9 th ETAP Forum on Eco – Innovation Financing the eco-innovators

«The Italian Angel Market &

The Early Stage InvestmentOpportunities in

Cleantech»

Paolo ANSELMOIBAN President

November 2010

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4.4. Italian BA ProfileBA's personal profile from a recent Survey

IBAN Association’s profile

The Italian Angel Investing Market

The Italian Business Angel’s profile

Seed and Early stage investment opportunities in cleantech

Summary

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4.4. Italian BA ProfileBA's personal profile from a recent Survey

It is an Italian non-profit making Association – born in 1999, through a project promoted by European Commission (DG Industry)

In Italy, it institutionally represents and promotes investment initiatives in the venture capital market coming from informal investors, usually called Business Angels (BA)

IBAN’s President is board member of EBAN, the European Association that represents BA Networks and Seed Fund in Europe

Through its birth, and a close co-operation with AIFI (the Association representing the formal venture capital in Italy), IBAN has felt up a remarkable gap in the Italian venture capital chain

Today, IBAN represents a more than 500 informal investors community across all Italy

IBAN Association (1)

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IBAN Association (2)Our Network to sustain Informal Venture Capital Market

FINANCING FINANCING INSTITUTIONSINSTITUTIONS

NATIONAL AND NATIONAL AND INTERNATIONAL INTERNATIONAL

PARTNERSPARTNERS

BUSINESS BUSINESS ANGELSANGELS

SERVICES TO SERVICES TO FIRMSFIRMS

TECNOLOGY TECNOLOGY CENTRESCENTRES

IBANIBAN

During last years, IBAN has created a strong “relationship network” that linksInstitutions and Economic Operators, Know–How and Expertise,covering all value chain in the early stage phase.

In this way, IBAN can really support “start–up” entreprises in their growing process.

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IBAN Association (3)Our Network to sustain Informal Venture Capital Market

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IBAN Association (4)Our Publications to sustain Informal Venture Capital culture

•“Legal and Fiscal handbook for BA” - 2010, in partnership with Studio Legale Gianni,

Origoni, Grippo & Partners.

•“Formal Documents for Early Stage Phase” (NDA, Term Sheet, Investment Agreement)

- 2010, with Studio Legale Rossotto & Partners

•“Business Angels and Informal Venture Capital in Italy” - 2009, in collaboration with

SDA Bocconi University – Finance Department

•“Implementation of European MiFiD Directive and IBAN circuit activity”, 2008 – in

collaboration with Studio Simmons & Simmons.

•“Guide to setting up a business with Business Angel” - 2008, in collaboration with

KPMG Italia.

•“Business Angel in Italy” - 2003, in cooperation with Professors coming from

II° Università di Napoli.

•“Standard Behavior Handbook for BAN” in partnership with ISTUD Foundation, 2001.

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Italian Angel Investing Market (1)Which are the data in 2009 ?

A. INSTITUTIONAL SEGMENT

Venture Capital (VC) and Private Equity companies have invested 2.615

ML €, with a decrease of 52% compared with 2008. Especially, for the

Early Stage sector, they have closed 79 deals for an amount of 98 ML €.

TYPE OF STAGE AMOUNT ML € N. DEALS

Turnaround 416 11

Early Stage 98 79

Expansion 371 112

Replacement - -

Buy Out 1.688 72

Sources: Aifi, 2010

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Italian Angel Investing Market (2)Which are the data in 2009 ?

Sources: IBAN, Survey 2009

Investment amount registered by IBAN 31.5 Mln €Deals 179Exit declared 33Average amount for deal 176.000 €Number of examinee projects 1.394

EARLY STAGE SECTOR:Seed 32%Start up 38%Early expansion 27%Other operations 3%

B. INFORMAL VENTURE CAPITAL SEGMENT

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Italian Angel Investing Market (3)Industry had a strong growth in the last years

Sources: Institutional (Aifi, Pwc); Informal (Iban)

Var ‘09/08 – 16%

Var ‘09/08 +1.2 %

10Sources: Institutional (Aifi – Pwc); Informal (Iban)

Italian Angel Investing Market (4) Deals in the industry follow the investments

Var ‘09/08– 10%

Var ’09/08 +49 %

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Italian BA Profile (1)BA's personal profile from a recent Survey

• Man, 49 years old, top manager or entrepreneur, strong academic

background (master’s degree, post-lauream)

• Place of residence in the North of Italy (83%)

• Range of 150-200 km to focus its investments to stress BA commitment

with entrepreneur

• Personal assets available around 1.000.000 € - IBAN Member

• He generally allocates nearly 10% of own assets for Angel Investing

• Average Investment for deal is around 176.000 €

• Interesting in High Tech sector Source: Iban, Survey 2009

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Italian BA Profile (2)BA's personal profile from a recent Survey

◆ BA's added values (over the risk capital) are:- strategies- contacts

◆ BA's best information's come from:

- IBAN network- his personal network (others entrepreneurs & friends)

Source: Iban, Survey 2009

Italian BA Profile (3) MAIN DIFFERENCES BAs IN USA AND ITALY

USA (data 2009) – ITALY (data 2009) USA ITALYAverage amount of deals per BA 4.7 1.5

Average amount of investment per deal $ 50.000-100.000 (55%) $ 100.000-1.000.000 (25%)

