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October 2001(Rev 5)
M. Reino
C. Saublens
WHY DO EUROPE NEED
A BUSINESS ANGEL CULTURE
•EQUITY GAP
•BANK RISK ADVERS
•ENTREPRENEURIAL SKILL TRANSFER.
Most start-up entreprises don ’t survive more
than 5 years.
•SME ’s BIRTHRATE
EQUITY GAP
Banks look for collateral (intangible assets
are not security)
 Formal Venture Capital investing in higher
and higher amounts
 Gap in the start-up and seed phase
 Need for Business Angel financing

BASIC FACTS
It is difficult for new companies to raise
funds because they don’t have the necessary
guarantees
 Business Angels and venture capital
organisations have difficulties in finding
good business plans
 Need for Business Angel Networks

SME SUCCESS DEPENDS
UPON
Business Plan
 Amount of equity and appropriate finance
available
 Skills of the entrepreneur
 Guidance available

BA FINANCING
GROWTH
CAPITAL
NEEDS
IPO
HIGH RISK
Formal Venture
Capital
Business Angels
Friends,
Family, Fools
SEED
LOW RISK
TIME
START-UP
EARLY GROWTH
SUSTAINED GROWTH
FROM IDEA TO ENTERPRISE
Start-up
Business
idea
10
000
1. Growth
Creatio
n of
enterprise
1
000
Pre-IPO
VC
finan
cing
100
2. Growth
Going
public
20
Market
leader
Source:McKinsey, New Venture
2
BUSINESS ANGEL
Informal private investor with smart money
(finance+expertise)
 Investment 25 000 - 250 000 euro
 Willing to share their managerial skills,
specialist knowledge and networks
 Often prefer to invest in their region of
residence
 Seeking profit, but also fun

Company name
Angel Investor
Business
Investment
Value at Exit
Apple Computer
(Name Witheld)
Computer
hardware
$91.000
$154 million
Amazon.com
Thomas Alberg
Online
bookshop
$100.000
$26 million
Blue Rhino
Andrew
Filipowski
Propane
cylinder
replacements
$500.000
$24 million
Lifeminders.com
Frans Kok
Internet email reminder
service
$100.000
$3 million
Body Shop
Ian McGlinn
Body care
products
£4.000
£42 million
ML Laboratories
Kevin Leech
Kidney
medical
treatment
£50.000
£71 million
Matcon
Ivan Semenenko
Bulk
containers
£15.000
£2.5 million
Source: partially adapted from unpublished data provided by Amis Vntures in 1999
ANGEL SYNDICATES
Informal “one-off” syndicates for individual
deals
 Permanent syndicates with their own
identity and operating procedures
 “Leed Angels” and outer group of passive
Angels
 Larger than average size of investments
 Some affiliated to a BAN (Linc Scotland)

BUSINESS ANGEL TYPES
(Source: LINC Scotland)
PATRON
ANGELS/ARCHANGELS






Over 50 000£
Serial investor
Net worth £1M+
Limited hands-on management
Invest in wide range of companies, including
start-ups
Often pull syndicates together
INCOME SEEKING/
OCCUPATIONAL ANGELS






ENTREPRENEURIAL / WEALTH
MAXIMISING ANGELS
•Invest £25K-£100 000 or more
•Significant hands-on management role
•Net worth up to £500 000
•Invest in known sectors / areas of expertise
Less wealthy
less able to withstand loss, risk averse
Invest 25K£-50K£
Seeking full-time or part-time employment
and regular income
Like syndicates
Invest close to home in known sectors
VIRGIN / FIRST TIME ANGELS
•Represent significant total investment potential
•Difficulties in finding opportunities
•Prefer co-investors
•Need professional support
•Prefer investments close to home
BUSINESS ANGEL
NETWORKS
Private or semi-public bodies whose aim is to
match entrepreneurs looking for equity with
Business Angels
GAP WITH USA
Operating in USA:
3 Million
 Likely to double
within next decade
 30-40 times more
companies get BA
than VC money.
(van
Osnabrugge)

