The role of angel investors in the promotion of entrepreneurship in

Europe

Claire MunckManaging DirectorEBAN

YES ExeCom, June 2010

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WHO ARE BUSINESS ANGELS?

Business Angel: Private individual investing own wealth in early stage businesses AND own expertise and network of contacts

• Investment 25 000 - 250 000 euro• Willing to share their managerial skills, specialist knowledge and

networks• No sector preference• Often prefer to invest in their region of residence• Seeking profit, but also fun• Usually total investments below 15% of wealth• Can become involved in the business (“active Angel”) or not

(“passive Angel”).

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ANGEL BACKED COMPANIES

InkSpin1

Aventiv NV (Ltd.)

Michelson Diagnostics

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ANGELS AND OTHER SOURCES OF FINANCE

Capital Needs

Time

Seed Start-up Early Growth Sustained Growth

Higher Risk

Lower Risk

Friends, Family & Founders

Business Angels

Venture CapitalFunds

IPO

0

Angels help fill the ‘Equity Gap’

Early stage and seed

venture funds

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WHY DO WE NEED MORE BUSINESS ANGELS?

Source: EVCA Year Book 2009 Stage distribution of investments per year

>Different amounts invested>Complementary roles

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WHAT BUSINESS ANGELS LOOK FOR

• Current & comprehensive Business Plan• Proven market - USP• High growth / scalable / strong business forecast

(5m€/3yrs)• Intellectual property protection • Realistic pre-money valuation• Exit strategy

BUT Entrepreneur’s qualities are most important i.e. strong and committed management team

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THE CONTRIBUTION OF BUSINESS ANGELS

• 2 wings: capital + mentoring/coaching

• Invest early – take a higher risk

• Invest in different sectors

• More flexible and reactive than other investors

• BA give access to networks and new potential

customers

• BA acts as an ambassador for the business =

credibility

• Easier to raise follow-on funding

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TRENDS IN EUROPE

2008 Europe 2010-2013

Networks 334

For profit 31%

Estimate n of angels and private investors

75k

Investment per round

207k€

Total estimate invested annually

4 billion€

2008 Europe 2010-2013

Networks 334

For profit 31%

Estimate n of angels and private investors

75k

Investment per round

207k€

Total estimate invested annually

4 billion€

Average amount of the deal in 2008: 200.000€

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SECTORS OF INVESTMENT

ICT & Software

still dominating sectors – Clean tech and health

« hot » sectors

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THE IMPACT OF THE CRISIS

• Equity gap is widening

• Increased dealflow – better valuations

• Angels have continued to invest – role of

providers of capital AND

knowledge/experience valorized

• Intermediaries impacted

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WHAT POLICY MAKERS CAN DO

• Awareness campaigns • Support to the creation of business angel networks• Support the creation of a national federation• Investment and investor readiness programmes• Public-private co-investment funds• Fiscal incentives

>To be carried out with the support of stakeholders i.e. business and entrepreneur organisations

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DELIVERING VALUE TO OUR MEMBERS

Business angel

networks

Federations of networks

Individual angels

Associate members

Over 100 member organisations – Representing 300 BANs – 28 countries

Seed funds

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• ICT SMEs currently receiving FP support for R&D

• Post proof of concept / pre-commercial

• SME mapping, selection, coaching, investment readiness

• SME« plugging » into investment events

• ICT Investor mapping and sustainable network

www.access-ict.eu ; www.ict-finance-marketplace.eu

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EARLY STAGE INVESTING: AN ASSET CLASS

9th Winter University hosted by Sophia Business Angels18/19 November 2010, French Riviera

Making your first investments to exit strategiesInvesting local and thinking globalCollaborating with other investors

European and international experts and practitionersBAN/Seed fund managers/Investors/Incubator managers, etc

Networking, learning opportunities

www.eban.org

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CONTACT DETAILS

EBAN Secretariat

+32 2 626 20 60

www.eban.org

Thank you for your attention!