> $ 1.000.000 (20%)

< € 30.000 (33%)€ 30-100.000 (33%)€ 100-500.000(11%)> € 500.000 (11%)

% Investments in seed and start-up phase 45% 76%

Sectors of investmentICT/software/internet, manufactures, Health

Care/Med Tech

ICT/Software/Internet; Manufactures,

Biotech/Med techGeographic Area of investment by 250 km (28%) by 200 km (50%)

% of potential BAs with no geographical restrictions 37% 42%

Source of deal flow Formal Informal

Preferred way out Trade sale/merger Trade sale/merger

Average IRR registered 27% 22%Average holding period from 3 to 6 years 3.3 years

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Italian Angel Investing Market2009, % Investments by sector

Source: Iban, Survey 2009

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What is Cleantech?Former Energy sector ……

“The US Cleantech Group” provides a comprehensive definition:

A “new, innovative technology to create products and services that compete favorably on price and performance while reducing humankind's impact on

the environment”&

“offering a cleaner or less wasteful alternative to traditional products and services”

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The huge scope for cleantech investmentsSource: “The Cleantech Group”

• Energy Generation: wind, solar, hydro/marine, biofuels, geothermal, other;• Energy Storage: fuel cells, advanced batteries, hybrid systems;• Energy Infrastructure: management, transmission;• Energy Efficiency: lighting, buildings, glass, other;• Transportation: vehicles, logistics, structures, fuels;• Water & Wastewater: water treatment, water conservation, wastewater treatment;• Air & Environment: cleanup/safety, emissions control, monitoring/compliance, trading & offsets;• Materials: bio, chemical, other;• Manufacturing/Industrial: advanced packaging, monitoring & control, smart production;• Agriculture: natural pesticides, land management, aquaculture;• Recycling & Waste: recycling, waste treatment.

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Do these cleantech investments“compete favorably on price and performance”?

Cleantech “alternative” Cleantech “alternative” The “traditional product”

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Trends in cleantech investmentsSource: “The Cleantech Group”

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Trends in cleantech investmentsSource: “PwC/NVCA MoneyTree report”

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Is the Venture Capital business model broken?

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The investment opportunity for seed-stage investors

• In order to be sustainable in the long-term and avoid dotcom-like bubbles cleantech investments have to be capital-efficient;

• Cleantech is not only about renewable energies (i.e., PV, wind, biomasses.); there is a great deal of less capital-intensive investmentopportunities in cleantech: suitable for seed-stage and less risk-averseinvestors;

• Cleantech is also about seed- and early-stage investments: less capital intensive, better valuations, greater value-adding potential, but higher risk; fixing the big IRR issue of traditional venture capital investing.

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How is IBAN going to addressthese challenges/opportunities?The forthcoming “Italian Cleantech Club” (1)

• An investment club, operating through syndication, focussed on cleantech investment opportunities backed by an independent committee of cleantech specialists to source, and select the best deals;

• Cleantech is a global opportunity; joint-marketplaces to exchangeinvestment opportunities with some of the world's most successful cleantech clusters (Sweden, Israel, and other European countries);

• Partnership with online content providers (i.e. www.energiaspiegata.it) to source the best cleantech technology transfer investment opportunities coming from the top Italian Universities.

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How is IBAN going to addressthese challenges/opportunities?The forthcoming “Italian Cleantech Club” (2)

• Incubators, Technology Parks, University technology transfer Offices and IBAN network will be the main deal flow sources• Seed and Early Stage investments in Italy and abroad between 50k and 500k euro, with possible co-investment with other Angel groups and Seed funds;• The Club will be managed by a specific Advisory Board (5 members) in charge of scouting and coaching business opportunities, also thanks to IBAN Association support;• 3 Investment Forum per year with 6 pitching companies each time;• Focus on 3-4 years exit time and trade sale way-out (M&A);• Per each deal a “champion” will manage the due diligence and the investment process;• Each ICA members (forecast 15-20) must fill a specific form in with his/her financial and managerial commitment.

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How is IBAN going to addressthese challenges/opportunities?

The forthcoming “Italian Cleantech Club” (3)

Entrepreneur

Business Angel

Contact with IBAN

Executive Summaryvalidation

Drafting of Executive Summary

Preparation of Elevator Pitch

Identification

Identification of investment priorities

BA added to database

Participation in investment forum/club

Confronting offerand demand

Circulation of Executive Summary

MATCHING

 

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A first step has just been done :“The Green Technologies Investment Forum”

• The GREEN TECHNOLOGIES INVESTMENT FORUM (GTIF), organized in February 2010 by IBAN Association (Italian Business Angels Network) and the Swedish Business Region Goteborg AB provided a unique chance during which investors and entrepreneurs coming from Italy and Sweden matched.

• Eleven Italian and Swedish “green” companies, selected by a panel of experts, pitched their activities to qualified investors, Business Angels, Seed, Venture Capital Funds and Trade operators.

• During the event two break-outs had been forecasted in which an Italian and Swedish keynote speakers presented strengths, weaknesses and opportunities of today clean-tech market.

• All companies had a marketplace area where they could meet investors during and after the event

• To cross experiences, best practices, business and trade opportunities and networking have been the key words of the initiative

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www.iban.it

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TEL.+39.02.89011207FAX +39.02.89011299

segreteria@iban.it

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