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ANGEL INVESTING EXPERIENCES
IS SLOVENIA
Blaž Kos, [email protected]
Beograd, 2010
The beginning…
What do you need to start your own business?
• You with the right/crazy “Mental Blueprint”
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Everything is always impossible before it works
Safe job is risky, not starting your own company
I don’t need a job, I want a fu*king adventure
Life is too short to spend 1/3 at the job you hate
• Excellent Idea
• Top Team
• Funding (money, money, money,…)
Sources of financing
• Retained earnings (Internally Generated Funds)
– You reinvest your money into growth of the business
• Grants and other support on offers (incubators, TP)
– Usually the cheapest money you can get (consider kg of reports)
• Debt financing (credit, leasing, factoring, franchising…)
– You borrow money and return the borrowed amount + interests in agreed time
periods. There must be insurance for every penny, it influences your cash flow and
there is usually no added value from Mr. Banker.
• Equity financing (!)
– The investors becomes co-owner of the company
Equity financing
Inside
– 4F (founders, friends, family, fools)
Outside
– Business angels
– Venture Funds
– Private Equity Funds
– Stock Exchange
Venture Capital
4F
• Founders
– Blood money: put your money where your mouth is
– Savings, Credit Cards,…
– Knowledge, sweat and tears
• Friends
– Not always wise; don’t mix business with pleasure
• Family
– Financial and moral support: Big difference between US and SI
• Fools
– You can always find a fool 
Three types of ventures
• Bad businesses
• Good businesses (organic growth)
– Family business
– Lifestyle companies
• Good investment opportunities (high growth)
Concept of Venutre Financing
• In most cases business angel REALLY trusts in the team.
• Therefore is willing to take the high risk, because investor believes the
team will find way to make business successful.
• Investor wants to become partner in the company, have some rights
and add additional value to lower the risk.
• The money will be made at liquidity event - EXIT (selling shares). But
because of the high risk and low liquidity of the investment the RETURN
must be SKYHIGH.
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9 out of 10 ventures fail in 5 years
6 out of 10 BA invested companies fail
1 out of 10 invested ventures makes more money than expected
1 out of 100 invested is homerun - and that’s the name of the game
Business Angels
• Successful high net-worth individuals who have already
built one or more successful companies
• Equity financing – with his/her investment the Business
Angel becomes a shareholder of the company
• “Smart Money” - high value-added for entrepreneurs
– Know-how
– Business experience
– Social capital (!!!)
• High personal engagement into growth of the company
(hands on investors)
What do they look for?
• Innovative idea
– problem, pain, solution
• Business model
– scalability, profit margins etc.
• Big market
– PEG – Potential for Explosive Growth
• Top executive team with strong leadership
• Exit strategy
Enthusiasm (spark in the eyes) and Competences (knowledge,
skills, values, beliefs + experiences, network)
Adding Value
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Higher credibility
Strategic and business consulting
Sales contacts
Helping to close the deal
Contacts of potential strategic partners
Organizing a business
HR contacts
Getting additional funding
Exit
VC Funds - difference
• It’s a FUND (like mutual fund) with hired management team
(some of them are partners)
• Established for 10 – 12 years (fund raising, investing, exits)
• They have their own investors who expect return
• Investment policy
• Investments in later stages (in our region)
– Expansion capital
• Higher investment size: 1 mio € to 3 mio €
• Different added value: CFO, Exit
• Different type of funds (Sector, Geography, Stage of development)
Angel Networks
Why investors join BANs?
• Better deal-flow
– More deals
– Pre-screened deals
• Better quality of business plans and pitches
– Investment readiness programs
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Syndications (risk sharing, different sectors coverage)
Help with deal structuring and legal aspects
Networking with other high net worth individuals
Having more fun
Our portfolio
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OBS d.o.o. – mountvacation.com internet booking portal
Versor d.o.o. – systems for parking optimization in car parks
Sonia d.o.o. – fashion accessory store
Acies E d.o.o. – biotechnology development company
British International School in Ljubljana d.o.o.
Sosed d.o.o. – computer assistance at home
Ekstundo d.o.o. – patent for eliminating dead spots in cycling
VentureLab d.o.o. – management and business service company
Why Business Angels of Slovenia?