Operating in
Europe: 125 000
 Potential: 1 000
000

A BAN IS A MARKET PLACE
WHICH ALLOWS
ENTREPRENEURS TO MEET
WITH BUSINESS ANGELS
•Ban can operate localy, regionaly,
or at national level. They need a critical
mass in terms of good project and angels
SERVICES PROVIDED BY
BANS
Creating awareness of the Business Angel
concept
 Identification of BAs
 Assistance to entrepreneurs and BAs
 Matching BAs and entrepreneurs

MATCHING BY BAN
ENTREPRENEUR
BUSINESS ANGEL
Contact to BAN
Identification
Business plan
evaluation and validation
Confronting offer
and demand
Drafting of
business plan summary
Circulation of
business plan
BA added
to database
Preparation
of presentation
MATCHING
Participation in
investment forum/club
Identification of
nvestment priorities
TOOLS OF BANS
Organisation of investment clubs, forums
 Information bulletins, magazines,
newsletters, circulation of business plans
 Internet, databases
 Personal introductions

Matching is only the visible part of BAN activities
lots of the time is devoted to make the entrepreneur
« INVESTMENT READY »
N.b. up to 120 h by NeBib (NL)
The Secrets of a Deal
ANGEL ’s 5 C:
•Cooperation : will he become a real member of the management team
•Commitment: can the team do what ’s in the Business Plan
•Competence of the management team
•Charisma: will the BA be able to transfer his know how and not to impose it
•Chemistry: Do BA believes he will cooperate with the entrepreneur
ENTREPRENEURS 4 C:
•Chemistry
•Competence
•Conditions: participations, responsabilities, modalities, objectives)
•Contacts:
HOW ARE BAN CLIENTS
ACQUIRED
Word to mouth
 Information events, seminars
 Own newsletters
 Articles in press
 Established co-operation with banks,
financial institutions, accountants
 Direct mailings
 Visits to enterprises

INVESTMENT FORUM
•
Generally organised in the late afternoon to allow
a small number of businessmen (4 to 6) to show
their project to a number of Business Angels (max
20)
•
Business Angels often receive a short description
of requests for investment along with their
invitation
•
There can be a fee to take part in such a forum i.e.
NEBIB charges +/- 110 EURO both to the
entrepreneurs and to informal investors
INVESTMENT FORUM
•
Entrepreneurs taking part in the forum are briefed
beforehand on how to introduce themselves and
their project appropriately. Following a formal
presentation of the projects, entrepreneurs and
Business Angels have time to meet and initiate
contacts.
•
The BAN follows-up the event with an analysis of
the contacts initiated during the forum
•
Depending on the BAN, investment forums are
held every 2 months
INVESTMENT FORUM
PREPARATION

T0 : Forum date

T3 : Training for entrepreneur - rehearsal of talk at
investment forum

T6 : Invitations are sent to BAs, along with a
summary of draft requests for funding

T9 : Identification of projects to be presented at
investment forum
BULLETINS & MAGAZINES
•
•
•
NEBIB (NL): publication of a monthly magazine on
company profiles, various analyses and information on
venture capital. Free service. Sent to 400 potential informal
investors.
LINK (UK): publication of a monthly magazine featuring
entrepreneur profiles which are published six times - once
extensively (200 word max) and five times as a two-line
summary. Subscriptions (190 EURO). Sent to 12.000
interested people.
Neither NEBIB nor Linc charge a fee to include a profile
in their magazine.
BUSINESS ANGEL
NETWORKS IN EUROPE
110
62
year 1998
year 2000
Source: EBAN 2000
AMOUNT OF BANS
Source: EBAN 2000
A
B
DKFIN
F
UK
NL CH
S E
I
IRL
DE
BANS BY COUNTRY
C o u n t ry
Austria
Belgium
Denmark
Finland
France
Germany
Ireland
Israel
Italy
Monaco
Spain
Sweden
Switzerland
The Netherlands
UK
TOTAL
Year 2000
1
5
1
1
24
23
1
1
5
1
1
2
3
2
49
120
Year 1998
1
2
1
1
3
1
1
0
0
0
1
1
1
49
62
DEALS REGISTERED BY
BANS
600
400
Rest of
Europe
UK
200
0
year 1996 year 1997 year 1998 year 1999
Source: EBAN 2000
DIFFERENT BANS
Non-profit organisations or public
initiatives, free standing or integrated in the
economic development actions
 Private sector initiatives, public limited
liability companies

