3

Current Situation of the early stage investment

market

Strong demand - qualified entrepreneurs seeking financing

Strong supply - more angels, super angel funds

Exit market picking up –interest from corporates

However, pressure increasing on the early stage with

widening equity gap.

4

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 Capital Funds

IPO

0

Angels help fill the ‘Equity Gap’

Early stage and seed

venture funds

5

Why are VC’s moving to lager stages?

• Equal time of due diligence for smaller investments but

lower potential of fast returns

• Financial return is the main motivation

• Companies in seed phase need as much mentoring as cash

• Historically low track record in returns on investment in seed

• Bubble and current crisis will increase this trend

6

About Business Angels

• 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”).

7

THE CONTRIBUTION OF BUSINESS ANGELS

• 2 wings: capital + mentoring/coaching

• Invest early – take a higher risk and in different sectors

• More flexible and reactive than other investors

• BA give access to networks and new potential customers

and act as ambassador for the business

• Easier to raise follow-on funding

8

What business angels look for

• Current & comprehensive Business Plan

• Strong & committed Management Team

• Environment and market

• High growth / scalable / strong business forecast

(5m€/3yrs)

• Intellectual property protection

• Realistic pre-money valuation

• Exit strategy

• BUT Entrepreneur‟s qualities are most important

9

Business Angel vs Venture Capitalist

Source: Go Beyond www.go-beyond.biz

10

RISE IN BANS VS CONSOLIDATION OF VC FUNDS

0

200

400

600

800

1000

1200

1400

1600

1999 2010

50

396

1600

711No. of Networks

No of VC funds

Source: EBAN Statistics Compendium; EVCA Data

11

About EBAN

Business

angel

networks

Federations

of networks

Individual

angels

Associate

members

115 member organisations – Representing 300 BANs – 26 countries

Seed

funds

12

2010 (2009 activities) EU US

Networks 396 340

Commercial 20% n/a

Estimate # of angels 75k 259k

Investment per round 200k€ 158k€

Total estimate invested

annually by angels

3-4 billion €

17.7 billion $

VC Investments in seed

and start-up/early stage Source: EVCA, NVCA

Circa 2 billion €

6.3 billion $

Summary of industry statistics

Average exchange rate 2009 : 1 USD:0.72€

EUROPEAN ANGEL MARKET=25% OF US ANGEL MARKET

14

CHALLENGES

Financial sustainability of the angel groups and

publically supported seed funds

Industry and performance data

Exit routes

Structure

Founded in 1999

about 170 members

Membership contributions from 100 € to 5.000 € Free of charge for sponsors and universities

Development organisation for innovative business set-ups in

Northern Bavaria

F.U.N. (registered)

f.u.n. netzwerk nordbayern gmbh 10 employees

100 % associate shares

Objectives and Financing

netzwerk nordbayern is committed to the foundation and growth of innovative

companies in Northern Bavaria and is supported by the Bavarian Department of Trade and Industry and private sponsors..

15

Target group and overview of our services

Innovative, growth-oriented companies and founders

Planning

Professional support in company planning

and preparation of business plans

Financing

Setting up contacts between investors and

companies seeking capital

Training

Seminars, workshops, start-up wiki,

coaching and mentoring

Networking

Setting up contacts, organising networking

events, online networking with Twitter &

XING

Target Group

16

Financing

17

Companies seeking finance

Strategic investors

Business Angels

Lending institutions

State sponsored grants

Venture capital

organisations

Core activities of the seed financing network

Betreuung Vermittlung Networking Selection Guidance Matching Networking

18

First-round selection of

companies:

› Business plans from the BPW

› Business plans across regional

multiplicators

› Business plans outside Bavaria

Selection of investors:

› Business Angels

› VC companies

› Promotion societies

› Strategic investors

Regular supply of

specialist knowledge:

› Investors„ newsletter

› Individual support for each

company: a ″sparring partner“

to aid concept development

› Seminars

Individual coaching

and workshops:

› Basics of purchase financing

› Investors„ pitch

› Due diligence/Company

Evaluation

› Legal/tax aspects for joint

venture contracts

Bringing ideas and

capital together:

› Informal individual matching

› Financial forums

› Investors„ newsletter

Networking of

individual network partners:

› Investor / Investor

› Investor / Company

› Company / Company

19

Summary of investments achieved

Sector in detail Amount

Construction 3.505.000 €

Bio-/Genetic technology 31.301.8957 €

Chemicals 100.000 €

Electrical engineering 11.902.993 €

Finance 1.204.747 €

Trade 30.677 €

ICT 60.403.471 €

Logistics 2.509.764 €

Marketing 520.000 €

Mechanical engineering 4.509.983 €

Media 531.292 €

Medicine and health 21.241.321 €

Environ./Energy technology 10.726.292 €

Materials 2.686.071 €

Other 215.339 €

Total 151.388.844 €

Deals Amount

Number 118

Business Angels 26.969.246 €

Strategic Investors 2.000.000 €

VC Companies 74.816.280 €

Public Investors 47.603.318 €

Summe 151.388.844 €

Financed by sponsors and public subsidies

20

UK: Overall Multiple: 2.2X Holding Period: 3.6 years

Approx 22% IRR

US: Overall Multiple: 2.6X Holding Period: 3.5 years

Approx 27% IRR

50% of deals were not related. When related, they typically had 14 years

of experience

High 3.7X (4.0 years)

Low 1.3X (3.6 years)

Overall Multiple for High Diligence 5.9X (4.1years) Overall Multiple for Low Diligence 1.1X (3.4years)

25

Pre-event EBAN Institute Trainings, BAN and seed

fund managers (May 10/11)

Pre event Training for women angels (May 11)

« Syndication and co-investments: partnerships for

the future »

Hosted by Lewiatan Business Angels

Warsaw on May 12/13

www.ebancongress2011.eu

11TH ANNUAL EBAN CONGRESS