• A big lack of early stage financing sources for SMEs, even
bigger in the financial crises
• Fast development of new entrepreneurial activities
• In the past, few successful business angel investments
were made, but no network
• Business angels are a very important fragment of the
capital market in every country and have a significant
role in the development of successful new companies
• We had first sponsor for 50.000€
Profile of the Association
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Legal founding form: Non for profit association (club)
Founding date: June 2007
Official name: Poslovni angeli Slovenije
International name: Business Angels of Slovenia
Webpage: www.poslovniangeli.si, www.businessangels.si
Primary investment region: Slovenia
Secondary investment region: Countries in the Balkan
region (cross border investments - trend)
• Our members: More than 35 carefully selected top high
net-worth individuals from Slovenia
Association activities
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Promoting equity investing
Scanning and evaluating the projects/teams/companies
Educating potential business angels and entrepreneurs
Cooperation with entrepreneurial support organizations
Organization of internal events (investment dinner)
Deal structuring (legal, financial structure etc.)
Due Diligence
Monitoring and adding value (hands on investing)
Information exchange between members
Cooperation with foreign business angel networks
Investment criteria
• Phase of the company: Seed or startup (founded
company with first revenues)
• Investment size: 100.000 € - 500.000 € (syndication,
trend)
• Investment mechanisms: Equity financing, convertible
loan agreements
• Sectors: No limitations (ethical business)
• Investment time: 3 to 5 years
• Expected: Minimum 30% annual return
• Targets: Companies with high growth potential, excellent
management and viable exit strategy.
Investment process
Inflow and
selection of
potential
projects
Internal
training and
business plan
preparation
BAN Manager Review
Investment
dinner
Due Dilligence
Preparation of
investment
agreement
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negotiations
Investment,
addition of
value and exits
Pipeline development
• Public relations
• Appearance at entrepreneurial conferences
• Promotion through key partners
– Educational institutions (faculties, institutes etc.)
– Support environment (incubators, technology parks etc.)
– Student initiatives
– Co investments
• Webpage
• Networking and word-of-mouth advertising
Our own projects
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StartUp Slovenia Business Plan competition (co organizers)
100% StartUp Forum (co organizers)
iTIME Business Accelerator
(don’t) SKIP conference (early stage financing conference)
Slovenian Innovation Forum (co organizers)
Investment Readiness Program (StartUp School)
• More than 40 entrepreneurial events per year!
Start Up School
• The purpose is to help entrepreneurs write appropriate
investment documentation:
– Business plan
– Executive summary
– Business plan presentation (10/20/30)
• The emphasis is on financial projections for a 3 to 5 year
forecast
• For every project, we try to make a basic deal structure which
is the starting-point for further negotiations between the
investors and entrepreneurs
• We also prepare the entrepreneurs for their presentation to
the investors
EU Projects
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EBAN Members
Easy Cross Border Early Stage Financing (2008 – 2009)
Inno Deal Innovations (2008 – 2009)
Ready for Equity 2 (2009 – 2010)
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4 years of program development
Business angel trainings
Entrepreneur trainings
EBAN Accredited
• International oriented BAN!
Club financing
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Memberships fee for Business Angels (1.500€)
Investment Readiness Program (200€)
3% Success Fee of the Investment
Consulting services
Sponsorships and donations
Public sources of financing (EU projects)
• It’s good to have a sponsor (private or public)
Current results
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Founded in June 07 (very young BAN)
35 members, business angels
Over 300 companies reviewed (100+ annually)
Over 100 companies took part in our IRP
50 projects presented at 5 investment dinners
8 projects supported, total investment value of 1,65 mio €
Business angels Fund (5,4 mio €)
Business angels Fund
• Starts to operate in October 2010
• 5,4 mio € business angel fund
• 51% business angel money, 49% public money
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Most active business angels are in investment committee
Sectors allowing for high returns
Seed and early stage fund (50.000€ - 500.000€)
We plan to make 15 investments in next 5 years
Contact information
Business Angels of Slovenia
Železna cesta 18, SI – 1000 Ljubljana
Phone number: + 386 1 30 70 933
E-mail: [email protected]