NATIONAL BAN
ASSOCIATIONS
BANA (UK), BEBAN (B)
 Trade representative bodies overseeing the
development of best practice
 Lobbying
NATIONAL BANS
NBAN (UK), LINC Scotland, BAND (D), IBAN (I)
• National networks of regional BANs
•
Nationwide circulation of investment opportunities
•
Magazines and bulletins
•
Web sites
•
Promotion of the BAN concept
•
Often sponsored by major banks and professional
firms, backed by Government
BANS OPERATING
NATIONALLY
NEBIB (NL)
•
Private initiative
•
Regional seminars (De 7e Hemel)
•
Working in co-operation with RoBAN
SITRA MATCHING SERVICE (FI)
•
Operated by national public fund
•
Regional offices
REGIONAL BANS
BE: Vlerick BAN, BAMS, Bizzbees,
WaBAN, Business Angels Connect
FR: Federation Club B2A, Pro-Back
DE: BAAR, NBA
IT: Lombardia 1, Centro Adriatico, UBAN,
Venise
CH: BOAS, Club Valaisan
UK: West Midlands, Equitylink, Xenos
INTERNET BANS
Professional Networks (FR)
•
•
http://www.businessangels.com, BusinessAngels®
On-line secure matching information system for
entrepreneurs and investors
• Funding requests are posted on the site after selection
by Professional Networks or one of its partners (RDAs,
CCIs, technological parks, specialised organisations,
etc.)
• Investor wanting to get in touch with an entrepreneur
clicks on a dedicated icon, this transmits his profile to
the corresponding entrepreneur. Entrepreneur decides
whether or not to follow up on the contact.
SECTORAL BANS
•
Talisman Ventures Ltd (UK):
•
Manufacturing
Biotechnologies, Internet, multimedia,
engineering, etc.
LOCAL BANS
Clubb essor 77 (FR), Vlerick (B), Devon
& Cornwall (UK), B.A.R. (D)
•
•
•
Often smaller amounts
Sometimes linked to “solidarity funds” (FR)
Generalised
TRANSREGIONAL
INVESTMENTS
•
Some BANs started to operate transregionally
•
Some ad hoc linking between BANs in different
countries
•
Offering of investment opportunities often
hindered by own regulations and fear of foreign
legislation and rules
•
Experienced BAs already work transnationally no need for BANs
FUNDING OF BANS:
SOURCES
Other
(sponsoring)
12%
Fees from
enterprises
30%
European
10% National
20%
Fees from
BAs
17%
Regional
11%
Source: EBAN 2000
FUNDING OF BANS:
DIFFERENT TYPES
Source: EBAN 2000
heavily
sponsored
10%
private
46%
publicly
funded
27%
mixed
17%
FUNDING OF BANS:
SPONSORS






