INTERNATIONAL BUSINESS ACCELERATOR

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• INTERNATIONAL BUSINESS ACCELERATOR
• European opportunities and challenges

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About IBA
Who we are A Silicon Valley based service
provider. Founded in 1999 What we do Work with
technology companies and investors to build
sustainable business models for profitable
international growth through market intimacy and
disciplined execution Contact www.ibaccelerator.
com jrortveit_at_ibaccelerator.com 650-470-4041
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Presentation outline
Status of European funding Europe as a source of
technology Europe as a market The emerging
Europe Strategic Alternatives for long term
profitability Market Strategy and the Product
Life Cycle Successful partnering
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European VC funding 2000-2003
The results 5,437 companies received venture
funding between July 1999 and June 2003, of
these 1/6 have gone out of business, losing
their investors a total of 7.6 billion euro 156
(2.9 percent) staged an IPO 355 companies (6.5
percent) - acquired by corporate investors.
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Europe as a source of technology (buy vs. build)

• What is not covered in previous slide The role
  that government funding plays on EU, country,
  regional and local level.
• On EU level 6th framework fund allocated 17,5 BN
  Euros to RD (2002-2006)
• European technology companies face 2 main
  obstacles in their internationalization efforts
• Lack of expansion funding (plenty of funding for
  RD, very little for commercialization)
• Lack of expertise (small market mentality)
• Opportunity for US companies
• Most European companies entering the US market
  are looking for US partners to commercialize
  their technology.
• US companies can benefit from this by getting new
  revenue streams and time to market advantages
  from market proven technologies

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Europe as a market

• Issues to consider when entering Europe
• The EU is still many different local markets
• Cheapest and fastest Nordic region early
  adopter market with excellent infrastructure,
  savvy users and short time to market
• Recent 3i UK study shows Nordic, UK and Spain as
  having the best current business climate.
  (Germany and France most negative)
• Review local government investment incentive and
  tax credit programs.

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The emerging Europe

• The new frontier
• Former Soviet Union newly independent states
• Notably Russia and Ukraine, also Romania,
  Bulgaria and Czech Republic
• Highly skilled, low cost labor force offers
  opportunities for US companies as outsourcing
  partners/developers as well as source of new
  technologies/IP
• Example USC in Ukraine, 1000 developers,
  50PhDs

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Strategic Options for Achieving Long Term
Profitability
Long Term Profitability
Increase Volume
Increase Productivity
Improve sales mix
Increase Prices
Expand Market
Market Penetration
Cost reduction
Increase usage
Convert Non users
Enter New segments
Win competitor customers
Fixed cost
Variable cost
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The effect of elongated sales cycles on growth

• Enterprise sales cycles have increased as a
  result of more
• decision-makers, poor target marketing and
• ineffective lead development programs.

Source Sirius Decisions, 2003
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The impact of maturing technology markets

• Companies are challenged
• Innovation is redefined
• Precise market definition becomes critical to
  success
• Business models must be adapted to new economy
  behaviors

• Increased margin/pricing pressures
• Increasingly sophisticated customer value chain
• Globalization is real
• Core competencies shift
• Technology is pervasive

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Market strategy implications
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Partnering for profitable growth

• How to maintain focus on innovation and value
  add, improve profitability and grow at the same
  time.outsource
• Challenge
• US client developing online solutions for Bank of
  America saw slow growth and low margins because
  innovation and value add resources were tied up
  in low margin work
• Solution
• Outsourced low margin functions to Ukraine and
  focused resources on marketing and innovation
  (high value add work)
• Result
• Achieved doubling of margins and 300 sales
  increase