1. Introduction 2. Funding Instruments 3. Public Funding 4. Support from Banks 5. Private Equity...
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Transcript of 1. Introduction 2. Funding Instruments 3. Public Funding 4. Support from Banks 5. Private Equity...
1. Introduction
2. Funding Instruments
3. Public Funding
4. Support from Banks
5. Private Equity Investment
6. Venture Capital
2
Challenges in Successful Technology Commercialisation
• Legal Frameworks as Obstacles
• Missing Awareness and Sensitiveness (Entrepreneurship Education for
Scientists)
• Missing Integrated Concepts
• Missing Integration of Engineering Competence with Business
Competence (Teamrekruiting)
• Missing Sales Forces
• R&D Results aren‘t Products
• High Risks in Early Stages (Gap of (Pre)-Seed Investment)
4
OnlineTicket-Technology
OnlineTicket-Technology
ProductProduct
Encryption of information by algorithmsin a 2D-Barcode
Ticket ID 82349294
Key ID F5CC06F1
From Technology…
ProductProduct
Benutzhandbuch
OnlineTicket
Version 2.0
Benutzhandbuch
OnlineTicket
Version 2.0
OnlineTicketOnlineTicket
Technology
Cash desk
Control center
Statistics
Ticketshop
Online payment
Online assistance
User Manual
Helpdesk
++++++++
… to Product
publicresearch facilities
Universities / patentcommercialisationagencies
medium-sizedenterprises
captive productdevelopment departments / supplier
software developer software developer
marketing and sales of technological products
Sales and licensing of technology
CustomerPartner
public research facilitiespublic research facilities
Screening/purchase
evaluation / choice
after-sales-service
marke-ting
sales
product-design
productdevelop-ment
information and communication technologies
7
Funding Requirements for Product Development
External Financing
Equity Loans
Equity FinancingMezzanine-Financing
LoanFinancing
• Private Equity• Venture Capital• IPO
• Loan• Warranties• Corporate Bonds• Leasing• Factoring• Asset Backed Securities
Internal Financing
10
Instruments for Financing
Ris
k
Sal
es
Company‘s Expansion
Stock Market
Venture Capital
Equity Gap
Family,
Fools, and Friends
Business Angels
Loan Financing
11
Phases of Financing
Germany Austria Switzerland GesamtFinancial Motivation (IRR; Profits) 47% 36% 41% 44%Expansion of Companies's Network 17% 15% 17% 17%Support of young Entrepreneurs 15% 21% 17% 16%Gaining Expertise in different Fields 7% 12% 12% 10%Access to New Technologies 7% 8% 7% 7%Support from Families and Friends 6% 3% 5% 5%Other Targets 1% 5% 1% 1%
100% 100% 100% 100%
12
Angel Investor´s Motivation
Losses
Profits
Break Even
Early Stage Phase Later Stage Phase
Expansion Phase
Seed Phase
Start-up Phase
EntrepreneurGrantsPrivate Pers.Business AngelsIncubators
Business AngelsIncubatorsStrategic InvestorsVC/CVC
VC/CVCPrivate EquityLoansGrants
Private EquityInvestment Bank
The Hockey Stick Effect
Sources of Public Funding
Free Consulting (Consulting Agencies)
Supplemental Funding
Equity/Shares
Warranties
Loans
15
HighTech Start-up Funds of KfW
Coach Start-up
Coaching Contract Shareholder‘s Agreement
Managementsupport Risk Capital
16
Example: High Tech Start-up Funds
Capital required
High
Low
Low High
Business Risk
Banks and venture capital firms
Venture capital firms
Financing gap which may be filled by the incubator
Banks
17
Sources of Funding in Relation to Business Risk
Companies
Bank InvestorsCapitalMarket
Capital
UniversitiesR&D Institutes
Market ResearchInstitutes
AssociationsNetworks
Industry
Information
19
The Role of the Banks
Potential Support offered by Banks
• Management Support and Consulting
• Information flow to Assess HighTech Start-up
• Local, Regional Networks
• Co-operation within an Innovation Team
• Organisation of and Participation in Fairs
• Loans
But:• Rating Requirements
20
Equity
Eq. Mezzanine
Loan Mezzanine
Loans
Private Equity
„Source of Equity Financing or similar Instruments without financing through the stock
market“
22
Private Equity
Institutional Investors
(Banks, Insurance Companies, Private Investors etc.)
Private Equity-Company/ Funds
Portfolio Company
Investment
Investment +
Management Consulting
Return
Return +
Fee
23
Private Equity
• Private Equity Investors are Co-Owners of the Company: They share Risks and Profits
• They target Investments in Companies that are not listet in Stock Markets
• Private Equity Investments target generally for both:Majority or Minority Participation
• Participation may be active or in-active as well
24
Private Equity
• Private Equity Investor targets a Return of 20% to 25%
• Normally they do not look for Desinvestments
• They use to take Management Responsability
• They target an Exit after 4 – 7 Years
25
Private Equity
0 24
First Meeting
IPR SituationTeam RecruitingBasic Business PlanMilestonesFinancial PlanningDraft ContratcsLOI and AssessmentTerm Sheet
Creation
Development Progress in BP Staffing Enhancement of
Management Proof of Concept
Negotiation
Exec Summary
Business Plan
Presentationen
Iterationen
Syndification
LOI and Valuation
Investment
Regulations
126 18Months
VC
26
How Investors Think