Banco Ambrosiano - Grupo Intesa (IBAN)
Deutsche Bank, German Venture Capital
Association (BAV)
All major UK high street banks (NBAN)
SchmidtBank and Rödl & Partner (NBA)
Düsseldorf Stock Exchange (WIN NWR)
Deutsche Börse, KfW, Investitionsbank Berlin,
Deutsche Ausgleichsbank… (BAND)
FUNDING OF BANS:
FEES CHARGED
•
Some take no fees from BAs or entrepreneurs
•
Fees charged vary according to a BAN, from 50
euro to >500 euro
•
Fees can be charged upon registration,
subscription to bulletins, a membership fee for one
year (BA), a success fee after a deal (2.5-5%)
•
Some BANs started taking an equity share in
companies
EUROPEAN BUSINESS
ANGEL NETWORK
•
Non-profit organisation
•
Exchange of experience and promoting good
practice
•
Concept of BANs and Business Angels
•
participate in the initiation and implementation of
local, regional, national and European
programmes assisting the creation and
development of a favourable environment to BAs
United Kingdom: Fiscal environment
Belgium and United Kingdom : capital gains taxation
France: plan d’épargne en action and Société de Capital Risque
Belgium & United Kingdom: public support to BAN
Germany: awareness campaign via BAND
Belgium: code of conduct to be member of BeBAN
UK: NBAN and Colin Mason analyses of the UK Business Angels industry
UK: ERDF money to support BAN activities
Italy, Germany and Luxembourg: business plan competitions linked with local BAN
networks and other financial institutions.
Belgium, United Kingdom and Germany: BAN are private regional initiatives who
gain in some circumstances public support.
Belgium: BeBAN awareness seminar with all other enterprises financing key players
United Kingdom: Integrated finance panel for entrepreneurs
United Kingdom: LINC Scotland: training for bankers, advisers, accountants concerning
Business Angels’ activities
Italy : partnership between IBAN and Banca Intesa in order to establish a perfect triangle
BA – Entrepreneur – Banks (capital debt)
Italy : Iban web site to make BA recruitment easier and propose business ideas.
EUROPEAN SUPPORT
•
•
Structural Funds
• “Financial Engineering” action line in
each national SF programme
Multiannual programme for
Entrepreneurship and Enterprise
EUROPEAN SUPPORT:
OJ C 263 of August 20th 1998
3 STEP APPROACH
Dissemination actions
Feasibility studies
Establishment of networks
Co-finance 50 %
Co-finance 50 %
1 year
Co-finance 50 %
3 years
Commercially run
EBAN
Dissemination across Europe
3 projects co-financed
6 projects co-financed
FEASIBILITY STUDIES
•
Creating an Italian Business Angel Network
•
Service delivered through regional and local
networks
•
Setting-up a “virtual community” in IT
•
Establishment of the Flemish Business Angel
Network
•
Expansion to the country
•
Design of the most appropriated type of
network
PILOT SCEMES
•
Establishment of regional networks:
• Lisburn enterprise organisation ltd
• Instituut professor vlerick voor
management
• Utveckling norrköping ab
• Gepafin spa
• Professional networks
• Instituto aragones de formento
EBAN AWARENESS
CREATION SEMINARS
•
Project with DG Enterprise
•
Co-funding (~25%) for organisation of regional
seminars
•
Awareness creation on informal venture
capital
•
studying the feasibility of setting up a BAN
•
Pool of experts
•
1999: 41 seminars in 12 countries
EBAN MISSION
Facilitate that all potential European Business
Angels are aware of the concept, want to
become Business Angels and have the help
of Business Angel Network to find suitable
enterprises to invest in.
EBAN ACTIVITIES
•
•
•
•
•
•
Awareness creation
Conferences
Workshops
Publications
Gathering information on BAs and BANs
Promoting a favourable environment for
Bas and BANs
MEMBERS
Bizzbees
Flanders BAN
NEBIB
NBAN
DBAN
Banow
LINC
Scotland
SITRA
NBA
BAND
BAAR
Vlerick BAN
BANA
BBL Banque
BusinessAngels.com
Club B2A
Pastor Centre
innovationsagentur
BOAS
Club valaisan
IBAN
Thank you for your attention
EUROPEAN BUSINESS ANGEL NETWORK, c/o
EURADA
Avenue des Arts 12, bte 7
B- 1210 Brussels
T.: + 32 (0)2 218 43 13
F.: +32 (0)2 218 45 83
[email protected]
www.eban.org