culture & components It takes guts!!! + time, energy, hard work and money... Mission orientation, persistency I have to get it done! Culture of risk-acceptance: most of the start-ups fail! Venture capital, BAN s and innovation community State support system (LIDA, LGA), legislation (tax relief, crowd-funding) Basic business education along with professional knowledge Specialized training Process

10 FUNDRAISING CONCEPTS

11 Why companies need outside funding? Global competition, global (open?) markets Technology advances VERY fast Individual players vs. Business eco-systems Individual Competences, business acceleration, market entries - could be bought by money!!! From start-up IPO From start-up IPO

12 Funding escalator

13 Funding Escalator

14 Startup Funding Escalator and Corporate Growth Strategy

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16 INVESTORS vs COMPANIES

17 Investors Industrial Investors vs Financial Investors Company in the same business branch looking for: Markets Customers Cost reduction factors New Technologies Business Angels, Smart money Long term private fin investors Family offices ( oligarch money ) Corporate Ventures Risk Capital Funds (PSF, SF, VC) Mezzanine Funds, Buy-out-Funds Private Equity Funds, Hedge Funds Their business expansion vs Your business expansion

18 Financial Investors mind-set Buy low, sell high, earn on the margin Strong business opportunity How To reduce the risk Team, team, team Focus, focus, focus High quality deal-flow: investor-ready companies Syndicate investments, networking with other investors

19 Investment Process Investor go ahead Investor approval 1 Investor approval 2 Initial Initial contact Innledende Term Sheet Due Diligence discussions diskusjoner Negotiations on documentation Closing General review of: Transactions The company Business plan Financial statements / budget Discussions with Main terms and conditions of the investment Legal Technical Environment Market Agreement Shareholders Agreement Loan Agreement Employment management agreements

20 Why Exit? Investors want to collect return Funds are sold and closed down Entrepreneurs cash in Entrepreneurs love the art of the start

21 Exit Routes for Financial Investor Secondary Buy Out (SBO) according to Corporate Growth Strategy Trade Sale (to Strategic Investor) M&A Management Buy Out (MBO) Buy out fund Initial Public Offering (IPO) Secondary markets Full listing

22 INVESTMENT CONCEPTS

23 Companies Businesses by Growth Potential Life-stile businesses Gradual Growth companies Fast Growth Companies (Growth Companies)

24 Life-stile businesses Restaurants Small shops Creative industries Family-owned companies Franchises (for sale...)

25 Life-stile businesses Set up and run by the Founders (families) Limited scalability Limited growth possibility beyond certain income level Limited access to out-side funding

26 Life-stile businesses Financing: FFF (founders, friends and family); Soft money (grants, state & municipal programs) Altum : SME & start-up lending LIDA, Business Incubators, Incubation grants Int. Grants (Horizont 2020, Interreg, EU Soc. Fund) Bank Loans (pers. Guar.+ collat.+ proven record) Long term private investors?

27 Gradual Growth companies Traditional Production and Services companies Transportation companies Agricultural companies Companies with Geographical Political Administrative Traditional...limits for growth

28 Life-stile businesses Gradual growth perspectives Access to out-side funding based on proved earnings history Mortgage and/or collateral required Modest valuations Interest from Industrial Investors (with disturbing business agenda)

29 Gradual Growth companies Financing: FFF (founders, friends and family); Soft money (grants, state & municipal programs) HIPO Bank (LV state): Altum program, start-up lending LIAA, Business Incubators (LV state): Incubation grants Int. Grants (EU 7th Framework, Interreg, EU Soc. Fund) Bank Loans (pers. Guar.+ collat.+ proven record) Long term private investors Long Term Industrial Investors Mezzanine Funds (after proven income history)

30 Growth Companies Innovative products and services Technology companies or technologically advanced companies Traditional companies with global cross-border growth ambitions Scalable business concepts with highly profitable reinvestment opportunities Disturbing technologies and services Strong management teams Serial entrepreneurs

31 Growth Companies

32 Growth Companies Funding: All the previous funding sources... Access to International Capital Markets: Intentional Angel Investors Int. Seed and Venture Capital Funds Intern. Business Accelerators and Business Education programs (Seed Forum) Multiple exit possibilities Listing possibilities at later stage of development

33 INVESTMENT CONCEPTS

34 Serial Entrepreneurs - Venture Capitalists and Business Angels love Serial Entrepreneurs - Serial Entrepreneurs understand the corporate growth strategy and investment process and could professionally exercise it - Serial Entrepreneurs usually become Private Financial Investors

35 Hockey Stick for Risk Investors Hockey stick a time for Risk Investors: - Private Financial Investors - Venture Capital Funds - Seed Capital Funds - Growth Funds - Mezzanine Funds

36 Startups - Born globals Risk capital financing is the new trend in internationalization Start-ups go international much earlier than before THE WORLD IS THE HOME MARKET"

37 Gints Vīns