Diapositive 1

1

• European Association of Development Agencies

Encouraging SME innovation and growth Increasing
Capital Access
SME access to finance challenges and solutions
Christian SAUBLENS
2008 INSME International Conference Guangzhou,
P.R. China 3rd of July 2008
2
The paradox of access to finance

• Banks
• Venture Capitalists have money
• Stock Exchange
• But argue that there arent enough good
• projects
• What is a good project?

3
A good project!

• A good project is a project presenting in the
• eyes of an investor
• acceptable risk profile
• a good perspective of return
• this means
• access to market innovation
• profits

4
Trial to solve the equity paradox
SupplyIncrease the volume of money available
for seed and early equity Improve the fluidity of
the value chain

• Demand
• Make entrepreneurs aware of investors
  aspirations/ expectations (asymmetric
  information all money is not the same)
• Help entrepreneurs to be ready to receive equity
  finance (Investment readiness)
• Improve entrepreneurs proposals

5
Public interventions

• Mix of non-financial and financial support
• services

This means that intermediaries have to provide
added value services and to become more
professional
6
Characteristics of most regional stakeholders
1. Public sector
Supply Proximity Generalist Public fund
managers
Abundant but little capacity to invest big
amounts Fragmented, with no networking Badly
equipped for assessing high-tech projects
Little demanding in terms of exit and return,
leading to  bad habits  in terms of growth and
profitability
7
Characteristics of most regional stakeholders
2. Entrepreneurs
Reluctant to share the management of their
companies with investors Undercapitalized and
no guarantees Lack of entrepreneurial and
management skills
Family entrepreneurs Small businesses Research
ers
8
Characteristics of most regional stakeholders
3. Private sector
Scarcity and looking for high return on
investment Not an issue, they are located where
the deal flow is high High skills and well-paid
expectations
Supply Proximity Manager
9
Tips for regional access to finance strategy
10
Regional Financial and Equity Value Chain

• - Grants - Loans
• - Micro-credits - Loans on trust
• Guarantees - Reimbursable advance
• Proof of concept

Public funding
Entrepreneurs own resources and reinvestment
capacities
Equity
VC
FFF Pre-seed University spin off
IPO
Business Angels
Corporate Venturing, Seed capital
Mezzanine
- Banks - Factoring - Guarantees -
Micro-credits - Leasing - Export credits
Private funding
Prerequisites
Human capital professional fund managers, state
aids experts
Infrastructure business angels networks,
incubators, etc.
Intermediaries advice, investment readiness,
tutorship
Risk taking investors private, public
FFF Family, Friends, Founders BA Business
angels VC Venture capital IPO Initial
Public Offering
11
Regions and access to finance Case Study of
the Rhône-Alpes (France)
Source RHONE-ALPES CREATION
12
Case study Wales (United Kingdom)

• The region of Wales (UK) re-organised all its
  financial services around
• a single organisation called Finance Wales
  (www.financewales.co.uk)
• to provide the following financial services and
  products
• Community loans amounting to US 10.000 to US
  100.000 for the social economy
• Xenos its business angels network
• Spinout unsecured loans without interest of up
  to US 50.000 for university spinouts
• Venture capital up to US 1.500.000 per
  financial pool and US 3.000.000 in total
• Mezzanine US 20.000 to US 800.000
• Loans from micro-credit of US 2000 to US
  20.000 to loans of up to US 1.200.000

13
Example of regional market fluidity

• A) SUPERSONIC IMAGINE
• CREATION 2005
• N OF STAFF MEMBERS 15
• FOUNDER INVESTMENT 50.000
• 1ST ROUND
• VC (AURIGA PARTNERS) 500.000
• SPONSORSHIP FROM
• NATIONAL AWARDS 450.000
• REGIONAL GRANTS 550.000
• 2ND ROUND
• 4 INVESTORS 10.000.000
• CRÉDIT AGRICOLE PRIVATE EQUITY
• AURIGA PARTNERS
• NB6I VENTURES
• BIOAM

14
Example of regional market fluidity

• B) MEILLEURMOBILE.COM
• CREATION 2004
• TURNOVER 1 MIO
• 1ST ROUND FOUNDER BAS 220.000
• 2ND ROUND GRANTS FROM REGIONAL INNOVATION AGENCY
  50.000
• 3RD ROUND LOAN ON TRUST 20.000
• 4TH ROUND LOAN ON TRUST 20.000
• 5TH ROUND V.C. (GALILEO PARTNERS) 1.000.000

15
A financial chronology of Google.com

• Price/share
• (in US )
• 1995 Larry
  Page Sergey Brin_at_Stanford University
• 1997 15 000 US creditcards
• 100 000 US B.A. Andy
  Bechtolstein (Sun Microsystems)
• Patent OTL
• 0.06 fin 1998 960 000 US 3 B.A.
• OTL receives2 of the shares
• 0.50 mai 1999 25 000 000 US
  2 V.C.
• Kleiner Perkins (Sequoia)
• 2.34 2001
  15 000 000 US of which Yahoo
• 85 août 2004
  2 718 281 828
  US I.P.O.
• 295 2005
  4 000 000 000 US Capital increase

NB turnover. 200 000 US 1999
8 000 000 000 US 2006
Source Hervé Lebert
16
Added value support services

• Improvement of business plan
• Market intelligence
• Prototyping, design, quality
• Intellectual property protection and valuation
• Support to the commercial exploitation of public
  research results
• Incubation facilities
• Clustering
• Advice regarding human ressources

17
Improving the quality of the demand
4 Business Plan
3 Development / Manufacturing
5 Marketing
2 Product
6 Customers
7 Leader
1 Technology
8 Team
12 Controls and Processes
9 Advisers / Support
11 Funding
10 Cash
18

• For more information
• EURADA
• info_at_eurada.org / www.eurada.org