Business Angels Culture

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• Business Angels Culture
• Andreas Müller
• Potsdam, September 18th 2007

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Business Angels

• invest private capital primarily in small
  businesses
• concentrate at an early stage, specific sector,
  close geographic proximity
• are independent in making decisions on investment
• Objective gain assets from business success
• offer added value through intensive management
  guidance and support of the partner-companies

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Business Angels

• make companies more attractive to other investors
  (VCs)
• use less stringent test and control procedures
• are able to make fast decisions
• but can also emerge as Business Devils through
  their right to make decisions

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The typical Business Angel

• is/was entrepreneur or manager
• is experienced in sales and corporate governance
• has substantial Know-How within a branch
• has access to a complex network
• invests up to 20 of his total assets, maintains
  1-5 investments
• is risk-aware but does not avoid risks
• is several days per month directly available to
  the partner-company

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BA vs. VC

• Business Angel
• invests private money
• Objectivesbusiness successminor
  sharepart-time investorentrepreneurial
  manageractive investormedium return gt 10
• short due diligence and negotiation

• Venture Capital
• invests external money
• Objectivesearly exitmajor sharefull-time
  investorfinancial managerstrategic
  investorlarge return gt 40
• long due diligence and negotiation

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4 steps to business success

• start off with small own capital and/or public
  sponsorship, development of a business plan
• business initiation through Business
  Angel-financing, concept-verification through the
  market
• business development with Venture
  Capital-financing, implementation in the market
  expansion stage
• private placement, VC-exitgrowth or sale

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strength/weaknesses of young technology based
businesses

• fast growth
• high value creation
• latest technology
• innovative, flexible
• qualified employees
• if successful, high increase in value,seed for
  tomorrowsbig business

• high capital needs
• high research and development expenses
• low cash flows
• management of growth
• long-cycle investments gt5 years
• - dependent on one product

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Why do involvements fail?

• founder-team unqualified
• no convincing business model
• unrealistic business plan
• valuation is unrealistic
• insufficient market growth
• risks are too high
• miscellaneous

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Objectives of the Business Angels Club
Berlin-Brandenburg

• merging of ideas, capital and market expertise
• assistance of creative and innovative
  entrepreneurs with the development/protection of
  their business existence
• creation of skilled employees
• increasing the interest to invest

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Process of applying to the BAC
sending in the synopsis of the business plan
rating through the Business Angels Club
Berlin-Brandenburg with 1 or 2 Business Angels
in case of positive valuation
screening
further business angel support
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Business Angel-Organisations

• BAND e.V., governing body of the German Business
  Angels Networks
• currently about 40 networks mainly on regional
  level
• Focus screening of requests and cross linking
  the partners
• diverse organization and financing

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BA-Investment a profit guarantee?

• 34 total loss
• 13 partial loss or break-even
• 17 return on investment lt25
• 13 return on investment 25-49
• 23 return on investment gt50
• Source C.Mason R.Harrison

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Business Angels Fonds GmbH

• founded in June 2005
• volume currently 540 k
• Cooperation with IBB (central subsidy institution
  of Berlin),
• IBB-venture capital company and HTGF (High-Tech
  Gründerfonds)
• Objectives - Lead investor (general partner)
  - 5-10 Involvements - 3 years
  duration
• each project is supervised by at least 2 Business
  Angels

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High-Tech Gründerfonds

• founded in 2005
• through Governmental Fundings, KfW, BASF,
  Siemens, Telekom et al.
• volume 272 Mio.
• investment up to 550 k each company
• BAC is accredited Coach

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Speaker Andreas Müller

• Thank you very much for your attention!

Berlin Office Business Angels Club
Berlin-Brandenburg e.V. Bundessallee 171 10715
Berlin Telefon [phone] Telefax 49
(30) 2125 4883
Potsdam Office Business Angels Club
Berlin-Brandenburg e.V. Steinstraße 104-106 14480
Berlin Telefon [phone] Telefax
49(331) 660 1891