Equity based internationalization

Alexander M Orlando, MBA, DBA

[email protected]

ROMA, NOVEMBER 30 2012

In coordination with

Agenda

Overview of financing options

Deal structure and what to expect during the investment process

About Strategies

© 2012 Alexander M Orlando, MBA, DBA www.innovahub.ocm [email protected]


InnovaHub

The four S of Innovation ©

Individuals that inspire through their wishes innovation

Professionals that utilize their skills and knowledge to propose innovative solutions for a prize.

Inventors or innovators that seek to to sell, license, or fund their inventions.

Entrepreneurs, organizations, and investors that are looking for new ideas, solutions, or inventions.


Overview of financing options

Angel Financing

Venture Capital

Private Equity

PublicStock Markets

Self Finance / Bootstrapping

Debt / Bank Finance

Equity FinancingNon-Equity Financing


What Is Venture Capital?

Venture capitalists:Venture capitalists:

RaiseRaise pools of capital from institutional and individual pools of capital from institutional and individual investorsinvestorsFinanceFinance new and rapidly growing companies; new and rapidly growing companies; PurchasePurchase preferred equity securities and preferred equity securities and take board take board positionspositions; ; Add valueAdd value to the company through active participation; to the company through active participation; TakeTake higher higher risksrisks with the expectation of higher with the expectation of higher rewards; rewards; Have a Have a long-termlong-term orientation orientation Make $$$Make $$$ by via M&A or IPO liquidity events by via M&A or IPO liquidity events


Large PotentialMarket

Opportunity

Unique Product Or Concept

PassionateFounding Team

Pre-requisites

Intensecompetition

likely

Need to moverapidly

Implications…

Hiring

Infrastructure

VC funding supports

Rapid Product Development

Internationalisation

Partnerships

Commercialisation

Good reasons to raise equity finance

Why VC Is Helpful?

Friends & Family

AngelsVenture Capitalis

ts

Capital

Advice

Connections

Low High


Equity Financing

Investment Investment Size Size

SeedEarly StageSeries A, (B)

Later Stage(B),C,D…

Pre-IPO / Buy-out

PrivateEquity

Potential Sources of Funds

0 - €1m

Grant-funding

University seed funds

Friends and family

Angel Investors

(Venture Capital)

€2m-€20m

Venture Capital

(Wealthy) Angel investors

€5m-€20m

Venture Capital

€30m+

Specialist Late stage tech investment funds

Hedge Funds


Identifying relevant VC partners

DoDo create a shortlist create a shortlist

Rifle is a better weapon Rifle is a better weapon than a shotgunthan a shotgun

Similar process for Similar process for identifying angels, look at identifying angels, look at VC funding press releases to VC funding press releases to identify prior Angel identify prior Angel investorsinvestors

Has funds to invest

Match of Size/Stage/Geography

RelevantPortfolio

No directlycompetitiveinvestments

Excellenttrack record

Shortlist

Sharing relevant information

100 page business plan 100 page business plan notnot required required

20 page ppt which 20 page ppt which clearly answers main clearly answers main questions is best betquestions is best bet

ProductProduct

MarketMarket

Business ModelBusiness Model

TeamTeam

CompetitionCompetition

Product RoadmapProduct Roadmap

Technology OverviewTechnology Overview

Business DevelopmentBusiness Development

Financial StatusFinancial Status

Pre - first meeting Pre - termsheet Post - termsheet

• Dialogue rather than documentation – expect lots of meetings

• Calls with current / prospective customers or partners

• Meeting broader team

• Brainstorming around strategy

• Identifying key hires post closing

• Formal presentation to VC partnership

• Some additional reference calls with partners / customers

• Personal reference calls

• Legal / accounting audit (if relevant)

• Drafting legal documentation

2-4 weeks 1-2 Months

Approaching VC’s

Investing is a people business, and getting a Investing is a people business, and getting a meeting is all about meeting is all about ““who you knowwho you know””

Best way to approach a VC is some form of Best way to approach a VC is some form of introductionintroduction

Entrepreneur, professor, attorney… (Linkedin…)Entrepreneur, professor, attorney… (Linkedin…)

Sending a plan to Sending a plan to [email protected] is a is a

waste of timewaste of time


The Executive SummaryStimulate and motivate Stimulate and motivate the investor to learn more. the investor to learn more.

Hook them on the first page. Hook them on the first page. Most investors are inundated Most investors are inundated with business plans. Your first page must make them want with business plans. Your first page must make them want to keep reading.to keep reading.

Keep it simple. Keep it simple. After reading the first page, investors often After reading the first page, investors often do not understand the business. If your business is truly do not understand the business. If your business is truly complex, you can dive into the details later on.complex, you can dive into the details later on.

Be brief. Be brief. The executive summary should be 2 to 4 pages in The executive summary should be 2 to 4 pages in length.length.



Contineo Management www.econtineo.comContineo Management www.econtineo.com

Accel Partners www.accel.comAccel Partners www.accel.com

Partners500 www.partners500.comPartners500 www.partners500.com

InnovaHub www.InnovaHub.comInnovaHub www.InnovaHub.com

Useful links


S.M.A.R.T. MODEL

S.M.A.R.To Scopeo Methodologieso Adaptationo Recognitionso Tools

Request a free digital copy : [email protected] in Italian and English


Alexander M Orlando, MBA, DBA

ALEXMORLANDO

www.linkedin.com/in/alexanderorlando

www.facebook.com/alexander.m.orlando

[email protected]

www.InnovaHub.com

USA: +1.410.294.2684 or From Italy +39 02 947 52334

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Equity based internationalization

Economy & Finance